Motion made, and Question proposed,
That there shall, subject as hereinafter provided, be charged as from the first day of March, nineteen hundred and thirty-two, on all goods imported into the United Kingdom a duty of customs equal to ten per cent. of the value of the goods:
Provided that the duty aforesaid shall not he charged on the following goods, that is to say,—
§ Mr. ATTLEE
I am sure that I am expressing the views of the whole House in congratulating the right hon. Gentleman both upon the occasion and upon the manner of the speech to which we have just listened with so much Pleasure. I am sure also that we all feel that if a change in our fiscal system was to come about, it was fitting that it should be laid before this House by the son of the late Joseph Chamberlain. One also feels what joy would have been his if he could have heard this programme put forward with such wonderful lucidity and clarity, and in such an extremely interesting manner. My business is to state the views of the Labour party on the great issues that have been laid before us. Perhaps the House will excuse me if, in dealing with this Budget question, I say a few words about one who has now left us, my late colleague Mr. William Graham. He was a man who also delighted this House by his lucidity and by the charm of his manner, and he has left to all of us a very sweet memory of a very dear and devoted colleague.
When I look at the circumstances in which these proposals are introduced, the most surprising feature is not that the right hon. Gentleman is officiating as chief priest at the sacrifice of Free Trade, but the principal acolytes that surround him. It would be an amazing thing to anybody who looks back upon the tariff struggles of the past to see the right hon. Gentleman sitting next to the right hon. Member for Spen Valley (Sir J. Simon) and the right hon. Member for St. Ives (Mr. Runciman), while the real prophets of the new era have to be content with the outer courts of the temple. The right hon. Member for Sparkbrook (Mr. Amery) and the hon. and gallant Member for Bournemouth (Sir H. Croft) are not even in a position such as that occupied by the right hon. Member for Darwen (Sir H. Samuel) in being present in the temple and bowing the knee to Baal. It is indeed peculiar that tariffs should be introduced in this way. We have to-day a unique occasion, because it is the first time for many years when, I understand, in the course of the Debate, we a-re to have the opportunity 298 of hearing the views of both sections of the Cabinet.
The hopes of the right hon. Gentleman that his proposals are going to do great good for this counutry have been put forward with admirable lucidity. Later in the evening we are to have the views of the right hon. Member for Darwen and his friends who have very grave objections to the proposals on the ground of national policy. It is a very interesting situation. I have followed the explanation of the right hon. Member for Darwen, and, as far as I can gather, he thought that the Government were leading us to destruction, that they were rushing like Gadarene swine down a steep place and that he proposed to go in with other devils and put on the brake in order to moderate the pace.
It is not my intention to deal at length with the very curious position which has arisen in our constitutional life, but I cannot help thinking how curious it is that I should be facing again the right hon. Gentleman the Member for Spen Valley when I think of the number of times I have sat and listened to his constitutional words of wisdom on dyarchy and general responsibility of Cabinets. I thought that I had really learnt that constitutional lesson for ever at the feet of a master, and now I find that he is among the backsliders. I am going to say only a few more words upon the division in the Cabinet. It is no use for the right hon. Member for Darwen and his friends to come forward and wash their hands of the whole business, and say that they are not responsible. It is no use their saying, "Oh, we are white, pure souls. We are still Free Traders. We have not surrendered anything." As a matter of fact, the surrender was not made in the Cabinet. The surrender was made when the right hon. Member for Darwen, for some slight consideration, handed over his party to the protectionists at the last election. I hope that we shall not hear anything of an attempt to wash their hands of those proceedings. They must take responsibility for their deeds.
We have heard from the right hon. Gentleman the considerations which have led the Government to put forward these Measures. The first one—and I think the chief one—was an endeavour to balance our trade. That is a struggle which is being engaged in by most countries at 299 the present time. Almost every country is trying in some way or another to balance its trade. The right hon. Gentleman dealt rather slightly with the situation that presents itself. He did not really tell us why we had these excessive imports, but if you read the recent reports of bankers and others, you will find that the whole thing is clearly set out. All the creditor nations—and we are still a creditor nation—are endeavouring to keep a favourable balance of trade, while at the same time insisting that debts should be paid. The only real argument of the right hon. Gentleman is, that when in Rome do as Rome does and that when in a lunatic asylum you must behave like a lunatic. The struggle for a balance of trade, and the idea that by some miraculous way you can restore trade by keeping out the goods of others, and at the same time make them receive yours are, unfortunately, very widespread. It is a complete confusion of thought. The right hon. Gentleman glossed over the question of inter-Allied Debts and Reparations, but, in our opinion, all attempts to seek a favourable balance of trade are futile so long as you do not deal with inter-Allied Debts and Reparations.
I can best illustrate the confusion of mind of quite a large number of people in the world upon this question by the example of the lion. Member for South Kensington (Sir W. Davison). The hon. Member talks a great deal about Russia. About once a week he implores us to get the Russians to pay their debts to us, and about once a week he implores us to keep out Russian goods such as timber, butter, anti so forth, that is, the only commodities whereby their debts could be paid. He does not seem to see that the two things are incompatible. It is what all the world is trying to do to-day, and what the right hon. Gentleman is trying to do at the present time. There was one remarkable thing about the speech of the right. hon. Gentleman which, I hope, everybody noticed. He told us that he was going to try to restrict imports, and at the same time he was going to stimulate exports. Like some counsel in the courts, however, he emphasised very strongly the point with which he was going to deal, but he never dealt with it. He explained that we are going to prevent all kinds of things coming into the 300 country in various ways and deliberately to restrict imports. He pointed out the danger of falling exports, but he did not explain how we were going to be paid for exports. Is the President of the Board of Trade going to tell us how he will get paid for his shipping? We have to face the fact that the serious position which has arisen in the world is that the debtor nations are the industrial nations, particularly in the case of Germany. Prior to the War the debtor nations of the world were mostly those engaged in producing raw materials and food. Therefore, the industrial nations were perfectly ready to take those commodities. With an entire overturn of the world the debtor nations have been those who can only pay by the products of industry. The people who, as the right hon. Gentleman so justly said, have come to this House for this particular business want those goods kept out. I have a quotation here which comes in at this moment. I see that the right hon. Gentleman, the President of the Board of Trade, has been speaking to-day to Canada. He said:Nothing could be more foolish and narrow minded than that people should go on selling and never buying. Those countries which were determined not to import would find it increasingly difficult to do any exporting.5.30. p.m.
I commend that to his colleagues on the Front Bench. I hope that whoever is going to get up—I do not refer, of course, to the right hon. Member who is going to give the opposite point of view of a section of the Government—to support the proposals will explain how we are to be paid for exports when we are going to keep out imports. The proposals brought before us to-day will be totally futile, because they rest on an entirely false diagnosis of the situation. If you read the writings of any prominent authority on trade and industry you find that they all say the same thing, that one of the great troubles of to-day is the existence of tariff barriers. The right hon. Gentleman quoted that opinion himself, yet he proposes to increase the tariff barriers. We are going to keep out goods from this country. Where are the manufactured goods going that we are not to have here? They are going to compete against us in neutral markets. We shall not get rid of them in this way.
301 We are suffering not from an attack upon our trade by some particular foreign nation, but the fact that the whole world is suffering from a slump and that there is a decrease of purchasing power all over the world, owing very largely to currency and exchange problems. The idea that we, like all the other unenlightened Powers, should go in for the practice that this internecine warfare has left behind, instead of seeking by better means a greater share of world trade, is a measure of the futility of these proposals. If you want to deal with the situation you should deal with the currency and exchange problems, but the right hon. Gentleman has postponed doing that. He has left that over until June. I noticed one thing particularly in the right hon. Gent leman's general survey of the situation. He congratulated the Income Tax payers very warmly on their magnificent response and the patience that they had shown, but I noticed that he did not congratulate the unemployed or the workers who have had their wages cut down. I suppose that would not have been cheered from the other side.
The right hon. Gentleman has put forward a proposal for a 10 per cent. tariff. We on this side are not bigoted Free Traders or bigoted Protectionists. We do not regard Free Trade as an end in itself or a tariff as an end in itself. A tariff is merely a weapon with which you affect the economic life of your country and the world. We think that it is a very ineffective weapon. We do not say that there is any awful sin in using it, but we do say that a tariff is a weapon that should be utilised only if it is used in pursuit of some definite and clear policy. The general tariff that the right hon. Gentleman has put forward is a kind of general utility tariff. It is to be used for seven different purposes, and I doubt whether they are compatible. Some of them are certainly not compatible. We are going to keep out imports and we are going to raise revenue. We shall keep out some imports and raise some revenue, but you obviously cannot get the full benefit of those two things together. We are also going to use the tariff as a bargaining method. It is to be used to knock the foreigner on the head when he comes here, and to attract the overseas Dominions to link themselves more closely to us.
302 What the right hon. Gentleman really envisaged is a tariff wall. That is what these tariff bargains lead to. You may start, if you like, by saying that you are only putting up your tariff to induce someone to reduce theirs, but I would like the right hon. Gentleman, instead of giving us theory, to give us practice. Can he give us any instance where a tariff war has led to a reduction of tariffs? I do not believe that it is a good way of cementing our friendship with the Dominions to go in for bargaining, because that is what it means. I think you will find very great difficulty in bargaining with the Dominions. I saw something of the situation at the last Economic Conference. The unfortunate thing is that the goods we want to sell to the Dominions are precisely the goods which they wish to manufacture for themselves. We shall have trouble, incidentally, over here. Already we have trouble with our own agriculturists who object just as much to be cut out by cheap goods from the Dominions as cheap goods from abroad. You will find it very difficult to get a business patriotic.
On the broad principle of the utilisation of tariffs, we object to the whole system because we believe it to be thoroughly unscientific and thoroughly bad. If you want to secure certain economic results in the life of this country you must have some conception of what economic life you want in this country. I think there is a case for saying that we want more stability for our economic life. There is a strong case for saying that we want to have so much of our labour and our capital devoted to agriculture. There may be a case for iron and steel or for this or that industry, but to say, haphazard, that we are going to put on a tariff and that we are going to stimulate this, that or the other will not lead to the rationalisation or the stabilisation of our economic life, but will lead to the creation of a large number of vested interests and will make it more and more difficult for us to reconstruct. I would call attention to the entire absence of anything in the right hon. Gentleman's proposal whereby we are going to see that those traders who will benefit by this legislation are going to be efficient. 303 There is no protection for the consumer or for the worker, and there is nothing to ensure efficiency. What the scheme amounts to is a very large dole to separate industries. There is to be no means test in those industries, no inquiry whether they are doing well or badly, and no inquiry into character as to whether they are useful or mischievous industries.
The right hon. Gentleman has come back to the traditional Tory policy, which was described, I think, by the right hon. Member for Epping (Mr. Churchill) as "ladling out doles to their friends." I do not say that I have given the language of the right hon. Gentleman quite correctly, but, at any rate, I have given the general lines of it. That is what the Chancellor of the Exchequer did in his De-rating Act. He does not seem to have learned any lesson. He ladled out doles to all kinds of industry by means of de-rating. He will do exactly the same thing in this case. If you want to deal with British industries, if you want to protect this or that industry you should take steps to sec that for every benefit that you give to that industry you get public control over the industry, that you should see that the profits do not run away into the hands of a few traders but into the hands of the community, and you should see that the resources of the country are not wasted. These are the main objections to this tariff scheme of the right lion. Gentleman. Our great objection to it is that it is totally divorced from any sound plan for building up the economic life of the community.
I do not propose to go into the details of the particular machinery that the right hon. Gentleman is to set up, but I notice that there was no howl about the irresponsibility of Ministers, as was always the case when Labour proposed anything. He in going to take power to inflict on us tariffs of all kinds up to 100 per cent. He is going to have an upper limit laid down by a tariff commission, but we do not know who those tariff commissioners are to be. They are to act in a judicial capacity. How can a judge act when he has no principles of law given to him. There is no criterion on which they are going to act. The right hon. Gentleman said that he would be sheltered from 304 political pressure, but I am afraid that it is a very flimsy shelter. There is plenty of room within that shelter for political pressure. There is no doubt as to what is going to happen in this House. Members are coming here to do their business, and industry will have to look to the House of Commons and will have to keep someone pretty busy in the Lobby. We are going to have the kind of ramp that you have in every country where there are tariffs.
My complaint is not against the boldness but against the timidity of the Government's scheme. They have not the courage to say that the economic life of the country must he controlled by the Government. In effect, they say: "We surrender to pressure from below the Gangway." I have little faith in the idea that this tariff scheme has been brought about by the peculiar state of trade and industry at the present time. If we had had a favourable trade balance, if we had been on the pound sterling, if trade had been looking up all around us, in a House of Commons constituted as it is to-day and with a Government constituted as it is, we should have had full tariff proposals introduced. It is sheer hypocrisy to suggest anything else. The right hon. Gentleman stood here as the inheritor of a tradition—the tradition of Protection and tariff reform. The right hon. Gentleman's father never concealed what it was that he was aiming at. He made no pretence that he was seeking to balance a Budget or a trade balance, or anything of the kind. His object was to bring about Protection, and the right hon. Gentleman is doing the same thing to-day.
I should like to hear what the President of the Board of Trade has to say, in view of what he has said recently. He is so very emphatic. In a speech delivered only a year ago, in which he criticised those who changed their views on tariffs on the ground of altered conditions, he said that no change of conditions could alter fiscal truths. Well, I suppose we shall hear from him. My view is that the Measure which has been introduced to-day has been forced upon the Government by pressure from below the Gangway and in the Cabinet. It is a device, just as much as the pew doctrine of Cabinet responsibility, by the Government somehow to get over their political difficulties. I do not regard it as leading 305 to a great future for this country. I do not believe that it is going to save us. I believe that it will lead on to industrial warfare. If the line that has been laid down by the right hon. Gentleman is carried out to its full and logical conclusion, it will lead to an attempt to set up an economic bloc of the British Empire and probably some allies. That will mean economic competition with some other bloc, and that economic warfare will lead to political warfare. It is surprising that we should get economic nationalism by a national Government at a time when all the world is crying out for internationalism. We oppose the proposal not because of any of the old views or arguments in regard to Free Trade or Protection but on the ground that it is not calculated to deal with the evils from which the country and the world are suffering, but is calculated to corrupt political life, to raise up a host of vested interests and, so far from helping the recovery of the world, will lead to economic warfare in the future.
§ The CHAIRMAN
Before the Debate proceeds further I think it may be for the convenience of the Committee if I say that, subject to the approval of the Committee, I propose to allow the discussion to-day and on Tuesday to be a general discussion of the four Resolutions. It follows from that, that after the Resolution which is now before the Committee has been disposed of, the other three Resolutions will be disposed of without any discussion.
§ Mr. AMERY
My first words this afternoon must be words of sincerest congratulation to the Chancellor of the Exchequer on the admirably lucid speech he has just delivered, on the triumph of the cause in which he and I have long been fellow workers, seeing eye to eye, but, above all, on the happy circumstances which have enabled him of all men to introduce to-day this great change in our national fiscal policy. This afternoon our discussion is carried on in the shadow of a great name. It is not the only name which will, perhaps, come back to us in this connection, for, after all, to-day marks the close of a chapter which opened 86 years ago with the repeal of the Corn Laws. It might be just and fitting if on this occasion I reminded the Committee of the closing 306 words of the speech in which Mr. Disraeli protested against that Measure and prophesied, though he could not have known how long it would be before his prophecy came true, that this country would go back upon the economic theories which at that moment it was so unreservedly embracing. Mr. Disraeli said:It may be in vain now in the midnight of their intoxication to tell them that there will be an awakening of bitterness; it may he idle now, in the spring tide of their economic frenzy, to warn them that there may be an ebb of trouble. But the dark and inevitable hour will arrive. Then, when their spirits are softened by misfortune, they will recur to those principles that made England great and which, in our belief, will alone keep England great.After nearly a century of aberration in the wilderness of theory, we are to-day returning to the practical wisdom of our forefathers and to the established practice of every great civilised nation. To me this is a day of deliverance rather than a day of fulfilment. The hon. Member for Limehouse (Mr. Attlee) spoke of bigoted Protectionists. I am not, I trust, a bigoted Protectionist. I do not regard Protection as in any sense a panacea or as the be-all and end-all of politics. I have seen quite enough of the application of Protection in other countries to realise the limitations upon its efficacy, and the need for moderation and discrimination in its use. I have very little doubt that if I live long enough I may yet find myself in this House opposing the kind of high tariff measures which will only too certainly be advocated from the benches opposite before many years have passed. If I have fought with all my heart and soul, one mass of glowing conviction during all these years, it has not been to establish Protection for its own sake as some all-beneficent positive principle. My fight has been for the liberation of our political thought and our national action from the deadening shackles of a negative mental obsession, an obsession which for three generations has wasted our substance, cramped the energies of the nation and paralysed our thought. I am looking to-day not so much to the immediate wonders to be achieved by a tariff as to all that we may yet achieve for this Empire and nation when it is freed from the fetters which have chained it for so many years.
307 This is certainly not an ordinary political Measure which we are carrying to-day. It is nothing less than a vital change in our national thought, an intellectual Reformation in the sphere of economics. When Mr. Joseph Chamberlain in May, 1903, voiced, still as a Free Trader, his protest against the pedantry which forbad the use of our existing corn registration duty for the purpose of Imperial preference, his challenge started a new train of thought, created a new reaction, as definite and as momentous as when Martin Luther nailed his 96 theses to the church door at Wittenberg. There are not a few in this House this afternoon to whom that speech was the beginning of their political life. It certainly was in my case. I had no connection with party politics at that moment, but within an hour of reading that speech I was busy getting friends together to create the organisation which afterwards became the Tariff Reform League, and from that day onwards I threw myself into the struggle, little knowing how long, and how disappointing sometimes, that struggle would prove to be. Those were glorious days. How confident we were of early victory; how greatly we under-estimated the stubbornness of ancient prejudice; how little we foreknew the incalculable events which again and again side-tracked our policy and diverted public attention from it!
Now at long last we have triumphed. Or, rather I should say, the facts have triumphed for us. Last October the stars in their courses fought for us, when so often they had fought against us; and to-day this great change is going through, not temporarily, as the hon. Member said, but for at least some generations, and going through almost unopposed in this House. It is going through also with the substantial approval of almost the whole nation, not perhaps of the political nation represented in party organisations, but of that nation which goes to its work day by day and wants to know how it is to earn its living and carry on its business. I know that there are a handful of dissentients, 'mostly in the circles of the older political groups. I am told that there are such even in the sacred and harmonious inner circles of the Cabinet. They are the martyrs of the old faith. They have managed, by 308 special, cordial request of their colleagues, to combine the enjoyment of the martyr's crown without the normal discomforts which attach to martyrdom. I understand that, later we are to have an opportunity of discussing the constitutional aspect of their action and of the Cabinet decision, and this is, therefore, not the occasion upon which I should wish to trespass upon the patience of the Committee and enlarge upon that subject.
But there are one or two questions directly connected with this Resolution and the measures which will be based upon it which I should like to ask the Home Secretary, because I think the Committee is entitled to an answer with regard to them. What precisely are the terms upon which this agreement has been reached? Are we to have from him this afternoon a vindication of his consistency, followed by a vote rendered innocuous by his assured foreknowledge that it will make no difference to the result; and, after that, are we to have, if not his support, at any rate his acquiescence in all the further measures which may result from this Resolution and from the operations of the committee under the Board of Trade to which the Chancellor of the Exchequer referred? Or is he going to state a case against these proposals so as to give a lead to the Free Traders in this House and outside, to wake an echo, which will strengthen his own hands within the Cabinet and enable him there to delay, to modify, and in the last resort, by a threat of resignation, to weaken Cabinet action? In other words, we wish to ask whether his speech is to be his swan song as a Free Trader, or whether, like another Roland at Roncesvalles, he is winding his horn in the hope, faint though it may be, that somewhere in the distant marches of the next General Election the Free Trade army will slowly come up to his help? To that question it seems to me, in these exceptional circumstances, the House is entitled here and now to have an absolutely frank and sincere statement from the Home Secretary as to what the future course of action of himself and his colleagues is going to be.
