§ 4.0 p.m.
§ The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)
Ever since this present House of Commons came together last year, the Members of the Government and, I am sure I may say, the whole body of our supporters, have been anxiously longing for the day on which we might settle down to the main business which had brought us to Westminster. That day has now come. I do not think that any reasonable man would say that the delay has been unduly protracted. Barely three months have elapsed since the most remarkable election in the whole of our political history—[An HON. MEMBER: "And the most corrupt!"]—when the National Government was formed with a mandate to apply an unprejudiced mind, free from all fetters, to the restoration of confidence in our financial stability, and to frame plans for ensuring a favourable balance of trade. The Prime Minister, in his election manifesto, indicated some of the matters to which the Government would have to give their attention. He said:Tariffs, expansion of exports and contraction of imports, commercial `treaties and mutual economic arrangements with the Dominionswere some of the matters with which the Government would have to concern themselves in deciding upon their programme, but nobody expected that immediately upon taking office it would be possible for the Government to lay down at once a permanent policy in all its details. Some interval was required in order that the various aspects of the problem might be thoroughly considered, and the consideration of those matters had to be examined in the light of new factors which had come into the situation. Our departure from the Gold Standard was still only recent, and we required some experience in order to see what its effects might be. The conditions of certain countries which have been among our most important customers were so critical 280 that affairs required the most careful handling if we were not to precipitate a crisis which might have had the most serious effects upon the trade and finances of our own country.
On the other hand, if we had simply waited until we were ready with our plans, the anticipation that we might introduce some material change in our fiscal system would certainly have tempted traders and exporters in other countries to forestall our intention and to flood this country with goods to an extent which would have completely disorganised our markets, and brought that adverse balance of trade, which was already mounting up at the rate of £2,000,000 a week, to large and, perhaps, even disastrous dimensions. What we had then to do at once was to keep the ring. Accordingly, we introduced two Measures, the Abnormal Importations Act and the Horticultural Products Act with that purpose in view. How successful those Measures have been was indicated last night in the admirable exposition to the House by my hon. Friend the Parliamentary Secretary to the Board of Trade. Behind the shelter of those two Acts, the Government have been able to pursue their examination with all the deliberation that was necessary, and they have now arrived, by a majority, at certain conclusions which I shall presently have to describe in detail.
Before I do so, I think, perhaps, it would be convenient if I were to draw attention to certain features in the situation. If we compare the position of the country to-day with what it was last November, I do not think that we have any cause for dissatisfaction. When my predecessor in my present office, with characteristic courage, framed his Budget so that by a series of drastic economies and severe increases in taxation the national accounts would balance, there were some who doubted whether it would be possible that his anticipations could be fulfilled. They doubted whether the economies which had been contemplated could actually be carried out, or whether the returns which were estimated from those taxes would produce the yield which he had expected. I am not yet in a position to affirm confidently to the Committee that these melancholy forecasts will be falsified, but I can say that I do not believe you can find anywhere 281 else in the world such an exhibition of self-sacrificing and devoted patriotism as has been shown by the British taxpayer during the last year.
Up to the end of last month the amount of Income Tax due and payable on 1st January collected by the officials of the Inland Revenue Department had reached a total of £105,000,000, as against £60,000,000 collected at the corresponding date last year, figures which, when allowance is made for the increase of rate and for the alteration in the allowances, indicate a collection at a rate 50 per cent. higher than was the case last year. Similar results have been shown in the collection of Super-tax, which, in the same period, reached a total of £23,750,000, against £14,500,000 last year, and this at a time when these staggering increases of taxation coincide with a painful shrinkage of income which has been felt from one end to the other of the taxpaying class. No wonder that revenue authorities in "less happier lands" are left amazed at a spectacle which they surely must feel is the most remarkable demonstration that they have ever witnessed of that British eccentricity for which our country is notorious.