Let me now turn to the actual proposals laid before the Committee by the Chancellor of the Exchequer. There is 309 in these proposals a breadth of scope and a flexibility in application which, subject to certain reservations, I can wholeheartedly admire and applaud. Speaking of reservations, I trust under the new constitutional rules that I may be allowed to speak with unusual freedom, and say that sonic of the details, some of the methods, strike me as not altogether so happy as the main principles themselves, without in any way diminishing my general support of the Cabinet, or, shall I say, of the majority of the Cabinet? These proposals are not so much a tariff as an initiation, an adumbration, of a tariff. They lay the foundation, but do not carry us yet very far towards what either industry or agriculture, or our balance of trade, really require. It is a fledgling rather than a full-grown bird. If I may venture to use the foreign language of a menu, it is a poussin rather than a full-grown poulet, suited for delicate appetites not yet wholly accustomed to strong meat, but perhaps not altogether satisfactory to a starving industry or wasting agriculture. After all, pending the actual fulfilment of the work of the Committee, as to which we have been told very little as to time, we are to rely on the 10 per cent. tariff. Let me take that from the point of view of industry. I do not think anyone is going to suggest, in. present world economic conditions, that a, 10 per cent. duty is going to make any appreciable difference to the amount of foreign manufactures that will come into this country. It may be said that we forget that that 10 per cent. is on top of exchange depreciation. But that depreciation has a protective value, so far as we are concerned, only as regards the Gold Standard countries, and then only in so far as those Gold Standard countries have not taken special measures to counteract it. As a matter of fact special measures have been taken either by the Governments or by industry in several countries. In Germany at the beginning of December, by an emergency decree, all wages and salaries were reduced by 10 to 15 per cent., all cartel and other prices were cut down, all rents and mortgages were reduced 10 per cent., and railway rates by 5 to 25 per cent.
Those were all measures to neutralise any protective advantage which the fall in sterling afforded. Other countries, 310 Switzerland for instance, are giving actual subsidies to their exporting industries, and many of the great cartel industries-of the Continent almost immediately after our departure from the Gold Standard changed their price quotations in order to meet the situation. We are living in abnormal and almost desperate times. Other countries take desperate remedies. In many instances they are selling goods at 20, 30 and 40 per cent. below cost price. Such a desperate situation can be met only by prompt and, for the emergency at any rate, far bolder measures. I cannot help feeling that, at any rate pending the Committee's decision, we have something not much more than a half measure to deal with that situation.
The Parliamentary Secretary to the Board of Trade pointed with justifiable pride last night to the very substantial reduction of foreign imports effected by a 50 per cent. duty on top of the exchange depreciation. Would he suggest that anything like that, or indeed any appreciable difference, would have been created in that case by a 10 per cent. duty? If that is so, then all the objects which the Chancellor of the Exchequer has mentioned, the object of reducing unemployment and of reducing the adverse balance of trade, will not be attained by his immediate proposals. It is true that there will be a certain amount of revenue. But I venture to suggest, taking up the point made by the right hon. Gentleman who spoke just now, that there will be far less revenue than if the duty had been effective in transferring industry to our own country and employing our own people. One hundred million pounds of foreign manufactures coming in under the 10 per cent. duty would give you £10,000,000. But if you had made £100,000,000 worth in this country, basing myself on what the late Chancellor of the Exchequer said, that about 30 per cent. of the value of our production goes in taxation, then directly or indirectly local and national taxation would have benefited by something not far short of £30,000,000. Again, the extra £100,000,000 of production in. this country means the employment of 500,000 persons, and that means a saving of £40,000,000 on the dole bill. There you have from £60,000,000 to £70,000,000 as against the 311 £10,000,000. I might go further. If I took the line which was consistently taken by the late Government, that for every man directly employed in a British industry in this country someone else is employed indirectly, I might even double the figure. From the point of view of revenue it is far more important to produce than to levy a slight toll on the production of foreigners.
We come to the question of the superstructure. That superstructure is to be settled by a, committee of three or five, who are to be gifted with the wisdom of archangels and with no less superhuman powers of work. They are to fix the character of our industrial and agricultural tariff, and in doing so they have not only to exercise the judicial duty of adjusting details in a general scheme, but to devise the scheme itself. They are to make the laws as well as act as judges. With all my admiration for the general flexibility of the scheme of the Chancellor of the Exchequer, I think he is putting too much upon the committee and withdrawing too much from the responsibility of Government. The main outline of your tariff, whether it is to obtain protection of domestic industries, what industries should on other grounds except the mere yielding of revenue be maintained, as for instance agriculture, from what point of view you are to fix your tariff as a basis for negotiation with other countries—these and a number of main points ought in my opinion to be settled for the committee by the Government. If the Government do that the work of the committee will be enormously lightened.
I do not, feel too happy, after what the Chancellor of the Exchequer said, that he is in fact giving to the committee anything like sufficiently definite marching orders. Indeed when you think of it, they have to deal with an immense problem, with the framing of a new tariff, and they have to deal with it in the middle of a most curiously chaotic tariff situation. Until the committee has finished its labour, we shall have side by side duties of 10 per cent., duties of 33 per cent., duties of 50 per cent., and in one or two cases of 86 per cent., the difference between which has nothing to do with the structure of industry, but has arisen purely at haphazard owing to the particular manner in which the 312 Government, for political reasons rather than purely business reasons, has been compelled to address itself to this problem. I confess I should have thought that it would have been infinitely simpler for the Government to have done what we in Opposition contemplated doing—to impose a general emergency industrial tariff of two or three or four grades. It could have been very easily adjusted to whatever standard and appropriate rate for the highest duties on fully manufactured goods the Government decided upon. And then we could have left the committee to rectify mistakes. I believe there would not have been more than 5 per cent. of mistakes. It would have been far easier for these five gentlemen to deal with 5 per cent. of the field of industry than to deal with 100 per cent.
But, above all, the gist of the criticism which I venture in all friendliness and good will to address to the Government, the essence of the matter, is time. The Chancellor of the Exchequer himself spoke of the gravity of the situation. There are many industries that are really at their last gasp. They may not be able to hold on, with a 10 per cent. tariff, until such time as the committee gives its final decision. In the case of the iron and steel trade, if blast furnaces are put out of action they are largely spoiled by the process of contraction, and heavy expenditure and three months' of time may easily be required to put the furnaces in work again. In all that time not only that industry, but, all its ancillary industries, are deprived of employment and wages. During all that time, with only a 10 per cent. duty and the prospect of higher duties to come, I think dumping will be encouraged. I hope we may hear that if there is evidence of strong dumping in spite of the 10 per cent. duty, the Abnormal Imports procedure will still take effect, and that a 40 per cent. duty will be added in those cases. At any rate in this interregnum, until the committee has finished its work, there is no certainty, and it is certainty above all things that the employers and workers of the country wish to-day. How can anyone extend his works, re-organise, or rationalise, all of which means getting capital, unless he can go to his bank or the public with some assurance as to the conditions under which the work is to' be carried out?
313 We heard last night of 200 foreign firms making inquiries of the Government about setting up their industries in this country. I think a good many of those firms will postpone action until they know definitely what the committee recommends. I confess that I cannot see, in anything that the Chancellor of the Exchequer has said, sufficient reason on business grounds for the abandonment of the simple and comprehensive scheme for industry which, after such long and practical inquiry, had been worked out, by one party it is true, but which surely now could be contributed to the common national cause. As far as industry is concerned, I cannot in all honesty regard this method of procedure as altogether business-like, as altogether fair either to industry or to the unemployed. However, what I hope for and what I think would make all the difference is that the instructions to the committee will be that they shall within the next few weeks produce a rough and ready ad valorem emergency tariff. Then they can go over it later, modifying it, improving it, where necessary converting ad valorem duties to specific duties and, generally, making it a fully workable and scientific measure of national protection, or as I should prefer to say, in view of the greatness of the burdens of taxation in this country, of equalisation.
I only wish to say a few words on agriculture. I do not think that this Measure in its present form is going to do very much for agriculture. I do not know when the committee are going to have time to deal with the agricultural problem as well as with the industrial problem. I know that we are to have a wheat quota. There is nothing with regard to meat, though possibly when prices are so fabulously low at this moment a 10 per cent. duty, a halfpenny or less a pound, might have been worth considering. However it may be that this and certain other items are reserved for Ottawa. There is nothing for sugar, though I should have thought that even only two months before the Budget the extra revenue and the extra help to the Colonies involved would have made it convenient to impose a tax of 10 per cent. additional to the existing duty straight away. It would, as I calculate, both in itself and in the saving of subsidy, have been worth £200,000 to the Exchequer over a couple of months.
314 Take some other products. At present prices 10 per cent. means something like 4d. a cwt. on oats and 6d. a cwt. on barley. Duties of that sort, especially in face of the kind of dumping which in now taking place from Russia and some other countries will do very little. There again, however, I do not wish to pursue criticism in a speech which is after all one of welcome to the great step forward which the Government have made, but there again I would earnestly suggest to them that they should somehow take measures, either through this committee or by the setting up of another committee, which would enable the problem of agriculture to be dealt with immediately and not shelved indefinitely. There is one further suggestion which I would make to the Chancellor of the Exchequer. You cannot separate the problem of agriculture from the problem of the Empire. Agricultural Britain, in population and in purchasing power, is a Dominion fully comparable with the greater Dominions and as fully entitled to consideration. I hope that not only the Ministers who deal with industry and commerce, but also the Minister for Agriculture will be represented and personally present at the deliberations at Ottawa.
From that point I proceed to the last issue, namely, that of Imperial Preference. On that, I am glad to be able unreservedly to approve of the statesmanlike line which the Government have taken. I think from the point of view of preparation for the Ottawa Conference they could have done nothing finer than what they have done. No bargaining, no haggling, no standing out for small points could have got them one half of what this generous constructive attitude will win for them. As a matter of fact, I believe that not only as tactics but in principle and on merits this is the right method of procedure. I believe that Preference is something that should be given in some measure or other by each part of the Empire to every other part, simply as a recognition of our common partnership and our common interests. More than that, from the point of view of trade, in as much as our fellow-citizens in the Empire buy, on an average, four times as much from us as the outside world, it is four times as profitable to buy from 315 them as from others, irrespective of whether we get any Preference in return or not. We ought to remember that the first Preference in the Empire was justified on that ground by Sir Wilfrid Laurier and that but for that act of faith on his part we might never have got so far as we have got to-day.
Lastly, there is the point of view which has emerged in recent months, and is not the least important to-day, namely, the point of view of our sterling position. From that point of view, Preference to the Empire is of enormous value in strengthening sterling. The greater part of the Empire to-day is on a sterling basis. The whole of East Africa and West Africa the West Indies, Malaya, Ceylon are all rigidly linked to sterling, -while India, Australia, New Zealand and the Irish Free State have kept their currencies in line with sterling. Therefore as far as those parts of the Empire are concerned, imports from them exercise no weakening effect upon our sterling position. They are no more a disadvantage than are imports from Scotland or Northern Ireland. Even as regards those Dominions, Canada and South Africa, which are still, if not entirely on the gold standard, yet not on sterling, even in their case, because they are better purchasers from this country than the outside world as a whole, purchasing from them would not affect sterling to the same extent as purchasing from foreign countries. Therefore, I believe that in this matter the Government have taken the right course with regard to the Dominions. I think they have equally taken the right course with regard to the Colonies. I would add the hope that where there are Colonies which while not Dominions are still in full control of their own fiscal systems, and where those Colonies have not yet given us a substantial Preference, as some now do, they will lose no time in responding to the action which we have taken in this country.
I have ventured in all sincerity and in all good will towards the Government to voice these criticisms which I think, in the common interest, it is only fair should be voiced by one who has been so long associated with this issue and who in this matter can say—I think with all honesty—that he has never regarded 316 it from the party point of view. If I have taken a very definite line on this issue it is because I have been very definitely convinced of its urgency both nationally and Imperially. Those reasons will, I hope be accepted as my apology for having intruded upon what, to most of us, is a day of rejoicing, with a few critical comments and reflections. After all, the great thing is that we are free from now onwards to shape our national and Imperial economic life as we will that it should be shaped, and as our partners in the Empire will that it should be shaped. Henceforth we shall have the control and management of our own affairs. Henceforth we shall be "masters of our fate and captains of our soul."
§ The SECRETARY of STATE for the HOME DEPARTMENT (Sir Herbert Samuel)
The House will have an opportunity within a few days of discussing fully the departure from the doctrine of collective responsibility which is marked by my appearance at this Box this afternoon, and I do not propose, therefore, to answer the question of the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) with regard to the conditions of that departure. I would only say on that subject, that it was not at the suggestion of my two right hon. colleagues and myself, nor in accordance with any expectation of ours, that this agreement was come to, but it was on the initiative and at the proposal of the Prime Minister and the Lord President of the Council and the other Members of the Cabinet that this arrangement was made. If, to some hon. Members, it seems strange and even unseemly that a Member of the Government should rise to criticise one of the principal Measures of the Administration to which he belongs, let censure fall not upon my head alone but let it be equitably distributed all along this Bench. I trust that the House will grant me their indulgence, for I know that much, though I hope not all, that I shall have to say will be unwelcome to the majority of Members. I shall speak, of course, in no polemical spirit, but I should be doing less than my duty to my colleagues and myself, to the House and to the country, if I failed to state, fully and frankly, the reasons that have led us to dissent from the Measure which has been proposed to-day.
317 6.30 p.m.
The Government went to the country with no definite pledge for or against a tariff. As the Chancellor of the Exchequer said, we undertook to study these matters "with unprejudiced minds," but all of us were under the definite obligation to adopt any method, including, if need be, tariffs, which could be shown to be the necessary and the right way of redressing the unfavourable balance of trade and helping the nation in its present emergency. But, as the Chancellor of the Exchequer said this afternoon, this policy has in view seven purposes of which the redress of the balance of trade is only one. In his lucid and powerful speech he stated the case for a permanent scientific system of Protection. He made at the end of his speech a touching reference to Joseph Chamberlain, his illustrious father—a reference which woke a responsive chord in the hearts of all of us. But when Joseph Chamberlain 30 years ago initiated with so much vigour and enthusiasm his Tariff 'Reform campaign, that was not for the purpose of redressing an adverse balance of trade. The question was never heard of at that time. The right hon. Gentleman the Member for Sparkbrook tells us that for many years he has thrown himself into this struggle as, in his own words, "a mass of glowing enthusiasm," but I do not know that he ever did so in order to redress an adverse balance of trade. Let me say, in passing, that I thought the right hon. Gentleman's acceptance of these proposals was rather too qualified. He has been accustomed for so many years to dying in the last ditch that when, almost in the twinkling of an eye, the last ditch is converted into a triumphal and flower-bedecked highway, he is gratified and modulated, but he continues to vent the protests which have now become quite habitual to him.
I will address myself to this simple question, in the first place: Is the case made out for these proposals on the ground of the necessity of redressing the balance of trade? First, I will take the 10 per cent. all-round tariff. Is that the natural, the necessary means of redressing an adverse balance of trade? If we look at this question from the outside, if we imagine some foreign country which was faced by a serious adverse balance of trade and sought to redress it by reducing its imports, we should be somewhat surprised if we heard that the 318 course proposed by the Government of that country was to put a comparatively low 10 per cent. tariff over the whole range of those imports—not to seek to exclude masses of imports here and there which could be dispensed with, but to levy a tax upon 100 per cent. of imports in the hope or expectation that 5, 6 or 10 per cent. may chance to be excluded.
Unless you exclude these imports, the balance of trade is not affected. Unless you exclude them, nothing is achieved to redress your adverse balance, and how much will be excluded of the commodities that are to be taxed? What proportion? The Chancellor of the Exchequer gave us no figures, but I think he will not quarrel with an estimate that, with regard to foodstuffs, if some 6 per cent. of the articles taxed are shut out, that is the result that is likely to ensue; of raw materials 3 or 4 per cent., of manufactures perhaps 10 per cent. I have not got the figures of the precise amount to which it is suggested the 10 per cent. tariff would apply, excluding the Dominions and Colonies, but it would probably be somewhere in the neighbourhood of £400,000,000 worth of goods, and the exclusion maybe in the neighbourhood of £30,000,000 to £35,000,000. Some 8 per cent. of the whole will be excluded. So far as this 10 per cent. tariff is concerned, if it is to be justified, it can only be justified over the whole field of its operations as to 8 per cent. of that field from the point of view of balance of trade, and 92 per cent. must be justified on grounds of taxation or of Protection. That is entirely different from our Abnormal Importations Act, to which we gave our assent in the exceptional conditions of the time. There you had heavy prohibitive duties deliberately and successfully intended to shut imports out, but this Measure will tax 100 per cent. in order to exclude 8 per cent. That is the first argument I would address to the House.
The second is this: This measure, this 10 per cent. tariff, is not a temporary measure. It is not intended to endure merely for the time of the emergency, and has not been so advocated. The Chancellor of the Exchequer may say that the emergency requires this measure, is an additional reason for it, but he does not say that when the emergency is over this can be repealed. [HON. MEMBERS: "Hear, hear!"] That is 319 agreed to, as I knew it would be. Indeed the fact is obvious that the policy of which it is a part requires that it should be permanent, for upon this 10 per cent. tariff is to be based a series of bargains or arrangements with our Dominions. If the Ottawa Conference succeeds, and if, on the basis of continued exemptions from the 10 per cent. tariff a series of agreements are made with the various parts of the Empire, then we shall not be free later to say that we intend, for reasons of our own, to repeal any of these duties.
Parliament would have the constitutional right, no doubt, to repeal any duty at any time, but having entered into treaties, so to speak, with the Dominions, we could not, without breach of those arrangements, repeal the duties which are now to be imposed. Furthermore, under this 10 per cent. tariff, interests will grow up, and there would be the most vehement protests, as there always are in such cases, against any attempt to repeal it. Therefore, I submit that no Member will rise in the course of our Debates and say that this 10 per cent. tariff is going to be merely temporary and that two, five, or 10 years hence it will be repealed. Although it may be alleged that it arises from, it is not a measure which is limited to, the present emergency or can be based upon the emergency arrangements needed at the present time. The Chancellor of the Exchequer said that we needed, to deal with the balance of trade, some fiscal duties which were—I quote his words—"tentative and flexible," able to be varied as changes of conditions required. That does not apply to the 10 per cent. tariff, and therefore, from that standpoint also, the case in relation to balance of trade has not been made out.
We speak here in broad, general terms. We desire to adopt simple, one may say tidy, measures. An all-round 10 per cent. seems attractive, but let us translate that into the practical terms of everyday commercial life. Raw materials are not exempted under this tariff, except cotton and wool and maybe possibly some others which the Chancellor of the Exchequer did not mention—he mentioned cotton and wool alone—unless they come from the Colonies or the Dominions. The right hon. Gentle- 320 man said nothing as to drawbacks—not one word—in connection with the 10 per cent. duty. His reference to drawbacks related entirely to the surtaxes, and so far as the Committee has been informed, there is no proposal that these raw materials coming from foreign countries, which have paid 10 per cent, in duties, will be the subject of drawbacks if they are used in commodities which are to be re-exported. But even if they were, everyone knows that the system of claiming drawbacks based upon the amount of raw material in any particular article is exceedingly complicated and costly and is very much resented by manufacturers and industrialists, involving the control of officials in many of the details of their daily business.