If the collection continues during the remainder of the quarter on the same high level, then I am satisfied that any losses which we may have to meet in other directions will be made good, and that our financial affairs will come out on the right side at the end of the year. I must add that, if we are to succeed, the example of those taxpayers who have paid their taxes with so much patriotism and public spirit must be followed by those who have not yet so paid it, and I would like particularly to appeal to the companies who are liable for large amounts, and who have not yet made their payments, to do what they can to help the nation in this time of need. In the first nine months of the year our expenditure is always in excess of our income. We have to borrow to meet that excess, and we look to the collection of Income Tax and Surtax to repay those borrowings in the last quarter of the year. If, therefore, there is delay in the collection of these taxes, then there is a corresponding charge to the nation for interest, and I hope that those taxpayers who have not yet made their contribution will recollect that the earlier they do so 282 the greater will be the saving of interest to the community.
Among other matters for congratulation is, I think, the fact that up to the present the cost of living has almost miraculously remained unaffected by the depreciation in the value of sterling. When I read sometimes in the public Press that sterling is worth to-day 14s. 3d. or 14s. 2d. I feel that such figures may easily mislead readers if it is not remembered that they merely express the value of sterling in terms of some other foreign currency. If we take the value of our currency at home at its internal purchasing power our pound is still worth 20s. Since we went off the Gold Standard the rise in the cost of living has amounted only to two points, and, indeed, to-day it is actually six points below what it was on 1st January last year. I think we may be satisfied and gratified at the continued steadiness of sterling. It is the best proof we could desire to have of the confidence that is felt abroad in the future of our currency. I have no doubt it has been greatly fortified by the fact that only recently the Bank of England was able with such ease to repay the large foreign credits which fell due, without even drawing further upon its reserves of gold; and, indeed, it seems to me that conditions are so shaping themselves that other countries which, for one reason or another, have been forced to forsake the Gold Standard, are more and more turning their eyes towards sterling as the best measure of the value of currency during the period of suspension from the normal standard. Then I would mention, also, among favourable aspects of the 'situation, the definite but somewhat partial and uncertain improvement in trade, and, what is perhaps best of all, the more hopeful feeling which undoubtedly exists to-day, and of which evidence has been given in the recent speeches of prominent bankers, industrialists and others.
I have dwelt at some length upon these favourable features in the situation, but we should be deceiving ourselves if we thought that we had yet really turned the corner, and I must ask the Committee to look for a moment at the other side of the picture. A great exporting country like ours is forced to look overseas for a great part of its trade. The catastrophic fall in the gold prices of commodities which has been taking place, and which as yet shows no signs of having 283 reached bottom, has brought world trade into a truly deplorable condition. One of the first signs of this distress in world trade is the extraordinary growth of trade restrictions. There is hardly any device, ranging from surtaxes to quotas, which has not been applied by one country or another; and there has sprung into existence in many places so-called systems of "devizen control" planned on high Protection lines, which have raised almost impassable barriers to normal trading relations. Then there is that great problem which keeps Europe, or a great part of Europe, in a constant state of doubt and anxiety, the problem of Reparations and War Debts, still unsettled. Recent events in the Far East have raised a new source of anxiety, and he would be a bold man who would prophesy to-day what may be the repercussions of those events in other countries far removed from their centre.
The figures of unemployment still remain of colossal dimensions, and we must naturally look forward to some increase in the figures in succession to the usual seasonal activities at Christmastime. The main industries of the country are very slow to move. Iron and steel remain in a stagnant condition; shipping and agriculture are still in the depths of depression. The effect of the depreciation of the pound, which at first seemed to hold out hopes of increased facilities for trading abroad, is being gradually whittled away as one country after another has departed from the Gold Standard, and although, as I have already pointed out, the pound has remained wonderfully steady over a long period, we cannot feel that confidence can be fully re-established while the trade balance remains so heavily against us. While we may admire and praise the public spirit of our taxpayers we must not suppose that they can indefinitely be called upon to make sacrifices of this extent, and that the State can go on extracting such vast sums from the pockets of the people without seriously crippling the resources from which industry must be fed if it is to maintain its vitality.