Of these raw materials that are to be taxed there came into this country for 1930—the figures for last year are not yet available—£250,000,000, of which two-thirds, £160,000,000, came from foreign countries, and with the exception of cotton and wool so far as we know the whole of that £160,000,000 of raw materials of manufacture is to be subjected to a 10 per cent. duty. In addition, in Class III in the Board of Trade returns, which are usually called manufactured articles, but which, in the terms of the publication, are "articles wholly or mainly manufactured," there are a whole range of materials which are in substance raw materials and only technically or statistically are manufactured goods. For instance, copper bars, sheet lead, tin blocks, yarns, leather, oils, steel plates, blooms, bars, and angles. Of these things there are between £100,000,000 and £150,000,000 that come in each year, the great bulk of them from foreign countries. All of these are to be taxed 10 per cent. Is that the way to assist British industry? Is that to be welcomed by our manufacturers? The right hon. Gentleman exempts cotton and wool. If it is right to exempt cotton and wool, presumably for the reason that to tax them would be an interference with our industry and a burden on our manufacturers, why is it wrong to exempt flax, hemp, jute, all of which will be taxed?
§ Sir H. SAMUEL
I do not know if the right hon. Gentleman is intending to exempt iron ore or not, but copper, 321 manganese, tin—these ores are twice as valuable as the amount of iron ore that we import into this country. I have pointed out that two-thirds of our imports in Class II, and much more of a large volume of our imports in Class III, are raw materials which come from foreign countries, and are to be subjected to this tax. Why should the hoot and shoe industry and the leather trades have to pay 10 per cent. on their hides, skins, and leather, half of which comes from foreign countries? Why should the furniture trade and the building trade be taxed 10 per cent. on their timber, 90 per cent. of which comes from foreign countries? The manufacturers of this country, practical business men, who are accustomed week by week, year after year, to purchase these articles in the produce markets will, I think, read with considerable astonishment to-morrow that these commodities are to be taxed 10 per cent.
Our great industrialists complain to this House of the heavy handicap to which they are subjected on account of the conditions in this country compared with those of many of their rivals. They point to our higher wages, to our social services, to the heavy burden of taxation, to the high Bank rate that we have here, and they ask the Government to relieve them so that they can reduce their costs of manufacture and compete more equally in the markets of the world; and the very first measure proposed by the Government is to put a tax of 10 per cent. on the greater part of the raw materials which they use. If it be said that this holds out a prospect that there will be a lower Income Tax, that would be, of course, very welcome. But Income Tax is a tax upon profits which are realised, when there are any, but a tax upon raw materials is a tax upon production, whether there are profits or not, and the effect upon trade is far greater than the actual burden and is not measured by the receipts into the Exchequer.
Every day of the week there are competitions for tenders for foreign contracts in which our industrialists are engaged in a keen international competition. Two or three per cent. added to the price makes the difference between getting or losing the whole order. Put an additional charge of two or three per cent. on the cost of these articles through your tax upon raw materials, and perhaps for the sake of a £1,000 tax received by the 322 Exchequer the manufacturer may lose a contract for £50,000. Repeat that hundreds of times throughout the country, and over the whole range of our industries, and you will get some measure of the injury that is likely to be dealt to British trade from this tax upon raw materials. Hon. Members may say, "Well, let our manufacturers turn to the home markets, which are now to be reserved to them in greater degree," but, if we are to abandon our foreign trade and to say it is of no account that we should maintain and increase the volume of our export trade, how are we to pay for the raw materials of our industries and for all the foodstuffs that are needed? How can we maintain our vast and crowded population on this small island?
There is another aspect of this matter, which I think will be of great interest to many hon. Members, touching a subject to which Parliament of recent, years has given constant and close attention; that is, the housing of the people. There will be a 10 per cent, tax on many of the raw materials of the building industry. We know quite well that the costs of building in this country are far too high. It is not only a question of wages; it is a question of the height, the often artificially raised height, of the cost of builders' materials; there are rings and combinations, and the building trade is only kept to reason by the prospect of the importation of foreign raw materials. To the extent of 10 per cent., the price of bricks, tiles, timber, iron pipes, and everything the price of which is kept down by the possibility of foreign competition, will be raised, and all the efforts made by the Minister of Health to keep down the cost of housing in order to reduce the State subsidies and to provide more and better accommodation for the working-classes, may be undone at a stroke by this tax which is to be levied upon these raw materials of the industry.
Furthermore, this country has long enjoyed a great re-export and transhipment trade. Last year it was of the value of £86,000,000, and in ordinary years it is over £100,000,000. The Port of London, which has increased the volume of its trade by nearly 50 per cent. since the War, does a trade, of £49,000,000 in transhipment and re-export. Southampton does £9,000,000. Less than one-third of this is trade in bond. All this 323 will be hindered and hampered by the necessity of paying this 10 per cent. Customs Duty, and higher duties on many particular articles, as they pass through our ports. Large quantities of articles are imported into this country to go through some finishing processes here and to be re-exported. It will not pay to do that with a 10 per cent. duty, which may or may not be recouped in the way of draw backs. All this trade gives to numbers of our people employment and profit; it is of value to our shipping, docks, warehouses and commission houses, and this 10 per cent, duty will be a grave injury to that branch of our commerce.
I turn to the tax upon foodstuffs. Again we have had no figures. The range which is to be taxed is enormous. Wheat is left out, but it is to be dealt with under the quota. It is true that there will be free imports of wheat at world prices—a very important consideration—but still quota arrangements will involve an increase in the price of the loaf by perhaps one halfpenny on the 41b. loaf.
§ The DEPUTY-CHAIRMAN (Captain Bourne)
I hope that the Committee will permit the Home Secretary to pursue his argument.
§ Sir H. SAMUEL
I did not give way to the hon. and gallant Member because I was about to say that the wheat quota is a matter which will be debated separately on another occasion; it does not arise on this Resolution, and I am not proposing to pursue it, but it has to be taken into account—
§ Sir H. SAMUEL
Yes. Of the flour which is to be taxed 10 per cent., nearly half comes from foreign countries; of rice, two-thirds; and of butter, cheese and eggs, more than one-half comes from foreign countries. Condensed milk, lard, margarine, canned fruit, are to be taxed; fresh and dried fruit also, of which four-fifths comes from foreign 324 countries. These are all new burdens placed directly upon the people. Not only that, but the importation of feeding stuffs far cattle, and poultry, directly affects, of course, the price of human food. Home-grown meat, pig products, milk, butter, poultry and eggs—the price of these grown at home depends very largely upon the cost of feeding stuffs. All feeding stuffs not coming from the Dominions or Colonies are to be taxed 10 per cent. Of all our feeding stuffs, five-sixths of the barley, four-fifths of the oats, and four-fifths of the maize, come from foreign countries. Then there is oil cake for cattle, with regard to which I have not separate figures.
These taxes upon necessaries of life must be fairly and squarely envisaged by the Committee before it gives consent to them. We know how much poverty there is in the country. For years and generations this House, local authorities, trade unions and all kinds of social agencies have been endeavouring to raise the standard of life of the people, and there has been a vast improvement in our lifetime in wages, hours, education, health and social services. But we have in these days a new feature which we had not a generation ago—2,500,000 of working people unemployed, as well as a vast number working short time. Upon this class, this Government has felt itself compelled to impose fresh sacrifices. I was a party to it, but it was with profound reluctance for all of us that we were obliged to cut down the allowances given to this vast number of unemployed, until now a man and wife and three children have to subsist upon 29s. 3d. a week—about 3s. a day for food for five persons. What is the position of that family in relation to this proposal? Its tea is untaxed, its bacon is untaxed, but its sugar is already taxed more than its value, its bread will be raised in price one halfpenny for the 4-lb. loaf under the quota scheme, and now 10 per cent. is to he added to the cost of flour, rice, margarine, condensed milk, tinned salmon and all those things which are the day-to-day food of the working-class people.
It is true that the prices of commodities in recent months have not risen, but that is because the same world causes which, during the last two years, have 325 led to the catastrophic fall in commodity prices, have still been operating; and since Great Britain went off the Gold Standard in September last world prices in terms of gold have fallen 6 per cent. That is why prices have not gone up. Home prices in terms of sterling have risen 8 per cent., and as the Chancellor of the Exchequer said this afternoon, it is almost miraculous that the cost of living has not yet risen in this country, and that is due to stocks which had been accumulated and other causes. How can we be sure that that will long endure, and that at any moment we will not find world prices and sterling prices rising much more and the cost of living going up? With the wheat quota, as world prices rise the additional charge due to the quota diminishes, and the consumer is not affected. I need not go into that as we can debate it on another occasion. With the 10 per cent. tariff, however, as world prices rise the duty rises with it, and the higher the world price the more the 10 per cent. amounts to.
How can these food taxes be justified? Is it on the ground of balance of trade? You are going to tax much more than £100,000,000 worth of foodstuffs to exclude £6,000,000 or £8,000,000 worth. What importance is this small sum in an adverse balance of trade of about £100,000,000, and a total trade in and out of £1,200,000,000? It was anticipated by many that the 10 per cent. tariff would be a tax simply on manufactures, but, even if it were a tax upon manufactures, you ought to exempt all those semi-raw materials such as I have mentioned. If you exclude those, and if you exclude the manufactures already taxed, there is left little more than from £100,000,000 to £110,000,000 of real manufactures, that is, finished articles, not already taxed, which would be the subject of this duty. By taxing them, you might conceivably secure a revenue of £10,000,000 and the exclusion of goods to the extent of £10,000,000. That would be a very small result to achieve. If that were attempted alone, the tax on £100,000,000 worth of finished articles, which is the only field for which some argument might properly be advanced, or might conceivably be advanced with real force in favour of these proposals—if you were to do that, and nothing more, instantly you would have a 326 vehement and not illegitimate protest from British agriculturists, who would complain that if you are putting a 10 per cent. tax on a large range of imports, they must not be omitted from such benefits as might ensue.
These proposals cannot be justified on the grounds of balance of trade. Can they be justified on the grounds of revenue? The point has not been argued. Are they necessary for the purpose of revenue? No doubt £30,000,000 or £40,000,000 coming into the Exchequer would be welcome, but is it needed? The Prime Minister and the Chancellor of the Exchequer have told us that there is to be no deficit this year. We have budgeted for an unemployment of 3,000,000, but, there are 2,500,000 unemployed—that is a formidable figure, but the difference between the two figures means an enormous saving to the Exchequer in the course of the year. There may be items on the other side it is true, but the time has not yet come for the Budget. When it does, let the House consider whether it is necessary to impose all these taxes upon foodstuffs, raw materials and other articles in order to meet the financial exigencies of the State.
I agree that it is most desirable to reduce direct taxation, which is far too heavy, and to strengthen the Sinking Fund. But are these the best taxes to impose for this purpose? The question will have to be considered on its merits. It must not be assumed as a matter of course that these are the right taxes to impose in order to reduce Income Tax and to strengthen the Sinking Fund. There is to be £15,000,000 or £20,000,000 on the materials of industry, and £10,000,000 or £15,000,000 on the food of the people, and let hon. Members not forget that, if these taxes are to be imposed for the direct purpose of lightening the taxation which rests on the well-to-do classes, you will be arousing a most formidable political controversy which it would be wiser not to provoke. Is this 10 per cent. duty upon manufactures likely to be a lever to induce our manufacturers to improve the efficiency of their industry Possibly it may be argued that the Surtaxes and the Committee might effect that, and might use their influence to increase the efficiency of industry, but this 10 per cent. is for everyone unconditionally. It is a 327 mere protection for inefficiency, and gives no stimulus or inducement to the increase of efficiency of our manufacturers. Is it to be advocated as a means of bargaining with foreign countries to secure readjustments of their tariffs? There, again, the other taxes may perhaps be defended on that ground, but this 10 per cent., which is permanent, and which is to be a basis of bargains with the Dominions, cannot be altered in its incidence on foreign countries according ac those countries do or do not give us access to their markets. You cannot go to the Dominions in July and say "If you will give privileges to our produce we will give privileges to yours against foreign countries." And then, when an arrangement of that kind is signed and sealed to cover a period of years, afterwards go to the foreign countries and say: "If you cease to penalise our goods, we will give you privileges under our 10 per cent, tariff." It cannot be done. It would be contrary to the bargain entered into. So far as this part of the proposals is concerned—I am speaking now of the 10 per cent. tariff—it has no connection of any sort or kind with the policy of closing our markets to foreign produce as a means of securing more favourable terms for our products in their markets. On the contrary, it deprives us of a weapon which we might have had; but that shot would have been fired once and for all. The 10 per cent. tariff will have been imposed. It will be permanent. Over that range of our fiscal expedients we shall be unable to exercise any bargaining power with any foreign country.
Is it for the sake of Dominion markets? That remains to be seen, as to what return is to he achieved. If we were to enjoy real Empire Free Trade, free entry for all our manufactures into the markets of the Dominions, then the matter might deserve a fuller consideration. There is not one Member of this Committee who for a moment anticipates that such a policy could conceivably receive the acceptance of the Dominions.
I summarise, therefore, the objections which I submit to the Committee on the 10 per cent. all-round tariff. It is not the right way to deal with questions of the balance of trade; it will exclude an exceedingly small proportion of the goods which it taxes; the balance of trade effect 328 will be merely secondary and incidental, and the protective and taxing effect will be primary and predominant. Secondly, this is not a Measure which is temporary, dealing with the present emergency; it is intended to be, and it will be, of a lasting character. Thirdly, it will tax to the extent of 10 per cent. a greater part of the materials of manufacture and the food of the people. We have to consider whether that is necessary and wise. It is no lever to secure the efficiency of industries, because the privilege of Protection is to be accorded to all alike, without conditions. It is no weapon for bargaining with foreign countries, because it is to be the basis of commercial treaties with the Dominions, which will preclude such concessions.
For these reasons, for my own part, at every stage I expressed my disagreement with these proposals. I know that reports have appeared and statements have been made that I and my colleagues would have been willing to agree to these proposals as a compromise if they had stood alone. There is no truth in that allegation. The reasons which I have submitted have influenced our minds throughout. No one has been under any misapprehension as to the opposition which we should be obliged to offer to these proposals. We were told, "After all, it is only 10 per cent. Why be so recalcitrant Why be so rigid?" But this policy of the 10 per cent, is only a half of the proposals. There is to be set up an advisory committee of between three and six members—and their action must be taken before the Abnormal Importations Act ceases to have effect in May—and that committee in a few weeks is required to survey the whole of British industry. It is free to propose duties upon any article, except those in the Schedule of Exemptions, and duties of any amount; there is no limitation—20, 30, 40 or 50 per cent.; and for any period. It is supposed to examine the conditions of our industries, and to impose restrictions and qualifications in regard to prices, efficiency and so forth. Is that a task which is possible of fulfilment? That committee, in order to avoid obvious inequalities between this trade and that, will have to treat them substantially all alike, and all similar trades coming to them, a few having established their case for Protection, will demand equal 329 rights, and it will be exceedingly difficult to discriminate. The committee, having presented its report, the Government would be quite unwilling to re-open any of those matters for fear of being accused of favouritism between one trade and another. Indeed, the very purpose of the committee is to keep these decisions away from the Government and from the House of Commons. The House of Commons itself, in order to avoid the importunities which would beset it, will be expected to pass and to sanction the whole of those duties in a single Order. Consequently, whatever the three or six gentlemen decide will be accepted by the Government, and by the House, and will be virtually the law of the land.
Can we rely upon them to impose any adequate restrictions with regard either to the efficiency of the industries or to the prices that they are to charge? Where would the consumers come in in all this? There is to be no consumers' council or advisory body which would examine these things from that standpoint. The three or six gentlemen are to represent the interests of the consumers as well. It is sometimes said that, after all, these proposals are nothing more than adopting a policy which is virtually the Free Trade of our neighbour Holland. But Holland is not a manufacturing country. These proposals—[Interruption.] Holland is not a great manufacturing country. Its exports of manufactures in proportion to its population are far less than ours. Apart from that, these proposals are not a simple all-round tariff that might be accepted in Holland or Denmark. These so-called surtaxes will necessarily and intentionally convert this country into a Protectionist country. [HON. MEMBERS: "Hear, hear!"] I am very glad to have evoked those cheers, because that very much clears the situation. We shall be ranging ourselves with the Protectionist countries on the continent of Europe, and it will be time enough—having regard to the standard of living of their people, their accumulated wealth, their exports, their shipping—when we are convinced that their standards are much higher than ours, to accept their systems as better than our own.
I shall be asked, "Yes, but what about the balance of trade?" It is a fact that there is an adverse balance of trade. It cannot be ignored. There is a strain 330 upon sterling due to that adverse balance, but as the Chancellor of the Exchequer said to-day, the whole question is exceedingly complex. For my own part, I regret that the Government did not invite the considered opinions of leading men in our finance and commerce, and our economists, in order to advise upon this question. It would have been better to have had a thoroughly scientific and expert inquiry in so complex a matter. In the strain on the pound, the adverse balance of trade is a factor, but not the predominant factor. The whole effect of these duties that are proposed to-day may possibly, when they are in full working order, affect our trade balance to the extent of £1,000,000 a week, but there are movements of capital of £1,000,000 every day, in and out, and the effect upon sterling of all these trade questions is quite swamped by the movements in and out from one source or another, of capital.
It may be asked what, if nothing were done by the Government to restrict our imports to the extent of possibly £50,000,000 a year, would be the result financially? The result would be, as I am advised, a further reduction of lending abroad. The Chancellor of the Exchequer said that we had a favourable balance of £100,000,000 two years ago. It was lent abroad. This past year there was an unfavourable balance of £100,000,000, or whatever it may be. That means that what we lent two years ago will have been withdrawn. There would also be a contraction in the amount of what is called fluid money in foreign bills; and foreign balances would be reduced. All these would be disadvantageous undoubtedly, but not disastrous. There is nothing catastrophic about them, like the situation in which we found ourselves last summer, with capital withdrawals to the extent of millions of pounds a day flowing out of the country. That was disastrous, and had to be dealt with as a matter of extreme urgency. The problem with which we are dealing now is comparatively minor. It is not denied that the effect of its continuance would be deleterious, but I do deny that it would be likely to have any catastrophic effect upon the value of sterling. Meanwhile, the effect of the depreciation of sterling is gradually showing itself in the direction of stimulating exports in some degree, and of prohibiting imports. The 331 Chancellor of the Exchequer said that the advantage of that was being gradually whittled away, as other countries went off the Gold Standard. It will be remembered that our chief industrial competitors are still on the Gold Standard—France, Germany, Belgium, Italy, Czechoslovakia, and the United States. Those are the countries with which we have chiefly to compete.
It is incumbent upon me before I resume my seat to suggest to the Committee the general lines—and they can only be general—of a policy alternative to that which is proposed by the Chancellor of the Exchequer. If I were making merely a debating speech, I should limit myself to criticism, and not expose what would no doubt be a wider surface to possible hostile attack, but I should be doing less than my duty if I did not make to this Committee the suggestions which I ventured to lay before the Cabinet. It is quite obvious, indeed it is a truism, that nothing can take the place of industrial recovery, that no expedients can be a substitute for the efficiency of our industries. That is a truism, but a truism is none the less true. I think the Government might do much to stimulate industrial recovery, not by beginning at the tariff end and saying, "Here is a tariff which you industrialists may have, what are you going to do in exchange for it?" but proceeding from the other end. I would have a commission, not a tariff commission, but an industrial commission, and I would invite industries to prepare schemes—[Interruption.] Hon. Members do not seem to be aware that many industries have been engaged upon this task—for their own reorganisation and rationalisation and for obtaining such new capital as may be required.
Meantime, while those measures were being put into effect, if they can prove to the Government that for a limited period they need some measure of security I, for my part, should be prepared to consider measures for giving that security; but it would be subject to these four conditions. First, that prices should not be raised above world prices; secondly, that any protection that they might require, whether by licences or quotas, or in any other way, should be for a short period of 332 years; thirdly, that these proposals should be subject to the examination of an advisory commission which would consist largely of representatives of consumers; and, fourthly, that each proposal should have specific Parliamentary sanction. This policy has been adopted by this House in the case of one great industry, the dyestuffs industry. In the debates a year ago I, for my part, opposed the renewal of the Dyestuffs Act on the ground that after 10 years it had done its work, and that the industry ought to be able to run on without such assistance; but that Dyestuffs Act was initiated by a Government of which I had the honour to be a Member. It was endorsed by the authority of Mr. Asquith. When I spoke in the House of Commons a year ago on its renewal I ventured to pay tribute to the work that had been done by those who had built up this great new industry, which had conferred advantages upon the nation and had created a new export trade, and I expressed the opinion that that Act had been justified by its results. But that Act was accompanied by a11 the four conditions that I have mentioned. In the first place, prices were not to be, for any length of time, above world prices; secondly, there was a definite period of years within which the industry was to establish itself; thirdly, there was attached to the mechanism of the Act an advisory committee, representing the cotton trade and other trades which are users of dyestuffs; and, fourthly, the Measure was subject to definite Parliamentary sanction. I do not believe the dyestuffs industry is the only one to which measures of that kind should be applicable, and for my own part I would very gladly concur in a close examination of this aspect of the whole question with a view to promoting, industry by industry, definite industrial recovery which would do much to increase our export trade, to add to employment, and to improve our trade balance.
Secondly, with regard to agriculture: the Government have developed an agricultural policy, which will be laid before the House very shortly, and I cannot forestall what may be said by the Minister of Agriculture; but it is clear that that policy will depend partly upon this 10 per cent. tariff. That, in my view, is futile from the point of view of 333 farmers, and has often been so declared by them, although they would accept it as better than nothing. It is to that extent a bounty upon inaction. Partly, the Government policy will consist of the wheat quota, already announced to the House, but besides that it will be found to contain some bold proposals dealing with some of the chief branches of agriculture, and proceeding on lines which have nothing to do with tariffs, calculated to enlarge the productivity of our soil and thereby to strengthen our balance of trade. For my own part, I am whole-heartedly in agreement with that part of the Government programme, and consider that no more important task could be performed by any National Government than to endeavour, by such positive constructive Measures, to restore the prosperity of agriculture. Similarly with regard to fisheries: there has been a recent inquiry, the report of which will shortly be published which, again, will propose a great number of practical Measures—to which tariffs are only incidental in one case, and might be unnecessary—which will assist the fishing industry.
Next, since I am sketching out an alternative policy which might commend itself to the Committee, I would remind the Committee that the Abnormal Importations Act will lapse in May. It is not possible for any of us to contemplate its sudden and complete cessation, and further temporary legislation—temporary, for a short period—may be required until we see more clearly how the balance of trade position develops; but the purpose of such a Measure would not be taxation, would not be Protection, but would be definitely the exclusion of articles that could be dispensed with on the grounds of balance of trade. Then there is the whole side of our policy which deals with exports, and first Imperial economic co-operation and development. For my own part, I view with misgiving this policy of commercial treaties, with possibly different levels of duties on the commodities of different Dominions according to whether they do or do not accord us preferential access to their markets—different duties on similar commodities coming from Canada or coming from South Africa, from New Zealand or from Ireland, from the Crown Colonies or from India. There is scope for a very large policy of Im- 334 perial co-operation and development, for common action particularly between similar industries in the United Kingdom and in the different Dominions, which could co-operate in ways that have been envisaged by the late Lord Melchett, by Sir Robert Hadfield and many others. There are many minds which are thinking along those lines, and a great Imperial policy of that kind could be devised.
With regard to foreign countries, there is a movement in Europe such as there never has been before, sprung from a bitter experience of the results of the hindering of international trade—a definite movement towards lower tariffs. [HON. MEMBERS: "Since when?"] Within the last few months. [HON. MEMBERS: "Why?"] There are what are called "the Oslo countries," the three Scandinavian countries and Belgium and Holland, which some months ago met at Oslo and made a convention among themselves to hinder any further increase of tariffs. There have been approaches from Germany, and among other Central European countries there is a movement towards reduction of customs duties. Even the House of Representatives of the United States have passed a Bill, though I do not know whether they will proceed to action, declaring the advisability of a reduction of tariffs. I would like to see the present British Government definitely taking a lead in this movement, and if it were found, as it might be found, that a considerable part of the world is now ripe for a movement for tariff reductions I should be not indisposed to consider some combination of those countries with a view to bringing such economic pressure to bear upon the other countries as the necessities of the case may require.
Lastly, the possible expansion of our exports is limited, obviously, by the purchasing capacity of the overseas markets. Here any policy must link up with the large general questions on which the Government are engaged relating to Reparations, War Debts, Disarmament, and particular questions such as the value of silver in China, Et political settlement in India—large questions which must, of course, be dealt with on their own merits, but which have an effect upon the trade situation which, though indirect, is profound and far more important in the 335 long run than any of the other Measures that can be proposed.
Here is a large policy, rejecting all-round tariffs, rejecting the proposal of an advisory committee with its vast powers; a policy approaching industrial recovery not from the tariff end, but from the reconstruction end; a policy such as many of us believe would help to relieve the maladies of a, sick world. Those maladies by common admission are largely due to the spread and growth of tariff barriers hampering the commerce of nations, each country seeking simultaneously to expand its exports and restrict its imports, everyone trying to sell and no one willing to buy. The essence of this alternative is that the policy should be constructive and not restrictive; not imposing hardships on any section of the population, but doing that which is calculated powerfully to strengthen the economic foundations of the nation.
§ Sir ARTHUR STEEL-MAITLAND
I do not propose to discuss the Constitutional question which has been raised by the Home Secretary in speaking in opposition to the policy of the Government, but I think I may say these few words which I believe represent the opinion of a very large number of Members who support the Government. When we heard of this arrangement our first wish was to do nothing to weaken the National Government. We wanted to keep the Government as strong as possible to deal with our internal problems and also to represent this country vis-a-vis foreign countries. But I am bound to say that I think there are few of us, anxious as we are to support the Government, who really expected that the Home Secretary would use the occasion in the manner that he has done. What we did expect was that he would make a free, frank, full statement of his decision. But I think very few of us expected that he would make what constituted an attack on the Government's policy such as would fittingly have come from anyone speaking from the Front Opposition Bench.
May I repeat what was said by my eight hon. Friend the Member for Spark-brook (Mr. Amery)? While all of us who wish to support the Government want to act with all the restraint possible 336 in order to do our duty by the National Government as a whole, we really are entitled to have the assurance for which the right hon. Member for Sparkbrook asked and as to which we have had no answer. We say that once the Home Secretary and his friends have made this protest they should treat this policy as a fait accompli, if it is passed by this House; that they should do their best to make it practically successful, and that neither by act nor suggestion in this House or out of it, should they endeavour afterwards to upset it or to make political capital out of it. That is the least to ask, and the least that the Home Secretary and his friends can properly do. That is the least that is compatible with Cabinet responsibility however flexible you may wish to make it.
I wish also to deal with a few of the points which have been raised by the Home Secretary. At the end of his speech the right hon. Gentleman dealt with his own remedies and the international position, and he said that there was a growing tendency on the part of foreign nations to abate their tariffs and come nearer to the Free Trade system. I put it to the common sense of hon. Members to confirm me when I say that the general tendency on the part of foreign countries, so far as it exists at all, is a growth in the opposite direction. Where there is now any tendency to reduce tariffs it has been because those foreign countries have realised that for the future the fiscal policy of this country is not to be the same as it has been in the past. Surely we can face simple facts and realise that if we continue our policy of free imports and pious exhortations to other countries we shall get no further than the absurdity of the tariff truce, the only result of which was that some other countries raised their tariffs so as to start their negotiations from a higher basis.
The Home Secretary spoke of the result of the 10 per cent. tariff both in regard to the need for revenue and the balancing of trade. He told us that after the statement which had been made by the Chancellor of the Exchequer no case had been made out for an increase in revenue. Even to an outsider who has not read the Cabinet memoranda and conclusions the case seems to be clear. It is quite true that the Chancellor of the Exchequer is getting 337 a large revenue from the Income Tax at an accelerated pace, and we trust that in this way the right hon. Gentleman will be able to balance expenditure and revenue. I would like to point out, however, that you cannot expect to receive two years' revenue in one for a second year. What is helping us through now is the fact that at the beginning of the financial year we collected some of the Income Tax which was due on 1st January, 1931. That money was brought into this financial year, and this year we are accelerating the payment of the Income Tax for 1931–32. Consequently, as regards a great portion of the Income Tax, we are getting two years' revenue in one year, and it is obvious that that cannot occur a second time.
With reference to what the Home Secretary said as to the position of the pound sterling, not only do we want to balance our trade, but we want to make sure that our expenditure and our revenue balance. Unless we obtain extra revenue we shall only be making greater financial difficulties for ourselves in the future, and for that reason I heartily support the proposals of the Government. The criticisms of those proposals made by the Home Secretary in this connection were entirely without foundation. The right hon. Gentleman said that a tariff of 10 per cent. would have very little effect upon the balance of trade. He stated that the whole of those proposals would not affect the trade balance to the extent of more than £1,000,000 per week, and that the movements of sterling are so great that this million a week would practically make no difference. I will examine that statement to see how much there is in it. Firstly, it seems to me to be an unfair criticism of the proposals of the Government entirely to take the 10 per cent. tariff by itself and disregard the additional duties which may hereafter be proposed in their effect upon the trade balance. It is obvious that we must take the two duties together. Secondly, any financial authority in the City will confirm my statement when I say that it is not the trade balance week by week that affects the stability of the pound sterling. What affected the pound sterling last year was something very different from that. It was the trade position which began two or three years previously, and it is a 338 question whether for a long period of time we are making our payments.
The Home Secretary argued that by these proposals we should prejudice our re-export trade, but surely the right hon. Gentleman cannot have heard the speech which his junior colleague made last night, in which he pointed out that the higher duties and the restrictions imposed upon imports had had no mischievous effect upon our re-export trade. If the 50 per cent. duty has had no effect upon that trade how can it be argued that the 10 per cent. duty now suggested will be disastrous? With regard to what the right hon. Gentleman the Member for Darwen (Sir H. Samuel) said about food, I admit at once that part, of the reason why the cost of living has been kept low has been the fall in prices, but the right hon. Gentleman's criticism is unfair in relation to the policy of negotiations with other countries until we have some clearer indication of what the Tariff Commission will do, and also what is going to come out of the Imperial Conference at Ottawa. Until we have had some experience in regard to both those matters it is absurd to talk about the power of our negotiations with other countries being nil. The Home Secretary spoke in feeling terms about the poverty existing in this country, and I cannot help remembering the extravagances and unfairness of the cry which was raised against food taxes. I think that is why we should have some assurance that those who remain in the Cabinet are not going to have the best of both worlds.
For my part, I think the strictures made by the right hon. Gentleman the Member for Darwen on the subject of food taxes are entirely without foundation. I carry my memory back to the period of years before the last great fall in prices began and before the great trade depression started. Largely owing to the conditions of trade a few years ago we then had an unemployment figure running from 1,000,000 to 1,250,000, while other countries were enjoying booming prosperity. If during those bad years we had had a tariff we might have been able to do something to expand our markets and reduce our costs of production. I think that a well devised tariff would have largely reduced that figure, 339 and it would have been a means of helping the unemployed in an infinitely more humane manner than giving them unemployment benefit and refusing to have taxes on articles of food.
Reference has been made to the advantage conferred on this country by the recent devaluation of the pound, but I can hardly imagine how that affords the right hon. Gentleman the Member for Darwen any solace, because it is not only protection but protection in its crudest form. I agree with the Home Secretary when he says that when these tariffs have been imposed they will not be repealed. I sincerely trust that that will be the case, and that there will be no campaign for their repeal from any of those Liberals who support the Government. In other circumstances, I should have liked to have made one or two remarks about the proposals which have been put before the House by the Chancellor of the Exchequer. I look upon the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) as perfectly invaluable on this occasion, for the right hon. Gentleman is always like Oliver Twist asking for more, or like Socrates acting as a gadfly pricking on the Government.
From my point of view, I am extremely glad to welcome the proposals which were made this afternoon. My right hon. Friend said that he would have liked to have had a ready-made tariff imposed and then to correct it afterwards. That is the sort of thought that occurs to any of us private Members who have been thinking and anxious and working for a reform of this kind, but I always feel that it really is impossible for any private Member to be able, in an administrative matter of this kind, really to appreciate the actions and reactions that may be set up by different courses of policy. They can only be properly understood and appreciated by those who have all the resources of Government Departments at their disposal. Therefore, I would say to those friends who, like myself, are anxious for such a reform to be passed in this House, that what we have got is what we really want. We have got a definite renunciation in both principle and practice of the old doctrine of free imports. It has been put before us to-day with clearness and 340 cogency by the Chancellor of the Exchequer; and, realising that the motives of the Government are the same as ours, that their wishes are the same as ours, I, for one, am perfectly prepared to trust them absolutely, with their extra knowledge, as to the best methods for carrying that purpose into effect. I am sure that that is the right thing to do.
I would, however, add this: The position and function and duties which it is proposed to give to the Tariff Commission will make an immense difference. We all of us have our own views as to who should compose it. I have no doubt that there should be a judicial element in it. In a memorandum which I handed to the Lord President of the Council in earlier days in connection with an analogous matter, I said that I wished I could see upon it a first-rate man of business, a first-rate accountant who had expert knowledge and experience of commercial affairs, and also, if possible, a financier who had had to do with the financing of companies. An immense amount will depend on the duties that are assigned to this Commission and on its personnel. There are always dangers in a tariff, just as there are extremely great advantages. The Commission can deal with the matter in such a way as to minimise the dangers and get the fullest benefits of the advantages. Having said that, I think that when the Government, through the Chancellor of the Exchequer, have gone as far as they have gone to-day, we can trust them to go the rest of the way and do the job properly.
I believe I am the only Member of this House who belonged to the fast dwindling group of people who in the early days attended the inaugural meeting at the St. Andrew's Hall in Glasgow at which Mr. Joseph Chamberlain opened his great campaign, and, as a quite young man, I found in him an example of courage and tenacity, and not only a friend but an inspiration. I remember in the very early days, like my right hon. Friend the Member for Sparkbrook, going out and campaigning for his policy, and I remember his saying to me, when I was made Chairman of the Conservative party and the question of Conservative and Liberal Unionists amalgamation was an issue, that he was ready to accept it as I was chairman, because he believed that I would be faithful to the policy for which he 341 had campaigned and had given his life. During the years since then, we have all of us done our best for it, and now at last it is coming to fruition. I can only add my testimony to that of my right hon. Friend the Member for Sparkbrook. I believe that everything that has happened since those days has made the case stronger for it—the changes in industry, the changes in international relations, the changes in the position of the Dominions, the changes in taxation. Now that it is at last coming to fruition, I am delighted that it should be introduced by a man who bears his name, and bears it with such great distinction.
§ Colonel WEDGWOOD
We are reminiscent to-night. I heartily congratulate Birmingham. We have had Edgbaston, Sparkbrook, Erdington, and there is only Moseley remaining—[HON. MEMBERS: "Tamworth!"] Birmingham expanded! There is an old story, from a clerical historian, that the last words of Julian the Apostate were:Thou hast conquered, O Galilean.Now we have:Thou hast conquered, O Birmingham.I only hope you will like your victory. I felt, particularly when listening to the speech of the right hon. Gentleman the Member for Sparkbrook (Mr. Amery), that God was particularly kind to Moses, because He killed him off before he reached the Promised Land, and I am certain that for all great reformers the achievement of their ends may be a little bit disappointing. It is just possible that we may have, in the years to come, jeremiads from the right hon. Gentleman and from the rest of Birmingham because their policy has not exactly worked out as they thought it would. It is possible that Australia may give an example of what we may have to suffer from here, and I do not think that even the right hon. Gentleman is quite satisfied with the way in which high Protection has worked in Australia.
We were told by the right hon. Gentleman the Member for Sparkbrook that this miserable age of Free Trade had come to an end, that for 86 years we had been ruined, that "our thought had been paralysed," and that now a period of free thought had begun. That is indeed satisfactory. If this change is going to 342 open the eyes of hon. and right hon. Gentlemen opposite, possibly we shall make some progress. I presume that even the Home Secretary has not yet quite had his eyes opened sufficiently. He will have noticed, in the first place, that criticism of the Government is all right from behind, and all wrong from in front, and I hope he will carry that lesson to heart. He will notice, also, that even his opponents, as well as his friends, seem to think that it is essential to do something in the nature of Protection in order to balance our trade, and, as long as hon. Members will persist in thinking that trade is not balanced at the present time, we shall have this obscurity of outlook upon our whole trading position. Trade is balanced to-day; it is bound to be. How on earth can we avoid having our trade balanced when we go off gold? Directly you get off gold, trade is exchange of goods. It is said that exports and imports are unequal, but the exports plus invisible exports are now equal to imports. It is absolutely certain that our trade is balanced to-day. Let me read this statement by Professor Arnold Plant, of the London School of Economies, to show that there is no need to put a special tariff on imports in order to balance our trade:The whole problem of adjusting the balance of trade was settled when we went off gold. If we put a tariff on imports now that we were off gold, our imports would merely cost us more, prices in terms of sterling would go up, our incomes would go down, and our export trades would be hit again by the rise of sterling.It could not be put more clearly. That leads me to my next point. Hon. Members who are so anxious to keep imports from coming into this country in order to balance our trade are oblivious of the fact that the fall in the value of sterling has done it already. If our trade does not balance to-day, if we import more than we ought to do, the only possible result will be that the pound sterling will fall further. Just about 100 years ago, everyone in this country was singing a little ditty dealing with the passage of the great Reform Bill. There was some difficulty in getting that great Measure through the House of Lords, and there was a question of making peers in order to get it through. The lines ran somewhat as follows:Thirty peers will carry me;If thirty won't, forty will,For I'm His Majesty's Bustling Bill.343 It is exactly the same with sterling if 30 per cent. depreciation will not balance your trade, 40 per cent. will. The real difficulty is that both the right hon. Gentlemen the Member for Tamworth (Sir A. Steel-Maitland) and the Home Secretary wish the pound to fall no further. They want to balance trade and get the pound up as well, and they cannot see that any rise in the value of the pound will pari passu injure our export trade. A proper unengineered balance of trade, without the interference of Government tariffs, by a drop in the value of the pound, will help our export trade. The real injury that will be done by passing this tariff will not be the sending up of the cost of living, or the raising of indirect taxation, or even the giving of the opportunity to certain interests to line their own pockets. The real injury will be that it will hit our export trades so that we can no longer compete in the neutral markets of the world. We bad a chance when the pound fell. Our exports increased. You are trying to stop that. You are sending up the price of their raw materials, as the Home Secretary has shown, and, far worse, you are balancing trade, not by the pound finding its automatic level, but by stopping imports by a tariff, and therefore increasing the value of sterling and giving to our exports a smaller advantage in the neutral markets of the world. The right hon. Gentleman says that every Free Trader should object to going off gold, but I do not think the Free Trade issue is touched by it. When you go off gold, sterling falls immediately, and it becomes more expensive to buy anything from abroad. Of course, I deplore having to pay more for anything I get from abroad, but I realise that we must buy an amount equal to what we sell, for trade is barter, and I realise that if our imports are going to cost us more, at any rate our exports stand a chance of recovering their position.