These are the sort of considerations which have been under the examination of the Government, and we have given them careful and anxious attention. Some of our problems are international 284 in character. They can only be dealt with by the willing co-operation of other nations, and the best that we can do is to use such influence as we may possess to induce those who share our views to help with us in trying to deal with them. But there are others which are within our own control, and, in particular, in accordance with the undertaking of the Gracious Speech from the Throne, we have devoted ourselves to the consideration of this problem of the balance of trade, which to a country like ours, dependent to a large extent upon overseas for its supplies of foodstuffs and raw materials, must always be one of the very first importance. I am sorry to say that our investigations into the balance of trade have confronted us with disquieting results. The Committee is no doubt familiar with the way in which this balance of trade, or perhaps I should more properly call it this balance of payments, is calculated. There are three sets of figures in question. There are the figures of the imports of merchandise, the figures of the exports of merchandise, and then there are what are known as invisible exports, consisting of the income from shipping, the income from foreign investments, the receipts from short interest and commissions, and some other minor items. The calculation is made by deducting the value of the exports from the value of the imports, leaving a surplus against which is set off the value of the invisible exports.
If I give figures to the Committee of two years, the years 1929 and 1931, they will see how rapid and how disastrous has been the change. I must say that the figures for 1931 are not yet absolutely final, but they may be taken as a very close approximation to the truth. In 1929 the value of imports less exports, that is, of the surplus of imports over exports, was £382,000,000. The value of the invisible exports was £482,000,000, leaving a favourable surplus of £100,000,000. In 1931 the surplus of imports over exports was £409,000,000, but the invisible exports were only £296,000,000, leaving au adverse balance in the neighbourhood of £113,000,000. In two years, therefore, the balance of payments had gone against us to the extent of over £200,000,000. Even that is not the whole story, because I must point 285 out that the value, in prices, of imports fell off far more than the prices of exports. In order, therefore, to make a proper comparison one must value the figures of 1929 at the prices of 1931 to see what is the change of volume, which, after all, is the thing that matters for the employment of our people. If that correction is made we find that while the imports remained practically stationary in volume for the two years the volume of exports decreased by nearly 38 per cent.
I submit to the Committee that those figures establish the vital necessity for any action which it is in the power of the Government to take which may restore the balance of payments once more to the right side. It will not have escaped the notice of hon. Members that the shrinkage in the invisible exports amounted to no less than about £186,000,000, nearly the whole amount of the difference. Unfortunately, that is the one of the three sets of figures which it is least possible for the Government to influence, because the bulk of the invisible exports come from the receipts from shipping and from foreign investments, and both of those things must depend upon world and not upon home trade. Therefore, we are driven back to the two remaining items, the items which, as I have already shown, were dealt with by the Prime Minister in his election manifesto. We had to put to ourselves the problem, How are we at one and the same time to diminish our imports and to increase our exports? It is a complicated problem, and one that has to be attacked from many angles, because it is hardly possible to find a proposal which will advance one of these two objects without its having some reaction, which has the effect of retarding the other. The effect of the too sudden closing of the market of this country to one class of goods from another country may easily produce such a reduction in the purchasing power of one of our customers in another class of goods as to have serious results upon our export trade. If we are to increase our exports, we must necessarily contemplate that at the same time there must be an increase in imports, because it is certainly the case that the raw materials required for 286 increased exports would not be produceable in our own country. A revenue derived from a tariff may assist industry by relieving it of sonic of the burdens which now press so directly and so harshly upon it, but if we are to try to increase our exports by lowering our tariff either' to foreign countries or to the countries of our own Empire, by so much we must immediately lower the revenue which otherwise would have been obtained from those duties; in fact, the actions, the inter-actions and the reactions of all these things—home trade, export trade, revenue, direct taxation, tariff, cost of production—are simply endless, and the reflection that is forced upon one is that in any scheme which we may put forward for dealing with the situation there must always be a balancing of advantages and disadvantages.
What we have to seek for is a plan which will be flexible and elastic, a plan which can readily be varied and adapted to suit changing conditions, a plan which will allow, first one element and then another element, to come forward according as the balance of advantage lies on this side or on that. It is for such a plan that the Government with unremitting labour and concentrated attention have been seeking during the Recess. We had hoped that it might have been possible to find what we were looking for with the unanimous agreement of the Cabinet. That has not proved to be possible. I make no reproaches against any of my colleagues who do not agree with me, and I am quite certain they will make no reproaches against me. We have agreed to differ. I am not going to-day to enter into any discussion as to the propriety of the action to which we unanimously agreed. That will be debated on another occasion. All I want to make clear to the Committee is that the proposals which I shall disclose to them this afternoon are the proposals of the majority of the Cabinet. My right hon. Friend the Home Secretary, who will be speaking later in the Debate, will make clear to the Committee the position of his Friends and himself, and will show why it is that they have dissented from the views of the majority of their colleagues.
The secrets of the Budget are generally extremely well kept; in fact, it is a point of pride with every Chancellor of the Ex- 287 chequer to keep the people guessing until the very last possible moment. Of course that does not prevent the ingenuity of an enterprising Press from making more or less accurate guesses at what may be in the wind, but on this occasion the system of intelligent anticipation has proceeded so merrily that I am afraid I have hardly any secrets left with which to entertain the Committee this afternoon. I must say that the plan of disclosing by snippets proposals which were intended to be viewed as a whole has its disadvantages. It is apt to put things m a wrong perspective, and, therefore, before I come to the details of the Government's intended Measures, I think perhaps it would be convenient if I were to try to give to the Committee a very brief summary of the objects at which we are aiming, in order that they may perhaps get a better picture of the general scope and range of our intentions. First of all, we desire to correct the balance of payments by diminishing our imports and stimulating our exports. Then we desire to fortify the finances of the country by raising fresh, revenue by methods which will put no undue burden upon any section of the community. We wish to effect an insurance against a rise in the cost of living which might easily follow upon an unchecked depreciation of our currency. We propose, by a system of moderate Protection, scientifically adjusted to the needs of industry and agriculture, to transfer to our own factories and our own fields work which is now done elsewhere, and thereby decrease unemployment in the only satisfactory way in which it can be diminished.
We hope by the judicious use of this system of Protection to enable and to encourage our people to render their methods of production and distribution more efficient. We mean also to use it for negotiations with foreign countries which have not hitherto paid very much attention to our suggestions, and, at the same time, we think it prudent to arm ourselves with an instrument which shall at least be as effective as those which may be used to discriminate against us in foreign markets. Last, but not least, we are going to take the opportunity of offering advantages to the countries of the Empire in return for the advantages which they now give, or in the near 288 future may be disposed to give, to us. In that summary, under seven heads, we believe that we have framed a policy which will bring new hope and new heart to this country, and will lay the foundations of a new spirit of unity and cooperation throughout the Empire.
The Bill which will embody these proposals will, of course, not be available to the Committee this afternoon. It cannot be introduced until the Committee has passed the Ways and Means Resolutions, of which there are four. The text of these Resolutions will be available as soon as I sit down, and in moving the first of them I understand that it is agreed to be for the convenience of the Committee that a general discussion shall take place ranging over all the four Resolutions, but they will, of course, be voted upon separately when the Debate concludes.
The basis of our proposals is what we call a general ad valorem duty of 10 per cent. upon all imports into this country, with certain exceptions to which I shall allude a little later. The purposes of that general duty are two-fold. We desire to raise by it a substantial contribution to the Revenue, and we desire also to put a general brake upon the total of the imports coming in here.
Of course, if our sole object were the reduction of imports, we might achieve that purpose by a different method. We could take certain particular items and exclude them altogether. That would be a method which would bring about the greatest possible disturbance of trade, and in introducing a fundamental change of this character we naturally desire to do it with as little dislocation of existing arrangements as may be found necessary. There are, however, certain exceptions to that general duty. Wherever there is an existing duty the article so dutiable will not be subject to the 10 per cent., and that applies equally to such duties as those on tobacco, or sugar, or coffee, to the so-called McKenna Duties, to the Safeguarding Duties, the key industry duties, and also to the duties under the two Acts which I mentioned before, the Abnormal Importations and the Horticultural Products Acts until the duties under those Acts expire, when they will be replaced by the flat rate duty unless some other arrangement is made, of which I shall make mention again directly.