One more point. The Chancellor of the Exchequer pointed out that, so far as imports and exports were concerned, we were failing to balance our trade by £2,000,000 a week. That amount is, of course, represented to-day by invisible exports. If we are failing to balance our trade, that means that we are not export- 344 ing enough. He pointed out that our exports had fallen by 38 per cent. over the last two years while our imports had remained the same in volume. It is curious, but really not unrelated, that that fall of 38 per cent. is exactly the same as the fall in the value of sterling. As a matter of fact, of course, the whole depreciation of sterling has in effect been an invisible export. The depreciation of sterling has at a stroke wiped out all that adverse balance which we have been building up in the last few years. Now trade is balanced, and the more you interfere the worse you will make it for our trade.
The Prime Minister the other day, speaking at Seaham, laid down two fundamental principles which should not be affected by a tariff. Of course, both of them have been broken by these proposals. The first was that a tariff must not increase the cost of living. I do not think even the most rabid Protectionist will deny that a 10 per cent. tariff on food must to a certain extent increase the cast of living. The other was that it must not increase the charges on our export trade so as to make it more expensive for us to export. Of course, it has done that, too. You have increased the overhead charges on every industry. As the Home Secretary has rightly said, the Income Tax is a tax on profits, but this is an overhead charge on industry. It adds to the cost of production, makes it more difficult to compete, loses contracts and throws many people out of work.
You have approached the problem from the point of view of the moneylender. I ask you to approach it from the point of view of the money user, the man who borrows money, the man who is a manufacturer, the man who depends on credit. His one chance of increasing his trade is to sell abroad. You offer him, instead, a protected market at home, and a protected market at home will not be able to buy much of his goods when the price of living has gone up. I ask the right hon. Gentleman in charge to observe that when Mr. Keynes, before the great smash, came round to advocating this 10 per cent. tariff all round, which has now been Wowed by the Government, he earmarked the proceeds of that tax as a bonus to the export trade so that it 345 should not suffer. There has not been a word of that to-day. The export trades are left to carry the baby. Imports are protected, raw materials are increased in price, sterling will rise, giving them less of an advantage in foreign markets, and the cost of living will force up wages and the export trades will suffer.
I do not think right hon. Gentlemen opposite really believe that this so-called Trade Bill—I call it the Kill Trade Bill—can really benefit trade. I know that Front Bench well. I looked down it while the right hon. Gentleman the Member for Sparkbrook was making his perfervid oration. I never saw a more unhappy looking group of men. I felt that, whatever the right hon. Gentleman was doing, he was digging his own political grave, because they would never give him a job alter that speech. I think the Front Bench has more sense than to bring this Bill in unless they were forced into doing it. Of course, there is the President of the Board of Trade. I except him, and for paternal reasons I except the Chancellor of the Exchequer, but I doubt if any other Members of the Cabinet are capable of rising and saying they believe this Bill will help the trade of the country.
We have this Measure now—and I hope the promoters of Protection will like it—not because the Government believe that it will improve trade but for two other reasons. In the first place, there is a party in the country, in this House, and above all, in the Press, which would clear them out unless they did something. They cannot stand up to it. They are afraid. A great deal has been said about the poor old Labour party when they were a Government. All along they kept on squandering money, borrowing more and spending it on public works to solve the unemployment problem. They knew it was wrong all the time, but they went on ruining the country until it was too late and thereby they showed moral cowardice. They were urged on all hands, particularly by right hon. Gentlemen in the Liberal party. The more they spent apparently the happier the Liberals became. The Conservatives were as enthusiastic about wasting more money and they thought they were solving the unemployment problem, but it did not seem to work. The country, seeing that these people had ruined it, turned them 346 out. Now this Government is doing exactly the same. They know perfectly well what is right but they are afraid. Driven on by Beaverbrook and Company they have taken a further step along the road to ruin, but it is the country's ruin first and only their own ruin afterwards.
There is a certain degree, if not of pleasure at least of educational interest, in the career and fate of another great Coalition Government. When the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) led the conquering party—I think there were about 50 Labour people—he could do exactly what he liked. It was the most popular administration on earth. In four years it became the most despised administration and English history will judge it as one of the biggest failures that our politics have known. I am not certain that this Administration is not qualifying for the same judgment of history, perhaps worse, because they have had more opportunities and they have surrendered earlier to ignorant followers.
But there is another reason, It is not merely the fear of Beaverbrook that has driven the Government into doing what they know to be wrong. There is also the very urgent question of cutting down wages. We heard in almost complaining tones from the Chancellor of the Exchequer that, in spite of coming off gold, living had not got any dearer, in fact it was six points cheaper than in January last year. It had been hoped that, when we went off gold, the cost of living would rise and the workers would find their wages cut without knowing it, and it has not come off. The cost of living has not gone up, wages have not been reduced, and the only way to send up the cost of living is by a tariff. But that is not all. One of the saddest things in modern times is the way in which the rich have been penalised by heavy taxation. The noble fellows have taken it like heroes but they have had to pay—Super-tax, Death Duties, additional taxation in every direction. These direct taxes have become intolerable, and it was absolutely essential to shift the burden of taxation and raise more indirectly and less directly.
Of course, the real argument behind this 10 per cent. tariff on all imports is that, when you raise the money, you will 347 be able to remit it on general taxation. You will be able to pluck the goose with the least squawking and at the same time reduce Death Duties, Super-tax and Income Tax and restore that balance between indirect and direct taxation which is so dear to the heart of orthodox financiers. The people of this country can be fooled for the moment, but you cannot fool all the people all the time, and, when they see the result of this tariff and the injury to our export trade—the potting trade will suffer and do not you forget it—more unemployment in Hanley—when they see the cost of living going up, when they see that all those beautiful tales they were told about how England would blossom like a rose if only you stopped goods coming in from abroad are untrue, they will cease to be fooled and take their revenge. It may take some time. It may take many years to get rid of the Government, but, when the time comes for the people of the country to go to the poll, I think they will say something pretty definite about a Government pledged to work in the national interest working instead in the interest of a few protected manufacturers, working at the bidding of Lord Beaverbrook and the Press lords, who knew what was right and did what was wrong.
§ Mr. RAMSDEN
As one who has been for a very long time interested in tariffs, I am quite in accord with the announcement that has been made by the Chancellor of the Exchequer. I feel that those who are engaged in industry can now see an opportunity, not only of extending the sale of their products in this country, but also, during the new fiscal era which is about to begin, of extending the sale of our goods in foreign countries. I understand that in so far as the industries are concerned which are now subject to a duty under the Abnormal Importations Act they are to receive the benefit of the 50 per cent. duty but not the 10 per cent. all-round rate of tariff which has been announced to-day. It is of the greatest importance that this 50 per cent. which they now receive shall be continued until the Tariff Committee or Commission, which I understand is to be appointed immediately, gives its verdict and announces what the ultimate rate of duty is going to be, particularly in so far as the industry that I am thinking of, the textile industry, is concerned. There is in the 348 wool, and I believe also in the cotton textile industry, to-day a feeling of uncertainty as to the future. The talk that we have heard during the past week or two about a 10 per cent. rate of duty has led a certain number of people to believe that ultimately a low rate of duty in the neighbourhood of 10 per cent. would be imposed upon the products of the wool textile industry. Such a rate of duty would be quite useless. The other day I saw a cloth that was being offered in the City of London by an Italian firm—a light-weight Worsted cloth of the type that can be made in the city of Bradford. This cloth was being offered at 3s. 9d. per yard. In order to test the cost of production in this country, I asked a well-known manufacturer, upon whose figures I could rely, if he could supply me with similar cloth manufactured in this country. He got out figures which showed that the cost of labour and material alone came to something like 4s. 8½d. a yard. In addition to that, of course, there are the many other charges which have to be borne in the way of discount, agents' commission, cartage and other expenses which all go to make up the overhead cost. Against such competition a low rate would have no effect. This is not the only kind of cloth that is being sent by the foreigner to-day at prices which are very much below the cost at which similar goods can be produced in this country. Consequently it is necessary when we have a tariff that it shall be at a sufficiently high rate to cover the difference between production costs here and production costs in some foreign country.
There are a number of foreign manufacturers, German and others, who have been contemplating starting the manufacture in this country of goods that they formerly made in their own country and sold here, but until they knew exactly what is going to happen and what is going to be the rate of duty, they are not prepared to come to a decision. That is really one of the grave difficulties at the present moment. The lack of certainty and knowledge as to what is going to happen in the future with regard to the exact rate of duty to be applied will be detrimental to the interests of the wool textile industry and, I can imagine, detrimental to the interests of other industries situated in exactly the 349 same position. It is certainly most important that the duties in existence shall be continued until the Tariff Commission has had an opportunity of reporting. It is also of the greatest importance to the industry and consequently to employment in the country that the Tariff Commission shall commence its sittings and give its decision at the earliest possible moment. I hope that when the Commission is appointed the terms of reference will be of the simplest possible nature.
I remember the inquiries that were held not only into the wool textile industry but into other industries under the procedure established under the Safeguarding of Industries Act. Those inquiries were unnecessarily prolonged. The proceedings at, the first inquiry were in fact so long drawn out and so expensive that the manufacturers hesitated to recommence on the second occasion. The proceedings were extremly harmful to the industry for many reasons, and information was given to the foreigner which was undoubtedly of great value to him. That is why I hope that the procedure to be followed by the new Commission will be of the simplest character. I hope that we shall eliminate any tests such as those with regard to the importance of the industry and considerations of a similar character which were included under the procedure relating to Safeguarding. The main test appears to me to be whether the goods concerned can be produced in this country, whether the cost of production in foreign countries is lower than it is here, and the fact that we are as competent and as capable of making them as the foreigner. I do not think that the tribunal should have very great difficulty in arriving at a decision with regard to most industries to-day. The facts are so evident. The differences in cost of production here and the cost of production abroad are so plain to see that they should be able to deal with the matter speedily.
There is one other matter to which I should like to refer, and it concerns the speech of the Home Secretary. He referred to the fact that certain foreign countries had been suggesting that the moment had now arrived when all nations ought to reduce their tariffs and make it easier for one nation to sell goods to 350 another. That certainly is an extremely desirable state of affairs which, I think, all of us, whatever may be our fiscal label, would like to see. I am very strongly of the opinion that we have taken a step to-day which is going to bring about the very state of affairs which the Home Secretary suggested would be prevented by the imposition of tariffs. I do not think, if one looks at it from a practical point of view, that there can be any doubt that the foreigner is now much more prepared to discuss the reduction of tariffs than he has been for some considerable time. The reason for that is simple. One has not to go far to find it. The reason why the foreigner is to-day in a much more amenable mood with regard to tariffs is simply because he understands the changed opinion in Great Britain with regard to this question. He recognises that we are no longer going to continue a fiscal system which gave so many advantages to him. Now the foreigner appreciates, as I am sure he must after the speech of the Chancellor of the Exchequer to-day, that we are going, first of all, to try to arrange matters so that we can give the first benefit in selling to the home producer, and secondly, that we are no longer going to give advantages in the way of sales, in the best market in the whole world, to those countries which refuse to accept our goods. There is a very good reason for the belief that the foreigner will be more reasonable. I am sure that now that the Government have power to impose tariffs they will be prepared to reduce their tariffs and make it easier for us to sell our manufactured goods. We have now something to bargain with.
I have had a considerable experience in doing business with foreign countries, and I know that it is useless to negotiate with the foreigner, whatever the business view may be, unless one has something in one's hands with which to bargain. In the past we have been exactly in the position of a one-armed man trying to fight someone with both arms free to use. At last, having a tariff of our own we shall be able to meet the foreigner on equal terms. I believe that by negotiation we shall be able to obtain advantages in the way of reduced tariffs which will help us to sell not only textile 351 goods but many other manufactures on a larger scale in markets that have been closed to us in the past.
There is certainly going to be very great advantage to be derived from the fact that we have a flexible tariff which will be adjusted in accordance with the treatment that we receive from the foreigner. That is one of the most helpful features of the policy announced by the Chancellor of the Exchequer. I am of the opinion that within the next year or so we shall see definite reductions given to us by various countries because they will want to retain as far as they can the opportunity of selling their goods in the British market. Like many others, although I am a supporter of tariffs, I admit quite willingly that the ideal would be universal Free Trade. I feel, however, that by the step we have taken to-day we have done something which will, not perhaps within the next generation, bring about that complete freedom of trade which we would all like, but which will nevertheless help to carry us along in the right direction and make international trade easier than it has been for some time past.
§ 8.30 p.m.
§ Mr. T. GRIFFITHS
I have sat here for four and a-half hours, and I listened very carefully to the speech of the Chancellor of the Exchequer. It was a lucid speech and one that we could understand. He declared definitely that the fiscal policy of this country, which has been in existence for something like 85 years, will be changed and become a protective policy in the future. The Home Secretary, in a very good debating speech, shattered every argument that the Chancellor of the Exchequer put forward in favour of his protective policy. This is not the first time that we have had things of this sort taking place in the House of Commons and the country. The right hon. Member for Tamworth (Sir A. Steel-Maitland) said that he began the tariff campaign with the late Mr. J. Chamberlain at St. Andrews Hall, Glasgow. I believe it was in the year 1903 that the campaign was started by Mr. Joseph Chamberlain. After speaking in Glasgow Mr. Chamberlain came to South Wales and spoke at Cardiff. I remember well his speech. He referred to the tinplate 352 trade in South Wales. If hon. Members will look up the speech they will see that what I am saying is true. He said something like this: "Pearl buttons have gone, hooks and eyes have gone, pins have gone, and your tinplate trade is going." That was 29 years ago. What has been the result? In 1929 the tinplate trade was going on better than ever. In that year we had the biggest production of tinplate in the history of this trade.
The Home Secretary said that the Chancellor of the Exchequer was beginning at the wrong side. It is not only the Chancellor of the Exchequer but the Home Secretary also who is beginning at the wrong side. There is only one constructive policy that is before the country in order to deal with the iron and steel industry, and that is the policy which has been submitted by my society, the Iron and Steel Trades Confederation. Free Trade is not going to settle it, and Tariff Reform is not going to settle it. My society's policy is the only policy that will settle it. Let me give one or two illustrations outside Free Trade or Protection to show the burden on the steel industry. It is said that it takes at least four tons of coal in order to produce a ton of steel; some say that the amount of coal required is 3½ tons. According to the returns of the Miners' Federation ascertainment for the last quarter in South Wales, they paid in mining royalties alone Is. on each ton of coal. Therefore, you have royalties of 4s. imposed as a burden on the manufacture of each ton of steel. Other raw materials, iron ore, manganese, limestone, and sand have to pay a royalty. To put it moderately, in the production of each ton of steel there has to be paid in royalties and wayleaves something like 8s. I hope that the Financial Secretary to the Treasury will take note of these facts, because they are important. They are known not only to the employers but to the workmen. We know of these burdens, just as well as Lord Beaverbrook and others who have been advocating tariffs. Under the Railway Act of 1921 the railway companies were given statutory permission to impose a charge of 1s. per ton on the raw material they carried from one part of the country to another. There are hon. Members in the House who know that what I am saying is true because they have been engaged in making steel all their life. It takes seven tons of raw 353 material, of scrap, pig iron, iron ore, manganese, limestone and sand, to produce a ton of steel. You have there another 7s. per ton imposed as a burden on the production of steel, and if you add the 8s. royalty to that amount it makes a burden of 15s. per ton on steel. The cost of wages in producing a ton of Bessemer steel is 10s. per ton, therefore, hon. Members who are engaged in the production of steel have to pay 5s. per ton more in royalties and railway freights than they pay to their workmen to produce the steel. These are the things which the Government should tackle, but in doing so they would offend their friends, the landholders, who take all this money out of the industries of the country.
The suggestion is that a 10 per cent. revenue tariff, not a protective tariff, should be imposed on all raw material coming into the country. The Chancellor of the Exchequer did not say whether raw material is to include iron ore and steel bars, but let us assume that the 10 per cent. is to be placed on tinplate bars imported from Belgium and France into South Wales. The selling price of tinplate bars is £3 per ton delivered at Newport or Cardiff or Swansea. The Government are going to impose a 10 per cent. tariff on that £3, which will bring the amount up to £3 6s. I have here the audited returns for the tinplate trade in South Wales up to the end of December. Our men work under a sliding scale. The ascertained price of steel, on which the men are paid their wages, works out at £4 6s. per ton. You put a 10 per cent. tariff on the £3 which you have to pay for foreign bars and then the foreigner has the advantage of £1 over the steel worker in South Wales. That 10 per cent. will not help the steel trade in any way, and the proposal, therefore, is simply toying with the question. If the Government desire to assist the tinplate trade in South Wales, which they declare is their intention, then they will have to put on a tariff of 99 per cent. or they will not keep out a single bar at the docks at Cardiff, Newport or Swansea.
I want to come now to another proposal which has been submitted by what is called the independent tinplate manufacturers in South Wales. There is a 354 proposal from the British Federation of Industries that the Government must give them a tariff, and there is a proposal from the iron and steel manufacturers that they must have a tariff. But these independent tinplate manufacturers say that the Government must not give the steel manufacturers a tariff because it will injure their trade in producing tinplates for export purposes. The suggestion is that if the Government want the industry to be able to compete with Belgium and France in the manufacture of steel they should compel the workers in South Wales to work the whole of the week-end in order to produce steel as cheaply as it is produced on the Continent. In South Wales for the last 30 years, through our Conciliation Board, we have fixed the finishing time on Saturday at 1 and 2 o'clock and the starting time after midnight on Sunday, and I warn the Government that if the Advisory Committee which they are to appoint is going to make any recommendation that our people should work over the week-end and all the hours God has given in order to assist the steel manufacturers in South Wales to produce steel as cheaply as they do on the Continent, they are in for the fight of their lives, because the steel workers will never submit to it.
These independent tinplate people say, "Why is it that the steel makers of this country do not produce Bessemer steel in the same way as it is produced on the Continent?" I would tell the Parliamentary Secretary that if he will come down with me to Ebbw Vale, where all the steel works are idle, I will show him a works with its own blast furnaces, its own Bessemer shop and everything necessary to produce finished steel at the rate of one ton per minute. In South Wales to-day we can produce sufficient steel to take the place of every ton of steel that is being imported. One of these independent men, Mr. Spence Thomas, who is connected with Blenavon, if he simply walked up the hill could see works, could see 5,000 men idle, men who could produce Bessemer steel as good as and better than that produced on the Continent. Our proposal is that a board should be wt up, that we should get the iron and steel industry worked as a public utility organisation, and that the board should have the power to buy the raw material. 355 There are in South Wales 16 steel works, some of them working two furnaces out of eight, some of them working one out of four. Immediately the Government put on this 10 per cent. duty those 16 works will be competing against each other for the raw material, and after they have manufactured the steel they will be competing against each other to sell it.
If there were organisations on the lines of the proposal of the Confederation, so far as South Wales is concerned these people would not have the opportunity of competing against each other. Instead, there would be one body of men buying the raw material and one body of men selling the finished article instead of engaging in cut-throat competition. The Government are going to negotiate with foreign countries, but I would much prefer to see the establishment of this board for the purposes named and for fixing prices. If the Government would help to that end they would be moving on the right lines. What we are aiming at is the socialisation of the whole industry. That is our first step. Hon. Members opposite may be frightened by it, but will be the only salvation of the country, whereas the proposal of the Chancellor of the Exchequer will cripple every industry in the country. I want the Government to consider our proposals still further. Lord Snowden himself said that Protection meant an indirect reduction in the wages of the workers. I agree. The Government proposal will be an indirect reduction of wages, it will increase the price of the necessities of life, and the country will be in a far worse position after accepting this 10 per cent. than it is now.