289 There is also a free list of no great length which will be included in a Schedule to the Bill. I do not propose this afternoon to go through the free list. It is not necessary, for the purpose of the Resolutions, but I may give some indication to the Committee, and mention one or two of the most important items which are included in it. In the free list will appear wheat in grain. The Committee is aware that it is the intention of the Government to deal with the importation of wheat by means of a quota system. There is also meat, which includes bacon, one of the staple foods of the people, and fresh fish of British taking, which I am advised includes also those members of the mollusca and crustacea which form such a desirable and ornamental addition to our dinner table. There will also be found in the free list the raw materials of the two great textile industries, raw cotton and raw wool. Then there is tea, and I think I ought to tell the Committee that tea is put into the free list of this Bill because it is considered to be more convenient to deal with tea in conjunction with other beverages, such as coffee and cocoa, in the ordinary course of the Budget. I must also warn the Committee that they must not assume that tea is going to be or is not going to be taxed in the next Budget, because that is a subject upon which I must reserve a. doctor's mandate until Budget day comes.
I now pass to the superstructure which it is proposed to build upon the general ad valorem duties. That superstructure takes the form of additional duties which may be imposed upon non-essential articles. When I speak of non-essential articles, I mean either articles of luxury which Are not essential to the individual, or articles which are not essential to the nation, in the sense that they either can be now or could be very shortly produced at home in substantial and sufficient quantity. We do not propose to specify these additional duties in the Bill; we propose that these duties may be imposed by Order of the Treasury after consultation with the appropriate Department, which will be the Board of Trade or the Ministry of Agriculture, or other Department concerned.
But the Treasury will not take the initiative in this matter. It would be extremely undesirable to put the selection of articles to be made dutiable, or the 290 rates of duty to be levied, into the discretion of a single Minister. I am quite sure that his life would be very soon made intolerable by the demands which would be addressed to him, but, in addition to that, it might be thought that the decisions of such a Minister had been influenced by political considerations. Accordingly, it is proposed to set up an independent advisory committee consisting of a chairman and not less than two or more than five other members. This committee will be expected to give its whole time to its duties, and will be paid a salary which will be proportionate to the standing which we shall require of the members and to the sort of judicial attitude that we shall expect of them. It will be their function to consider the circumstances of those non-essential articles which are already subject to the duty of 10 per cent., and to recommend whether additional duties shall be placed on them; and, in making their recommendations, they will be instructed to have regard to the advisability in the national interest of restricting imports into the United Kingdom, and they must also consider the general interests of trade and industry, including the interests of the trades which are consumers as well as those which are producers of goods. The duties which they may recommend may be either ad valorem or specific; they may be permanent, or they may be temporary, or they may be seasonal; and in certain cases the Committee will also have the power of recommending that drawbacks shall be applied.
One of their first tasks will be to consider what is to happen to the duties now imposed under the two Acts to which I have already made more than one allusion, and it will be seen that they will have full power to recommend either that those duties shall be continued as they are, or that they shall be reduced, it may be by degrees, or that they shall be replaced by the flat-rate duty, or that they shall disappear altogether. Complete freedom is left to the committee to make whatever recommendations they think are in the best interests of industry as a whole. On the receipt of a recommendation from this committee, the Treasury will be empowered to make Orders directing that a duty may be imposed upon the article specified, at a rate not exceeding the rate which has been recommended by the committee. 291 The Treasury will also have power reserved to it to revoke or to vary such duties, and we regard that power as being an important safeguard for the consumer, for, if it were found as a result of these proposals that any particular duty was being used to exploit unduly the consumer, then the Treasury would have the power to take off the duty, as was recently done in Canada. I believe that the mere fact that that power resides in the Treasury will be a sufficient safeguard upon any future occasion against any abuse. I should add that all Orders made by the Treasury imposing duties will be subject to confirmation by a Resolution of this House, in the same way as the Orders made under the Abnormal Importations (Customs Duties) Act.