§ Mr. MACMILLAN
By a happy coincidence a few days ago we celebrated the centenary of Lewis Carroll. I do not suppose that even the genial author of "Alice in Wonderland" could have produced a situation as fantastic as that which the House has enjoyed this afternoon. The major point of Government policy has been put forward in a speech of remarkable lucidity and power by the Chancellor of the Exchequer, and that speech was followed by an equally powerful attack upon it from the Home Secretary. The Home Secretary's speech was one of the best examples of the presentation of the classic Free Trade case that 356 it was possible to make, and I think he had the sympathy of the House in the very difficult task that lay before him. It would have been difficult indeed to have put the old Free Trade case more powerfully from a Free Trade point of view. If I may comment on what seemed to me the weakness of it, it was that the right hon. Gentleman gave no consideration to the change in world conditions since the time when he was accustomed to deliver the speeches that belong to the older controversy, the time when Mr. Joseph Chamberlain was pursued from town to town by Mr. Asquith, and when the whole basis of the controversy depended upon the then economic organisation of the world. The whole of that has gone in recent times, and particularly since the War.
The Home Secretary took no notice of the growth of economic nationalism. Whereas before the War the world might, roughly, be said to have been organised upon a complementary basis, to-day the nations are organised on a competitive basis. Great industries have grown up in countries which used to be our customers. The interruption of the organisation of industry which has followed has put an entirely new aspect upon all these arguments, and the discussions of Free Trade or Protection seem to many of us no longer applicable to the circumstances of the case. The speech of the Chancellor of the Exchequer was one which every Member of the House felt to be worthy of a great and historic occasion. As the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) said, it marked the end of a definite period in national policy. For 90 years, since the repeal of the Corn Laws, the national economic policy has been directed into one channel. Whether rightly or wrongly, what was done in 1846 brought with it grave hardships and great difficulties. Then, we decided to sacrifice everything to the rapid development of an industrial society, without regard to the balance between rural and industrial life. I think that all of us, Conservatives, Liberals and Socialists, admit that the weakness and the mistake of that policy were that it was carried through without any conception or plan as to its effect upon the national life. The rural community were drafted into the towns; the slums were allowed to grow; industries were allowed 357 to develop without regard to their position in a national plan. Half the troubles from which we have since suffered have been due to the haphazard and unplanned way in which our economic life developed during those years.
If Free Trade, in its strict aspect, has gone as from to-day, so has laissez faire; and those who clamour so hard for Protection, the industrial leaders of this country, must recognise, that if they are to have the advantages of Protection, great duties and responsibilities are placed upon them. The great crisis in which, as a nation, we still find ourselves, has been revealed by many symptoms and calls for a variety of cures. There has been the loss of our foreign markets, the failure of Empire markets to expand, the rise of unemployment, the heavy social costs of maintaining our people, the impoverishment of debtor countries, followed by the forced dumping sometimes at bankrupt prices upon the home market, and, following from that, an unbalanced Budget, and, last of all, the lack of balance in our trade. This crisis is not sudden. It has come slowly, for over 10 years; many people have given warnings of its approach, and I think all of us, of all parties, are to some extent to blame that we have neglected those warnings. But just as the crisis is not sudden, so its solution cannot be simple and, while I for one heartily support the proposals of the Government for dealing with the question which mainly concerns us now, I think the House of Commons will recognise that those proposals cannot in their present form be considered as more than emergency proposals.
All the questions which have been before the House of Commons in recent weeks are important but none of them taken singly will give us the cure. We have balanced the Budget. As the Chancellor of the Exchequer told us to-day great efforts by the taxpayers have helped to do that. But I think that many of us have had the experience that all that has really happened as a result of this wonderful paying-up of Income Tax has been that what was borrowed by the Government in previous years is now borrowed by the taxpayer. The overdraft has been transferred from the Treasury to the unfortunate individual. The balancing of the Budget, in so far as it 358 has been brought about by economies, only means, as we were reminded by an hon. Member on this side, a, further deflationary result and a shrinkage in purchasing power in the home markets pro tanto. So that, necessary as it is, the mere balancing of the Budget is no real cure for our difficulty.
Then there is the question of war debts and reparations. While we all want to see a settlement of the debts and reparations question let us remember this fact. Whereas certain countries would, if that question were settled tomorrow as we would like it to be settled, come out with no burden of internal debt, with reconstructed industries, with an enormous rationalised industry carrying very small capital costs, we, unless we take measures very rapidly, would come out with our industries—not through their own fault but through the pressure of that very debt which other countries have escaped—still not organised and not equipped as we should like them to be. We should come out with our industries bearing heavy capital charges for plant constructed during the War when money was borrowed at high rates of interest. We should come out with all those disadvantages. Do not let anybody think that the mere settlement of the debts and reparations question is going to get over the fundamental difficulties which confront us.
There is also the question of gold hoarding and the difficulty of working a gold system. That is not in our power to control. But I think we do not fully recognise that whereas the working of the gold standard system was comparatively easy in the nineteenth century, when the opportunities for the export of capital or capital goods to new and growing areas of the world were so enormous, it is different in the twentieth century when we have much more restricted areas of that kind. There is much less opportunity now for the export of capital and capital goods, and in some of the most hopeful areas like China and India there are grave internal difficulties which restrict development. We cannot altogether blame countries like America and France for having brought that disaster upon us—at any rate we cannot cure it.
Finally, when we come to the balance of trade, the correction of which I under- 359 stand is to be the main purpose of the forthcoming Measure, do not let us think that the mere correction of the balance of trade is going to be the solution of the problem. The balance of trade, can be corrected at a high or at a low level. The whole question is at what level. If you were only anxious to protect sterling, if you were only anxious, when on gold, to protect gold, then, of course, it would not matter at what level you arranged the balance so long as it was balanced. But if you want to deal with questions of opportunities for employment and the lives of your people, then it is very important. As was well said in an article in the "Times" the other day the important thing is to balance trade on an increased scale, to balance it at the highest possible point, and to concentrate far more on an increase of the exporting power of this country than on the mere restriction—necessary though it is for the moment—of imports into this country. When we recognise that every restriction upon imports into this country pro tanto reduces the buying power of our chief customers, we must recognise again that this principle of the balance of trade is an emergency measure. It is an ambulance measure to deal with the disaster in which we found ourselves last August and from which we are still suffering. But we need more careful and calculated methods if we are to effect a real cure.
We have asked for a doctor's not a surgeon's mandate, and I think that we might well consider some of the proposals which I was sorry were not much more fully developed and which the Home Secretary put forward in the latter part of his speech. If the right hon. Gentleman had devoted himself less to the mere presentation of the old Free Trade case, which he put in the first and main part of his speech and had developed a little more closely some of the proposals, which interested me very much, in the latter part of his speech there might have been a combination of a policy of Protection and shall I say of reorganisation—for that was what he pleaded for—which may be the true line and which I believe to be the real line upon which the Government intend to advance. We must have a policy of Protection. We must have Protection at once, as soon as it can be 360 arranged. We must have it, because some of the main industries of the country are dying without it. But the conditions under which it comes, the method by which it is brought into being, on that depends whether Protection will be a failure or a success.
When you come to the real question that divides us, the thing that alarms both Protectionists and Free Traders is, Is it possible to have a protective system without inflicting any injury upon the rest of the trades, particularly the exporting trades? And when you come down to the main question about which industrialists are debating, you come really to the question of iron and steel. That problem has been very much debated in this House, but there are one or two general observations which I think it fair to make about it. In the first place, the importance of the industry cannot be exaggerated, from the point of view of the employment that it gives in other industries, its horizontal effect on coal, coke, iron ore, limestone, and railway traffic. Even in the very depressed conditions of 1930 that industry used 20,000,000 tons of coal, 16,000,000 tons of coke ore and 5,000,000 tons of limestone and other materials.
Then consider its importance from another point of view. We are as a nation almost entirely dependent on imports for food and raw materials. We pay for those imports by our exports of manufactured goods, but the fundamental raw material for the export of almost every form of manufactured goods is iron and steel, and it is not possible for those exports to continue if the iron and steel trade is to be allowed to fall into decay. The consumers of the industry, of course, need to be protected. The President of the Board of Trade put the case rather too high, I thought, when he was speaking on this matter the other day. It is very easy to point to the very large numbers of people employed in the trades mainly dependent on iron and steel which use it as their raw material, but one must also point out that, obviously, the farther away, the greater the process of manufacture and the greater the amount of work done on the raw material, the less important does that factor become. It is not so important in bridge-building and in structural engineering as it is in shipbuilding, and it is less important still in 361 the motor car trade, while in the highly developed engineering trades it is much less important still.
I am engaged in a form of engineering in which we make a very high-class machine, which is sold at from £1,200 or £1,500, having in it perhaps half a ton of steel. It would not affect that industry if the price of steel did rise, but in the consuming industries where the cost of iron and steel is a very high proportion of the total cost, it is another matter. Remember, the chief consumer of imported iron and steel is the iron and steel trade itself. Of the total imports into this country in 1930 of very nearly 3,000,000 tons, 1,500,000 tons of pig iron, crude and semi-finished steel were bought by the industry for re-rolling and re-selling and exporting in other forms. Therefore, half the total imports were imports of the industry itself.
Most of those imports in the shape of billets and bars were made into galvanised sheets, sheets used in the tinplate trade, and so on, and it is important to remember that 75 per cent. of the products of that trade are exported, that the tinplate and galvanised sheet trade accounts for nearly 1,000,000 tons out of a, total export of 3,000,000, and that it represents £16,000,000 value out of a total iron and steel export of £51,000,000. Therefore, it is not a trade to be lightly injured, and when we remember that to-day the re-rolling trade is importing billets and bars at roughly £4 a ton and re-exporting them at £8 or £9 a ton, it will be seen that on the mere question of the balance of trade it is very important not to interfere with that trade.
The problem is, Can the home trade be so organised under a protective system as to be able to produce internally at a price commensurate with the foreign price? Can it be so organised as to produce what is necessary for this very important export trade at a price which will allow it to continue to flourish? I It seems to me that we are in danger of falling into a futile argument between two points of view. One side says, "Give us Protection, and we will rationalise and modernise our industry." The other side says, "We will not give you Protection until you do modernise and rationalise your industry." Surely it is not impossible to bring about these two desirable ends together. They 362 cannot be synchronised in point of time, I admit. To make the best reorganisation of the industry, even for the use of existing plant, would take a year perhaps or would be at least a matter of months; to rebuild the new plant that is required for real modernisation of the industry would be a matter of years. But if they cannot be synchronised in point of time, they can be synchronised in point of determination, and the Government can help in the organisation of the system by which these two desirable things can be brought about together.
The industry itself is willing. Great progress has already been made in the regional amalgamation which is generally considered to be necessary for the future organisation of this trade. The firms of Dorman Long and Bolckow Vaughan on the North-East Coast, the foundation of the Lancashire Steel Corporation, amalgamating the Wigan, Pearson Knowles, and Partington companies, the Guest Keen Baldwin combine in South Wales, and the Scottish group, Colvilles, Dunlop, Beardmore—all these are signs that this trade is moving rapidly in the direction of regional amalgamation. They have in recent years, by the organisation of the British Steel Export Association, made one of the most remarkable co-operative advances towards the development of the export trade that has ever been made in this country, and when you think that we have increased the proportion of our share of Canada's imports of heavy structural steel in three years from 3 per cent. to 25 per cent., it throws the greatest credit on those who have been able to make that co-operative organisation of their selling machinery.
But there are many grave questions as to the future organisation of this trade which cannot be settled in this House. There are the technical questions. There are 65 blast furnaces in blast to day, and 290 which are out of work. How many people could say how many of these ought ever to be relit, what size the furnaces should be, the capacity, whether of 3,000 tons, 5,000 tons, or 10,000 tons, where they should be placed; where the pig-iron is to be produced in relation to steel; and whether the plant should be adjacent to the coal or the ore? An hon. Member 'has referred to Bessemer steel. Should Bessemer steel be pro- 363 duced at all, or should the open-hearth process be entirely used? All these are technical questions of very great importance, but they can only be answered by an authority which will take these questions into account in dealing with the really important part of the Government's proposals, namely, the final tariff which will be set up by the Tariff Commission. I put these matters forward in a pure spirit of trying to be of some assistance to the Government.
The whole question whether this change of fiscal policy comes about successfully or unsuccessfully depends upon the personnel of and the terms of reference to the Tariff Commission. They are the people who have to do this jub. In an industry like the steel industry, if the Commission is to be of a purely judicial character with no power of suggestion of its own and no authority of itself to come to anything but a mere decision for or against tariffs, Protection will fail. But if it can be given advisory powers and can be, as the Home Secretary suggested at the end of his speech, turned into a kind of real development commission, and if it has the authority, by a series of sub-committees dealing with different trades, to be a help from every point of view towards the reorganisation and the re-direction of industry, both upon the technical and the financial side, then we shall have a Commission through which we shall be able to bring about these two desirable ends—a protected market and a reorganised industry—within a reasonable space of time. The problem of the gap remains. A bounty on exports, a system of rebates, such as exists between steelmakers and shipbuilders, might be used to bridge the gap.
The Commission must arrange some system to get over the difficulty of the increase of price until the new modern organised industry is prepared to go ahead at full blast; but I cannot believe that this country is not capable of running what is, after all, as well organised a steel industry as any other. I cannot believe that we have not the sense now to have the machinery necessary to bring that about. The difficulties are enormous, the industry is almost at 'a point of bankruptcy in many respects. The financial complications are great, but the Tariff Commission should be developed into something more than a merely judicial 364 body following the rather unsatisfactory system of the Safeguarding Duties inquiries, with long debates by counsel, and both sides trying, not to make the industry a success, but to score off their opponents. If it can be far more on the lines of a real development Commission, directing and planning the growth of our economic life, realising that there are some of the basic industries which by their nature cannot hope to play the same part as they did in the past, and perhaps must be smaller in their employing capacity and directed towards different markets; if, by helping industries so to organise themselves that they are able to speak with one voice, then they have, think, a hope of doing the two things upon which the whole future of this country depends within the organisation of the modern capitalist system and the development of an Imperial economic unit. The Tariff Commission can help to produce the first. If our Ministers can go to Ottawa with industries so organised that they can speak as industries and not as individuals, they can make a start with the second. There is no alternative but Communism or a properly organised capitalism.
We shall long remember the wonderful scene in the House of Commons of those enthusiasts who had long worked for this cause and their emotion at seeing the apparent triumph of their policy. I prefer to think of this, not as a victory of Protection as against Free Trade, not as a victory of one party as against another. Some of us who have not been engaged in the older conflicts will not think of it in those terms. I think that it may be made a victory for real common sense and for a common effort—a system of creative Protection bringing into being all the best elements of all parties and allowing them each to give a real contribution towards the development of a truly constructive policy.
§ Mr. McGOVERN
I have listened to-day to various points of view in connection with this controversy of Tariff Reform and Free Trade. The picture has been painted for a number of days, and the scene has been set by public pronouncements and by the Press in preparation for the great speech that was to be made by a man in this House who held Cabinet rank, who was to lay down the policy that was rejected by this 365 country a long number of years ago. I cannot blame any man—I think that he is to be respected—if he pays a proper respect and homage to his parents, but it is another thing when we are expected to have reverence and respect for ideas that might have been useful 20 or 30 years ago. It reminds me of an occasion in the town hall in Paisley when I heard the late Mr. Asquith deliver an oration at a by-election. Two gentlemen came out at the close of the meeting, and one of them said to the other, "Wasn't that a splendid address?" His mate continued puffing his pipe for a little while, and then replied, "Yes, that speech would have delighted the heart of my grandfather."
I believe the same is true of the speech that was delivered by the Chancellor of the Exchequer to-day. If the spirit of his father were hovering over him, it might have delighted him, but so far as I am concerned I must confess—I may be rather out of place in this House—that it leaves me entirely cold. The speech seemed rather stupid in suggesting that the so-called changes which the right hon. Gentleman prophesied would bring life to the industries of this country. Then I listened to the speech of the Home Secretary, and I thought, when I heard his analysis of what was likely to take place under this system of tariffs, and when I heard his suggestions as to how he was going to revive industry, that the Chancellor's statement was not so stupid after all. I could understand the 10 per cent. tariff as a wish which was father to the thought, that it would assist and stimulate industry and in some eases provide a means of revenue; but when we heard the suggestion of commissions and councils and gatherings of the various collections of manufacturers in this country in order to pool their ideas and have interminable discussions, whether within the precincts of this House or outside, I began to wonder whether we were back in the old days of the Labour Government, when we were setting up commission after commission in order to bide time.
I am not finding fault with the Home Secretary for giving expression to his thoughts and his point of view. Every Member is to be encouraged to make his speeches and to deliver his message free 366 from party antagonisms. A Member should be allowed to put his point of view as the representative of a division, not as representing only a party, but as representing his own mind and conscience, pouring out in this assembly what he deems to be the things that will contribute to a happier life. Therefore, I do not blame the Home Secretary in that respect. It is, I am told, rather a departure for a Member of the Government to get up and condemn a speech that has been made by one of his colleagues in a Government to which he belongs. We are not strictly orthodox, however, and I welcome any changes that may take place. At the same time, I want to point out to the Home Secretary that he is trying to make the most, if not of two worlds, at least of two parties and two ideas.
If he believes that these things are going to play havoc with the commercial life of this country and the life of the people by reducing by taxation the ability of the people to keep their homes going, he ought in honesty and fairness to divorce himself from the Government. It reminds me of a man who, when I was in Queensland, was continually prophesying in the year 1924 that the world would come to an end in 1927. The Home Secretary of the Queensland Government made a, public pronouncement. He said:While this man may believe that the world is coming to an end three years hence, in discussion with me the other day he took good care to insist upon a ten years' agreement being set up by the Government.The same is true of the Home Secretary of this country in another connection. He is prepared to be part of the life of a Government who are going to bring overwhelming disaster to the people and to economic life. One hon. Member said that Mr. Chamberlain inaugurated this campaign 27 or 28 years ago, and that he had been chased by Mr. Asquith from town to town—Free Trade chasing the Tariff. I believe that when the community's intelligence and reason return, it will be chasing both of them.
Hon. Members opposite are continually telling us that they were returned on a policy of tariffs, that the people had thought the matter out in a reasonable manner, concluded that a tariff was the thing to restore prosperity to the industries of this country and had plumped 367 for that system of tariffs, believing that it was the proper thing to do. The people were in an unreasonable frame of mind a few months ago. They were prepared to vote for anything, in the spirit of fear, and in anticipation of national calamity and disaster. Therefore they voted for the return of what they believed to be a National Government, but what in reality is a Tory Government from top to bottom. There is no use in attempting to keep up the pretence that it is anything but a Tory Government. An hon. Member behind me said that the National Government was not returned with a surgeon's mandate but with a doctor's mandate. My reply is that if an honest doctor were called in to diagnose a disease in a patient, and he saw that a continuation of the medicine was likely to lead to the complete exhaustion or death of the patient, he would order the surgeon's knife to be applied, and that the surgeon should be brought in to deal with the situation.
I and those who sit with me on this bench believe that it is a surgeon's job that is required at the present moment and not a doctor's mandate or the application of any system of medicine. I have often wondered why Parliament has continually devised and brought in Bills to deal with quack doctors, quack dentists and all kinds of quacks in the outside world, but has never yet brought in any Bill to do away with quack politicians. We are suffering from a number of quack politicians who have grown like a cancer in our system. They have tacked themselves to the body politic. They are professional politicians, many of them, determined to be in any Government that is in office. They do not care what that Government is carrying through; if it carries their bodies on the Front Bench they are prepared to support that Government. In the prospect of a turnover or a disaster, I can see the present Home Secretary safeguarding his lines of communication right back to the other side.
The Government are suggesting that tariffs are to be a cure, and we hear from one side of the commercial world that a tariff is the thing that is required; and then we get the awful warning from bankers and other commercial people, that there are certain things that ought to be exempted because to do otherwise would 368 prove disastrous to a particular trade. I believe that in every country in the world there are these same points of view, one section wanting tariffs and the other section not wanting tariffs. The Home Secretary this afternoon, in dealing with the growth and development of an anti-tariff campaign in this country—[Interruption]—No; the Home Secretary is not asleep.
§ Mr. McGOVERN
I have not the slightest doubt that the right hon. Gentleman, like every child when it is being smacked, wishes he were out of the reach of those who can give punishment. I am sure that the conscience of the Home Secretary is troubling him at the present moment. I was only going to say, in response to the suggestion behind my back by' two or three hon. Members, who said, "Wake him up; he is asleep," that I believe he has always one eye open. Since I came to this House I have always put him down as one of the cutest men in the House of Commons.
Now let us get on with the business of tariffs. I came along the other week with a man who is in commercial life in my Division, and who was pleading at that time for a system of tariffs to be applied, because be was in the pig-breeding trade. He said, "I wish to God the Government would bring in a tariff to keep out foreign bacon! We could get a better price for our pigs." Shortly after that he said, "I am going over to Holland to purchase a machine that is required in my industry," and he added, "I hope to God that these tariffs are not applied to machinery before I get it into the country." He was a Free Trader for his own protection, and a Tariff Reformer when he wanted to exploit the community. I believe that the question of Tariff Reform or Free Trade merely affects certain sections in our commercial life. It is a question of transferring, to a certain extent, economic power from one section to the other. We hear, for example, of the growth of that anti-tariff feeling in the countries of which the Home Secretary spoke. That is a point I want to drive home, in connection with the development that is supposed to have taken place where people do not want tariffs to be applied. That is the same 369 old argument that is used by the countries Who are in favour of arming themselves. They say, "We do not want disarmament, but we must go on with our armaments, piling them up and up." They want other people to lead the way.
I attach no importance to the attempts being made in other parts of the world to break down tariff walls. Supposing we had a complete elimination of tariffs and were able to send goods from one country to another without imposts or restrictions of any kind. It would mean only the same old system of cut throat competition which has been in operation for a very long time. Why is the foreigner able to send goods into another country and to exploit the people there? He does so either by paying lower wages, working his men longer hours, or by the more scientific production of his goods. That enables him to sell on the markets of the world at a lower figure than his competitors. Take the question of the supply of goods. One would think there was a shortage of goods in the world. This assembly of seemingly intelligent men and women ought to be concerning itself to see how it can contribute to the well being of humanity by a better distribution of the goods that are already glutting markets in every part of the world. The cold stores are stuffed from floor to ceiling with goods for which no market can be found. In some of the cold stores there is Danish butter, with a 1930 stamp on the boxes, which it has not been possible to unload on the market because of the lack of purchasing power.
If this were a sensible institution we should be considering how each particular country could best utilise the wealth which is under its soil, and be building the machinery, the ships and the railway rolling stock with which to distribute its goods to the populations of the world, independently of colour or race. We are not considering that simple matter, but, instead, we are being told by statesmen of the great problems that surround us. They are not problems at all. They are only problems because a small section of the people in every country own and control the means of life, to the exclusion of the vast multitudes in those countries. Tariff reformers say that our industries are suffering for want of tariffs. Why are there 205,000 people unemployed in the building trade in this country? Is it because foreign workers 370 come in to build houses here? Assuredly not. Foreign labour is not putting a single hour's work into the building of a house here. Yet 205,000 unemployed building trade workers are walking the streets of this country, and drawing £200,000 a week in unemployment benefit, which means that £1,000,000 is being poured out to them in unemployment benefit every five weeks without any return. Take the case of the coal trade, with nearly a quarter of a million men unemployed. Are they unemployed because foreign coal is coming into the country? Certainly not. It is not through a lack of tariffs here that those quarter of a million miners are walking the streets and drawing about £300,000 a week in unemployment benefit—nearly £1,000,000 every 3½ weeks—without providing any return.
Why should we keep up this sham and pretence that tariffs are the one thing that will stimulate industry? We are living in a world where unemployment is rife not on account of the lack of tariffs but because of the coming of the machine age. The trouble is that the machine is controlling man instead of man controlling the machine. According to all the rules of the game the only thing that ought to have moved is the mind of man, but the mind of man has remained in so backward a state that he has allowed the machine to control his own life and being and to contribute to his unemployment and destitution. We are living in a world where industry is developing; where the backward countries have developed; where all are beginning to supply and there is nobody ready to buy.
From what has been said one would imagine that tariff reform countries enjoy prosperity of a high order, but if we look round them we discover that they have the same problems, the same concern about balancing their Budgets and their falling export trade. They are all devising ways and means of bringing about rationalisation in industry, balancing their trade figures, and bringing employment to their peoples—America with its 9,000,000 to 10,000,000 unemployed, and Germany with its 4,000,000 to 5,000,000 unemployed, Every State in Australia, in spite of high tariff walls, has a greater degree of unemploy- 371 ment in proportion to its population than we have in this country. In all those countries, wherever we look, the war of Tariff Reform against Free Trade is going on among the political parties. Applying Tariff Reform is like applying sticking plaster to a, wooden leg. As well expect it to bring about an end of our troubles and trials! You can travel all those roads, you can run after all the red herrings you like, but in the end you will get the same result under the capitalist order of society.
Let it not be imagined that we are being led by men on the benches opposite who are above the average in intelligence. Years ago, when I was looking at politicians from a distance, I used to imagine they were all great men. I was taught to have respect for them and to revere them. My father used almost to lift his hat every time the name of Joe Chamberlain was mentioned. I grew up to believe they were great men. They are not great men. They are only great because people have been taught by them to believe they are great when they occupy those benches. Liberals, Tories, and Labour men have each in turn, since 1918, applied their minds to the self-same problems, and yet the position of the country is worse to-day than it was in 1918. [An HON. MEMBER: "What is the remedy?"] I will tell you if you have patience—if you have as much patience as your Division shows to you. The Liberals tried it, the Tories tried it, and the Labour party tried it, and after each party had failed to make ally impression they said, "Send us all back together and we will all have a pull at the cat's tail and see if we can make any impression."
Nowhere in commercial life do men get the same chance as they do in politics. If a board of directors make a mess of a than, it is the last chance they get. Out they go, and a new board are put in their place. In the case of politics the position is different. It is like having "dolly shots" at a fair. You knock them down in one election, but up they pop at the next election—the outs and the ins, the ins and the outs—the same old faces appearing again. The Leader of the Opposition said the other day that when they are sitting on his side of the 372 House they condemn the very things which they do when they pass to the Government side.
What is the solution of this problem? I do not say that capitalism was not essential to the development of our life in the past, but it has organised industry and brought about the present state at our industrial economic life. A more reasonable application of that system would provide all the things that human beings require. My suggestion is that we should set up in every country in the world, by international agreement, a board of experts to ascertain the amount of raw material in the soil, and that that material should be rationed out to the entire world, and then the workers could be put to work. One section of them would build houses, another would build ships, some of them would make boots and shoes, and clothes, and others would till the soil. In that way every part of the world would be contributing to the general well-being. We want to take the control of industry out of the hands of those who have mismanaged it so long, not because of any lack of brain power, but because economic forces have been too great for them.
§ The CHAIRMAN
I think the hon. Member's enthusiasm for his alternative is leading him far away from the Motion before the House.
§ Mr. McGOVERN
I am prepared to accept your Ruling, Mr. Chairman, but I thought that, as the Home Secretary was allowed to state his alternative, I would state my alternative in order to get the Government out of a mess. This problem is a question of control by the whole of the people instead of by a few people. Public control is essential in order that all people should be provided with an opportunity to work. I am prepared to overlook the fact that the supporters of the Government have been carried away by their enthusiasm for something which they believe is going to rectify a wrong, but I wish to point out that with a more complete understanding of the development of society the real question to be considered to-day is that of distributing the goods which have been produced in the present state of society. We do not suffer in this country from any lack of goods. It is not a question of a tariff, but a question of keeping our 373 machinery going, and taking the control out of the hands of private individuals and placing it in the hands of the people for the benefit of the whole of the people. We must proceed along those lines which are the lines of sanity instead of along the lines of reaction and despair. Stagnation lies along the road which is now proposed, and we must realise that Socialism is the next stage in human progress. We are bound to go ultimately along that road whether we have to wait three, five, or 10 years. We are bound to travel along that road in the end, and I dismiss the case put forward by the Home Secretary and the Chancellor of the Exchequer as an example of the old game of shadow boxing with no results.
§ Major PROCTER
I ask for the indulgence of the House, because I am making my maiden speech. We have listened on this historic occasion to two fine expositions of Free Trade and Protection, and I think it is to the credit of the National Government that they have been able to deal with this problem in this way in spite of such a wide divergence of thought. At this time of crisis national unity makes all things nonessential but itself. We have listened to a classic exposition of Free Trade from the Home Secretary, and we are glad that that speech has been set side by aide with the statement made by the Chancellor of the Exchequer who introduced these proposals. We hope that out of this clash of opposite arguments there may emerge ideas which will tend to make the nation great. The Labour Members who have just spoken claim that their proposals are favourable for the protection of the working-classes, but there has been such a divergence of views in their speeches that I have failed to understand how they can be identical with the interest of the workers. I do not know how without some sort of protection of the home market we can give employment to the thousands of working men and women who are out of employment in Lancashire and who do not want doles or charity but who simply want work.
I am glad that the protection already applied to industry has resulted in so many new industries starting in this country. I am in touch with some 20 foreign firms who realise that it is necessary for them to use our markets for their products. I received a telegram 374 to-day asking if it is possible for a certain class of cotton goods to be protected by as much as 25 per cent.—at the moment it is 50 per cent., but that is a protection which is insecure, and they do not know whether that duty may not revert to 10 per cent.—and I am informed that if they can get an assurance that there will be protection on that class of cotton goods to the extent of 25 per cent. there will be provided employment for 10,000 more Lancashire cotton workers, and, in my own division, employment for 300 men and women. Therefore, I ask the Labour Members, is it because of the success of this policy that they fear it at the next election? What is the good of following out a scheme such as the hon. Member has just mentioned'? What is his remedy? He would appoint a commission, an expert hoard to explore the world. To-morrow he will be telling us that men are starving and that immediate action is required, and when he lifts his voice in that way in this House I wonder whether I have a head or whether I have a heart. He cannot say a word, I am sure, if he has the interests of the workers at heart, against the policy of the National Government which is producing immediate effects, which in my own constituency has brought down the unemployment figures from 14,000 to 10,000. The success of fishing is a string of fish, and when hon. Members' proposals can produce results like that, we can truly say that they are the friends of the working classes.
I rejoice that at last our Colonial Empire—an Empire consisting of about 37 countries, including Colonies and Mandated territories—is to come into this great scheme of fiscal reform. I think that, if we were to bring within the scope of these measures systems similar to those carried out by America and France, it would result in great employment in this country. Take two Colonies, both producing practically the same kind of products, separated only by a night's journey from one another—the one Jamaica, an old British Colony, and the other Porto Rico, which has been under the American Government for only 35 years. America, by her fiscal policy, has bound Porto Rico to herself, with the result that we find that, while Jamaica some 30 years ago had only 343 miles of railroads, and today has only 17 miles more, Porto Rico under the American policy of allying 375 her Colonies with herself under the same fiscal system, has so increased its prosperity that it has not only 1,000 miles of surfaced roads, but 1,100 miles of railroads. The trade of Porto Rico with America is £20,000,000, while with Jamaica this country has a trade of somewhere in the neighbourhood of £3,000,000. Porto Rico buys from America, per head, 10s. worth of cotton goods, while Jamaica buys from us 2s. 6d. worth. If we were to administer our Colonies as the French administer Algiers, if we were to bring the Gold Coast and Nigeria into fiscal union with ourselves, we should have a market for our cotton goods equal to that which we have lost in China.
Therefore, I welcome the statement which has been made to-day, and I hope that the committee of experts will get to work immediately and that from Ottawa we shall hear that our Empire is at last bound together, not only by the present ties of kinship and kingship, but by those greater economic ties, so that together we shall march forward to this great heritage of ours until at length we have prosperity and work for our workless and hope for us all. I would like to stress the fact that to-day a pronouncement by some responsible authority is anxiously awaited that, especially as regards the class of semi-luxury cotton goods, the duties which are now on them will not come off in May, so that our men can get to work, fit out our factories, and give to a stalwart, independent, sturdy race of Lancashire men and women the fulfilment of the promises we made to them.
I should like to compliment the hon. and gallant Member for Accrington (Major Procter) on his maiden speech, and also on his enthusiasm for a policy which he seems delighted to have heard put before the House. I must, however, differ entirely from the hon. and gallant Member's expressions with regard to the policy which the Government are now going to pursue. We have here, I consider, a definite breach of faith and of all the election pledges given by every Minister, the Prime Minister included. It is perfectly true that during the election a mandate was sought, and in the speeches of the Prime Minister throughout the country he made it clear 376 that, in this state of emergency, any tariff measures that might be considered would be measures of a tentative and not of a prolonged or permanent nature. This Bill is designed to bring in a wholesale tariff policy—an entire change in the fiscal policy of the country—which is permanent in character and undefined, leaving it possible for every particle of imports to be tariffed to the extent of 10 per cent.
During the Debates in November, when we questioned the policy of the Horticultural Products Bill introduced by the Minister of Agriculture, and said that it was an introduction in a small way of tariffs on foodstuffs, nearly every Conservative Member who spoke contradicted that statement, and said that there was no intention whatever of having tariffs on foodstuffs. I would remind the hon. and gallant Member for Accrington that this is not a tariff policy dealing with industry alone, but is a tariff policy which deals with foodstuffs, and which, when it becomes operative, will without doubt increase the cost of living to every working man and woman in the British Isles. I think that the Home Secretary at least ought to be commended for putting before the House a few home truths regarding the application of this Measure when it becomes an Act of Parliament.
We suggest, if the Government are anxious to deal with our financial situation at the present day, that tariffs are no cure. If the hon. and gallant Member for Accrington, or any other speaker in this Debate, had mentioned by way of illustration any country where high tariffs are now in operation, and had shown us that the conditions of working people in that country were as good as or any better than they are here, we might give consideration to a policy of this description. What is the real issue with which the country is faced? Why are not the Government bold enough and big enough to face the issues which are causing the real depression and oppression of the working classes? They would have been far better engaged if they had been concentrating on our large heavy export trades and examining some cure for their difficulties. They would have been far better engaged if they had given consideration to the heavy War debts that are oppressing our people. This Bill is neither a cure for unemployment nor will 377 it improve the balance of trade. It will make worse the conditions of the people whom we on this side of the House represent. We are very anxious to see Measures introduced which will improve the lot of the working class generally. Is this Bill likely to cure unemployment? Not in the least. I agree with the Member who said that, if we really want to tackle unemployment, we have to deal with machinery, which week in and week out is throwing hundreds of men out of employment and will continue to do so.
The Government would have been better engaged, particularly at a time like this when the whole heart of the universe is crying for world peace, if we had been negotiating in these directions instead of helping to build further barriers of tariffs, which can only bring about jealousy and hatred. We should have been better employed in giving consideration to things of that character rather than altering a fiscal policy which has not been found to be worse than one of high tariffs. It is up to the Chancellor to give some proof before he can expect even his own supporters to follow him into the Lobby on a Measure which has not been explained in any particular detail showing any benefits which will be given to the community. We shall oppose the Bill root and branch on the ground that it is contrary to election pledges and because we have no confidence that tariffs are the cure for our present ills. We should have been far better engaged if we had been giving serious consideration to the international problems that confront the whole universe rather than building up barriers which are likely to create jealousies and further wars. The country as a whole will be grossly disappointed, and I hope that at least the Free Trade Liberals will go into the Lobby with us and will let the country see that there are still men and women prepared to support a policy which will bring about far better conditions than this Measure. I make my protest with the full approval of the constituency that sent me here to oppose tariffs, and particularly tariffs on our food supplies which, obviously, can only bring a lower standard of comfort to working men and women.
§ Mr. DIXEY
It is a great moment in the history of the House of Commons to 378 see, after many promises, a definite programme of tariffs put before the House. We have heard a most remarkable speech from the Home Secretary. I was rather amazed at certain portions of it. Having regard to the programme on which he fought his election, it seems strange to hear him, as a Member of the Government, say, "I am opposed to tariffs, which I believe to be highly detrimental to the country, which are vicious in principle, which will add to taxation and will do no good, yet, although this Government is going to commit the very worst offence in the interest of the people of the country, I am still going to support it." A position like that is absolutely untenable and it almost makes me agree with the hon. Member who asked, Is there any honesty in Front Bench politics? The right hon. Gentleman, who had a telegram of support from the right hon. Gentleman the Member for Bewdley (Mr. Baldwin) when he fought against a gentleman who stood on the tariff programme, has the audacity to say, "Because I am a Minister of the Crown, I will continue to support the Government although it is committing the worst offence it could commit." To my mind there is something savouring of a very disagreeable taste, even in the interests of the unity of the Cabinet, in a right hon. Gentleman of his prestige, who has held the highest honours that the country could confer upon him, making a speech of that sort and at the same time announcing that he is still going to support the Government. I hope I am not saying anything offensive to the right hon. Gentleman, whose past career I admire intensely, but if his sentiments are those that he has expressed, there is only one proper course for him to take, and that is to sever his connection with a policy with which he so utterly disagrees.
The one sound remark that he made was his reference to the bad practice of a revenue tariff, inasmuch as it did not benefit any particular industry which needed help and was utterly futile for the purpose of the steel trade, for instance, where unemployment is rife. He made a very wise remark when he said that from that point of view it is useless, and is inclined to protect industries which do not require any tariff at all. Personally, I think that that is bad, but 379 I recognise that certain compromises have been necessary. The part of the Bill which all will welcome is that which is to set up a committee whose first consideration will be to increase the employment of the people of the country. May I remind Members on the Front Opposition Bench and other hon. Members opposite that, after all, the business intelligence of this country can contribute quite as much to the industry and trade of this country as hon. and right hon. Gentlemen? There are great business brains which could very properly be employed in doing something in this matter.
I welcome the Chancellor's wonderful way of starting this matter by setting up an expert committee to decide scientifically what tariffs are necessary for the big industries of the country. The only justification for a tariff which I recognise is the creation of employment for the people of this country and the giving of a fair chance to our industries. As far as the appointment of such a committee is concerned, it is a very proper and wise step. The right hon. Gentleman, in whom we have the greatest confidence, has stated that a Commission is to be set up, hut I should like to be clear upon this point. I take it that the committee is to sit at once and will not receive instructions such as have been given to committees and commissions in the past. We all remember—I speak very feelingly, because it is a subject very dear to me—the difficulty under the procedure of the Safeguarding of Industries Act. There were the innumerable questions in connection with the White Paper and the hostility of Government Departments towards some of the committees of inquiry. We realise that every opportunity was given to make the proceedings as long as possible. [interruption.] I only say that that was the experience we found, at least those of us who were keen upon the Safeguarding of a particular industry.
§ Mr. BUCHANAN
Is the hon. Member serious in this matter? He really makes two suggestions of a very serious character, first of all, that governments instructed commissions how to act, and. secondly, that governments interfered with the working of the commissions which they set up. Surely, that is not the intention of the hon. Member.
§ Mr. DIXEY
The hon. Gentleman misunderstands me entirely. I said that the procedure under the Safeguarding inquiries was so slow and cumbersome and the inquiries lasted such a long time, that the actual industry concerned lost heart. We all know what took place. Counsel appeared, and big institutions representing foreign merchants were represented at the inquiries, and the industries which required to be safeguarded had to wait much too long. Hon. Gentlemen on the front Labour bench may laugh. Their contribution towards the relief of unemployment was absolutely nil, and it ill becomes them to complain. Judging by the paucity of their numbers here to-night they do not appear to be very keen to discuss the subject. I suggest that the committee will pay particular attention to the big basic trades where unemployment is really bad, and I make a special appeal on behalf of the steel trade, upon which the hon. Member for Stockton-on-Tees (Mr. Macmillan) touched very pertinently. It is the biggest basic trade in this country, and for years it has rightly demanded adequate protection. I would remind the right hon. Gentleman and Conservative followers on the Front Bench, that from the point of view of their political sympathies they should stand committed to the principle of fair play for that trade. It has long been entitled to Safeguarding. It has had four commissions, and of all trades it should be the first to be considered by the proposed commission. The effect of the proper treatment of this big trade would be vital as far as our unemployment figures are concerned. I thank the Government for the wonderful contribution which they have made, and I have the utmost confidence that their scheme is going to be carried out, but I would beg of them to take this great trade into their favourable consideration.
§ Mr. HALES
I appreciate the great privilege of speaking on a subject very dear to my heart on an occasion which will go down in English history as emancipation day—the day on which we struck off the shackles which have so long handicapped us in our economic war, giving us an opportunity, at last, of having a fair chance of a share in the world's com- 381 merce. I do not propose to go into statistics, which are in themselves boring, nor do I propose to speak with any particular reference to any industry, but I should like to draw the attention of the House to the circumstances which have brought about this historic occasion. This Bill is one of the few blessings which the War has conferred on this country. It focussed the attention of the nation upon a matter which too long has escaped the attention of the Government. Had it not been for the outbreak of War, Great Britain would have struggled along handicapped and manacled. When the War came it altered the whole course of trading in Europe and the world. Countries on the Continent which had been in the habit of purchasing goods from us ceased to do so and began to manufacture the very goods which they had purchased from us in the past. Indeed, they began to sell to us those goods. That brought about a crisis which, together with war indemnities; brought us face to face with realities.
What is this Protection? It is not some new, fantastic experiment with which we are going blindly forward, in order to see what it will bring about. We are following the whole world on lines on which they have been working for a century. What will be the effect in foreign countries of the step we are taking? They have with one accord expressed fear and anxiety because the markets of this country which have been at their disposal hitherto will now be taken away from them. We look at these matters from the insular aspect, which does not give us the opportunity of seeing what is happening outside. I have been in the fortunate position for the last 15 years of travelling from this country to China for the purpose of selling British goods, and that has given me a chance of seeing what opportunities we have missed and the need for the alteration of our fiscal system. Since the time of Mr. Joseph Chamberlain we have been struggling blindly towards the light. To-day has seen the son of that illustrious leader bring about the great occasion to which business men have been working for a quarter of a century.
It has been said that every foreign nation will retaliate. To that I reply 382 that foreign nations have taken measures of retaliation long since, and they have nothing further with which to retaliate. What was the position when the United States put up her tariffs against France? France immediately said that they would put up a tariff of 100 per cent. against American motor cars if a tax was put on French silks, and in a few days America wiped out the duties. That is the test as to whether a tariff is effective or not. We want tariffs, not merely to shut out foreign goods, but as a lever and bargaining power, so that we can say we will let your goods come into this country provided you let our goods go into your country; you must not tax our products and use this country as a dumping ground. Let me endeavour to do justice to the Lord President of the Council who has been severely criticised in his settlement of the American Debt. It has to do with this question. He made a settlement which the majority of the people of this country have condemned; and I with them. But the right hon. Gentleman consciously or unconsciously, I hope consciously, did something in that case which has saved the commerce of the world. If he had bargained and bargained with America and brought down the scale of interest and the amount of capital repayment, we in common with other nations of Europe—
§ The DEPUTY-CHAIRMAN
I must remind the hon. Member that we are not now on an annual Budget discussion. We are discussing the question of the Tariff Resolutions. The American Debt does not arise in these discussions.
§ Mr. HALES
I bow to your Ruling. When this matter was coming to a crisis I was abroad, but I got into communication with Members on the Cabinet and others. They are too long to recapitulate at this late hour but there is no doubt that the overwhelming feeling of this country, which was realised in the wonderful election we had in the autumn which swept the Labour party out of existence, is that we must now take a step which we shall never have to retract, which will give us a chance to partake in the trade of the world, a fair opportunity to interchange our goods with other nations, and fair play for us in the commerce of the world.
§ 10.30 p.m.
§ The FINANCIAL SECRETARY to the TREASURY (Major Elliot)
I rise to 383 commend to the House the four Resolutions which the Chancellor of the Exchequer moved this afternoon. My right hon. Friend gave an account of the general considerations which have urged the Government to lay these Resolutions before the House. Now that the Resolutions are in the hands of Members it might be convenient very briefly to go over them, because we are passing to-night from theory to practice. These Debates, which have gone on so many years, so many decades, are now being brought to the touchstone of experience, and we shall soon be able to tell, not by argument but on facts, whether the prophecies of evil are true, or whether we are taking steps which, as we believe, will be looked back to as steps for the good and not the ill of this country. The first Resolution empowers us to put on a 10 per cent. ad valorem duty, and it is provided that the duty is to be charged only on goods which are not otherwise subject to some duty of Customs. That Resolution has met with condemnation from more than one side of the House. I shall have to say something about that later.
The second Resolution is the one upon which, probably, controversy will be concentrated more in the Debates towards which we are advancing. That is the power to add additional Customs duties to the 10 per cent. ad valorem, and to apply those under the machinery of an Advisory Commission. I ask the House to give its attention to the fact that the goods to which this Resolution will apply must be:Either articles of luxury or articles of a kind which are being produced, or are likely within a reasonable time to be produced, in the United Kingdom in quantities which are substantial in the relation to the United Kingdom consumption.That does mark a wide breach in the fiscal practice of this country, which was to levy duties on articles which were not likely to be produced in this country. It certainly seems to us that the time has come when it is only reasonable to consider that if you are to tax a thing it is not unjust to say that if it can be made in this country it should be made here and afford employment to our own people. We are passing from the 19th century, the century of scarcity, to the 20th century, the century of over-production. 384 Arguments which were applicable in years of scarcity are not applicable in years of over-production. I know there are those who say that there is no such thing as over-production, but only under-consumption. That is a quibble about words into which I shall not enter, save to say that in my opinion there is such a thing as definite over-production, and that that is one of the circumstances which differentiates the economics of the 20th century from the economics of the 19th. When we are dealing with the fact of over-production we have to adopt a different attitude towards it, and it is that attitude which has led us to adopt the solution proposed in the second Resolution, that if goods can be made here they shall be made here rather than outside.
The machinery for the application of that, which has been subject to criticism, notably by the right hon. Member for Sparkbrook (Mr. Amery), is the machinery of a commission as far as possible removed from the immediate political influences of the day. I direct the attention of the House to the solution which has been found, and I would add that we are willing to defend our position when we come to discuss the Clauses of the Bill. The powers of the Treasury to alter a duty so that it may be charged,by reference to value, to weight, to measurement or to quantity,are set out with a view of providing the utmost flexibility to the machinery which we propose to adopt, because we recognise that we are here in an experimental period and dealing with a difficulty which no other nation has ever had to face—to build up from the ground and relatively instantaneously, a structure which in the case of other great nations has grown slowly year after year and has been adapted to the circumstances in which the nation found itself. If the solutions which we seek here are not ideal, if they have to be altered, they have been made as flexible as possible in this machinery, and we stand firmly on the defence of the flexibility of these proposals. The third Resolution suggests that it should be possible for us to put a duty upon the goods of countries which are discriminating against this nation. I do not think that any more popular proposal has been brought forward within the whole range of the fiscal controversy. It is generally 385 agreed that what is sauce for the goose is sauce for the gander. Not one party but many parties have brought forward the argument not in this House only but in Geneva, not merely in the national but in the international atmosphere, that if other nations continue to keep their tariffs up against this country, then this country sooner or later would repay the treatment which it was receiving.
Reference has been made by the bon. Member for Stepney (Mr. Attlee) to the loss which the House of Commons sustained in the death of Mr. William Graham—a reference which I am sure was sympathetically greeted by the whole House without distinction of party. I remember that Mr. William Graham, himself at the annual assembly of the League of Nations warned the nations of the world that if we could not get results by the method of peaceful persuasion which he was then advocating, more vigorous methods would be adopted by this country. That was the suggestion made by a man who was as deeply devoted to the cause of international peace as any man in the House of Commons, or indeed in the world, and he was merely repeating a warning which had been given by other speakers. I myself as a delegate to the League of Nations on a previous occasion had to give such a warning and every constituent member of the League of Nations regarded it as a reasonable warning, as one which it was fair for this country to give, and, if they believed that we should act upon it, as a warning to which they would have to give their immediate and pressing attention. They did not believe then that we mould act upon it. They believe it now, and it is that, and only that, which is bringing about that greater readiness of the nations to enter into trade relations, especially with this country, on which the hon. Member for Stepney commented.
§ Major ELLIOT
I beg pardon but for a moment I had difficulty in separating the two speeches. I must say that I considered that the Home Secretary delivered a speech which the spokesman of the Opposition, if be had had sufficient fire and energy, might have delivered but I apologise to the Home Secretary for having credited part of his excellent 386 speech to the relatively milder effort of the hon. Gentleman opposite. These four resolutions represent the plan at which we have arrived in the fiscal history of this country. It is impossible for us to suppose that we can, by mere argument, arrive at a solution of this question. It has been proved only to-night. The same set of facts has been put before the Members of the same Cabinet. It would ill become a junior Minister to animadvert on the remarkable many-sidedness of truth. I will, however, say that one facet of the truth was observed by a much larger number of the Members of the Cabinet than the other facet, and it seems to me that it was one which commended itself, not merely to the majority of Ministers, but to the vast majority of Members of this House.
I was acquainted with the late Sir Hugh Bell, who was an ironmaster on the north-east coast. The facts of the iron and steel trade were before him all his life, and under the impact of those facts he remained a resolute and confirmed Free Trader. His partner, subjected to the same set of facts, a man of no less ability and force of character, under the impact of those same facts was a resolute and confirmed Protectionist. If those two eminent gentlemen could not come to a solution of their difficulties by argument, in the close connection in which they lived for over half a century, I think it is impossible to suppose that by anything less than demonstration we shall come to a result here in this House. What we ask is that we should now take the first step towards demonstration, and we do it with the more confidence since the arguments, particularly of the Home Secretary, seemed to me not so valid as they seemed to be to the four Ministers who adopt the view which he supported.
The difficulties in front of the country are grave enough, but it is surely necessary for us to realise that they would be made all the greater if, instead of applying the brake, as the Chancellor of the Exchequer has suggested, to the general inflow of imports into this country, we should suddenly concentrate upon one or two blocks of imports and seek to arrest them entirely. It seems to me that that would be a method which would produce the maximum of disturb- 387 ance, of dislocation, and of interference with the normal channels of trade, and the maximum international because when a set of products is absolutely prohibited by the ipse dixit of a Minister, you are undoubtedly apt to find a feeling of resentment which is not produced by a general tariff applying over a wide range of products, which does not produce the same feeling of injustice in the hearts of any particular producer or set of importers.
The argument has also been used that these tariffs are not to be supported because they are not temporary, that they were merely meant to deal with the emergency; and when that emergency is over, it was asked, will they be repealed? "When the emergency is over." We of the post-War generation have struggled along year after year under the belief that the emergency was just about to be over, but what is the emergency? The emergency is the 20th century. When is the 20th century to be over? Will it nut be succeeded by the 21st? If we could succeed in coming to the state of economics desiderated as a necessity by the apostles of Free Trade, by Cobden and Bright, when they were launching their great campaign as an inevitable thing for the adoption of Free Trade, that the unilateral economic disarmament of any nation would inevitably result in the disarmament of every nation—if we came to such a state, we should all believe that the emergency would be over, but at present we are dealing with a position in which, whatever the emergency is, it is one of a peculiarly stubborn and lasting nature, and it is ridiculous to say that we are not dealing with emergency measures because the emergency with which we are dealing is likely to continue for a considerable time.
The argument as to taxation of raw materials seemed to me to omit the enormous reservation of the freedom from importation of all goods and raw materials derived from Imperial resources—that is, from a quarter of the world—and that is a very substantial movement towards the freedom of access to raw materials which no doubt every manufacturer in this country desires. As to the £160,000,000 worth of raw materials 388 which come from outside the Empire, the Home Secretary said that the duty levied on them would be a great disadvantage to the manufacturers of this country. Take manganese. At present the Soviet Union, which has great resources of manganese ore, is prepared to put that ore on the market at any price simply to realise cash value. This country is closely interested in the manganese deposits of West Africa, where we have some great capital sums invested in harbours and docks for the purpose of handling it. It is almost unmarketable. But is it to the advantage of the manufacturers of this country to place themselves entirely in the hands of the Soviet Union for the source of this indispensable mineral, and to allow the docks and harbours of West Africa to fall into ruin, and so deprive themselves entirely of the possibility of access to this source of the ore if at a later date the Soviet Union should, unfortunately, find itself under the necessity of cornering the source of this mineral? Manufacturers of this country have at any rate a reasonable security under this policy of drawing on a source which it is very difficult to corner, and any attempt to raise prices will cause an immediate increase in the stocks which are available for them.
There are further provisions in the Resolutions to make it possible for us to make arrangements with friendly countries and to reciprocate with them in the form of lower duties for favourable treatment which they give us. There are provisions for absolute freedom of entry from the Colonial Empire; freedom of entry, subject to discussion at Ottawa, for all products from the Dominions and from India; and freedom of entry, after negotiations to a greater or less extent, from any other country with which we desire to make commercial arrangements. It seems to me that these three strands, at any rate, provide a safety line which enables us to embark on this experiment with a reasonable degree of confidence, so that if the water is too deep we can haul ourselves safely out of it.
The Home Secretary embarked on the astonishing argument that housing was being held up because the prices of housing materials were all too high already. But unlimited freedom of importation has been permitted over many years for housing materials. He said that, if a tariff were put on, they would become 389 higher yet. At any rate that is an argument, but his main argument was that housing materials are already too dear. He cannot have it both ways. If unlimited freedom of importation for 87 years has not produced an unlimited supply of the cheapest possible housing material, surely we may make an experiment to enable us to control our own housing material within our own areas with at least a reasonable prospect of entering upon a legitimate commercial transaction and not a rash gamble which the Home Secretary seems to think it is.
The Home Secretary brought forward the case of the great entrepot trade of this country, and that answered one of the arguments which he brought forward about the exemption of raw wool. That was exempted on that ground. London is a great entrepot of raw wool, and we must as a general principle seek to find where exactly we can place the duty and where we must omit the duty, and if we find we are injurying the great distributing power of this country, and that the injury from the slowing up of our distributing power is greater than the benefit we can derive from making anything in this country, it is reasonable to suppose we should not continue that duty, but allow the entrepot function of this country to continue as it has done in previous days.
I feel that the main argument of the Home Secretary is that it is unnecessary. He says: "Let us wait until we come to the Budget, and until we need this extra money." On behalf of my right hon. Friend and myself, I say that we do need this money. We need all the money we can get. We can then respond to the demand that the Home Secretary makes upon us for the remission of Income Tax upon the reserves of companies for which he supported the late Government to the verge of destruction. I well remember his bringing upon himself the bitter indignation of the then Chancellor of the Exchequer, under whom I subsequently had the honour of serving. I remember well that he brought forward most vehement demands for the freeing of company reserves from the heavy burden of taxation, and that when it was explained to him by Lord Snowden that that would mean £20,000,000 or £30,000,000, "Never mind," said the Home Secretary, and he forced his demands to a Division and 390 pressed the Government within two votes of defeat on the Budget of the year. He may do the same to us.[Interruption.]
§ Major ELLIOT
Hope springs eternal in the breast of the Opposition, If the hon. Member for Dumbarton Burghs (Mr. Kirkwood) looks forward to marching forward in the Division which I do not exactly discern, and to bringing this Government to within two votes of defeat, he may do it, for all I know, with the aid of the Home Secretary. The Home Secretary pressed his demand upon the right hon. Gentlemen and hon. Gentlemen with whom he was associated at the time, and I have no doubt that his remarkable consistency may prevail again, and indeed he has promised that it will prevail in the Debates into which we are about to enter. His remarkable fire and energy, eloquence, and power of cumulative argument, which I wish I could equal, may succeed in swaying the great Protectionist mass of this House in order to defeat, or well-nigh defeat, the proposals upon which the Government have entered this evening.
If we can obtain any revenue from this tariff we shall need it. We shall need it as an assurance against possible qualms of conscience on the part of the Home Secretary when these proposals once more fall to be brought forward. We shall put the duties on as soon as ever we can. For that reason we took the time of private Members, who have spoken and clamoured for this for 20 years. We are under no illusions in this matter. As a friend of mine said, "This is the first occasion on which a Government has even been elected in which the whole House is against the Government." It is true that the whole House is against the Government, and that the Government have to justify their position not by threats, but by persuasion. It is by persuasion that we hope to be able to convince them. The arguments which we have brought forward will be debated for many days to come. Unfortunately it is not possible for us to adopt Budget procedure, and to make these duties applicable from the moment they were introduced by the Chancellor of the Ex- 391 chequer. I think hon. Members in all parts of the House would have wished that that might be done.
Nothing is more remarkable in this Debate than the resignation and calmness with which those opposed to these proposals have accepted them as inevitable. There is not a sign here of the fire or force of any political battle. A perfunctory set of manoeuvres is gone through by those opposed to these proposals. An hon. Member for one of the Welsh divisions was vehement because he feared the advisory committee might bring forward a proposal to lengthen the hours of work in the steel trade. I assure him it would be quite out of their power to do so, even with the very wide powers which are proposed for them under this Resolution. The right hon. and gallant Member for Newcastle - under - Lyme (Colonel Wedgwood) produced the great tour de force of claiming that the Home Secretary was practically as strong a Protectionist as my right hon. Friend the Chancellor of the Exchequer, and insisted, with his superior knowledge of economics, that both were entirely wrong. The hon. Member for the Shettleston division (Mr. McGovern) delivered a speech full of sound and fury indicating that he would choose an international board of experts who would be neither business men nor politicians.
But all these were the mere rehearsals of the stage play of the tariff Debate as we have known it for these many years. When we debate things upon which this House is keenly moved, such as great questions concerning the coal trade, unemployment or the means test, then, indeed, there is no need to search for speakers, no need to search for arguments, which are brought forward by hon. and right hon. Gentleman with vehemence, because those are things about which they feel deeply. That is not the case on this occasion. There is no conviction behind these arguments. There is no ultimate feeling that the nation will be ruined if it is decided to put a protective duty on tins of milk as well as sugar, to put a tax upon bicycles as well as upon motor cars, or if it is desired to put a 10 per cent. duty—or to inquire into the possibility of raising it to 25 per cent.—on some one or other of the great range of manufactured articles which this country imports.
392 The House knows that this great question has been argued out to a conclusion, that the time has come to test it by experience. The House is hungry and longing to get on to the greater problems before us. We shall not succeed by shelving the problems of currency and foreign policy. The things we are discussing tonight must be cleared out of the road before we can come to the great questions of the 20th century—the reorganisation politically, socially and economically which this country will have to go through; the rising spirit of the younger generation; the contribution which youth has still to make to the future of the country. Our efforts in those directions are being "cribbed, cabin'd and confined" by these dusty and fusty remnants of 19th century problems. Let us clear them out of the way. We have taken the first step, we must deal with the question speedily, in order that we may get on with the problems which will still remain an issue when this problem itself is no longer an issue in any part of the House.
Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[Captain Margesson]
Committee report Progress; to sit again To-morrow.