I now come to the position of the Empire countries in connection with this change in our fiscal system. The Committee is aware that next July the Imperial Conference is to be held in Ottawa, when the economic relations of the members of the British Commonwealth will be discussed. His Majesty's Government attach the utmost importance to that Conference, and they intend to approach it with a full determination of promoting arrangements which will lead to a great increase of inter-Imperial trade. I have no doubt that the Dominions would no more question our right to impose duties in our own interests, for the object either of raising revenue or of restricting imports, than we have questioned theirs to do the same, but considerations of that kind have to be weighed against the advantages to be obtained from preferential entry into Dominion markets, even though they should involve some surrender of revenue or some lessening of the reduction of imports; and since, until we meet the Dominion representatives, we shall not be in a position to estimate the advantages or the disadvantages on either side, and since we desire to mark at every stage our wish to approach this Conference in the true spirit of Imperial unity and harmony, we have decided that, so far as the Dominions are concerned—and in this arrangement we shall include India and Southern Rhodesia also—neither the general nor the additional duties shall become operative before the Ottawa Conference has been concluded. After the Conference, itsresults can be embodied in whatever modifications of these duties 292 may have been agreed upon. I am confident that this decision of His Majesty's Government will be welcomed by the Dominions in the same spirit in which it has been made. I regret very much that my right hon. Friend the Secretary of State for the Dominions, whose full concurrence, I need hardly say, has been given to these proposals, is prevented by his important duties at Geneva from being present here to-day, but he has asked me to say that he hopes before many days are over to be back again in this House, and I have no doubt that he will desire to say a few words upon this particular subject.
The Colonies, the Protectorates and the Mandated Territories are in a somewhat different position from that of the Dominions. They lie, for the most part, in tropical or semi-tropical latitudes; they have scarcely any manufactures of importance; and their products, which are for the most part fruits and vegetables, seeds arid outs used for expressing oils, and fibres, are not of a kind which compete with the home products of this country. Anyone who has visited those parts of the British Empire will know that they are characterised by an intense loyalty to the British connection. In their times of prosperity they have always been large buyers of British goods, partly by means of voluntary preferences on the part of the inhabitants, partly by means of preferences deliberately arranged in their fiscal systems. I am not sure if the Committee fully realise how wide-spread these systems of preference to this country are. Throughout the British West Indies they range from one-fifth to upwards of 50 per cent. of the normal duty. In colonies like the Bahamas, Bermuda, British Guiana, British Honduras, Cyprus, the Falkland Islands, Fiji, Northern Rhodesia, Mauritius, Somaliland—in all of these Colonies the people of this country enjoy special advantages as compared with traders from other lands. Many of these preferences form part of the permanent fiscal system of the Colonies, and they are continuously applied. Only recently, new duties were imposed in Mauritius, and the preferences which had already existed there were increased, until to-day they are something like, in some cases, three-fourths in favour of this country. In the Colonies and territories of East and West Africa, the countries are precluded from 293 giving Imperial Preference, either by the Congo Basin Treaties or by the terms of the Mandate under which they are administered, but even there a distinct advantage is enjoyed in those markets by British traders on account of the deliberate choice of the people themselves. What have we done in return for our Colonies? I am afraid we must say that we have done very little, and that frequently in the past our colonists have had the mortification of seeing that, while they were suffering adversity themselves, their neighbours and competitors were enjoying a prosperity which was given to them because of the preference in the markets of the Mother country. The recent terrific fall in the value of the commodities which they produce has brought many of them to-day into a condition of such dire distress that they have been obliged to come to the British Exchequer and seek for some assistance in their need. No fewer than eight of them are to-day in receipt of grants or loans in aid, and another four of them will be in the same position this year, and I am afraid there is a long list of those who are now only living upon their unexhausted balances and, if nothing else is done for them, when those balances come to tin end they will be in the same position as their neighbours and will have to come to us for help.
It is obvious that in such circumstances as that it would be useless to ask the Colonies to sacrifice revenue by lowering their tariffs in our favour, but we have here a great opportunity of helping them, because there is hardly any product which they produce which is not covered by these new Duties and upon which we cannot give them here a better and a more secure market than they have had in the past. The preference that we might give to them would not only benefit industries already established there but would encourage the starting of new industries and the growing of new products which are not at present derived from the Colonies, but which might equally well be grown there if only they had the encouragement that we could give them. We propose that all produce from all Colonies, Protectorates and Mandated Territories shall be completely exempt from either the general or the additional 294 Duties. We have confidence that this new departure in British policy will be most warmly welcomed throughout the Empire. I have no doubt it will evoke an immediate response. I attach even greater importance to the stimulation of the prosperity and the increased purchasing power of customers of ours who have shown that they always have the will, if they have not always had the power, to buy the bulk of their requirements from the old country.
I should like to touch for a moment on the provisions in connection with trade with foreign countries. They are of two kinds. The first deals with the case where the treatment accorded to goods coming from this country, as compared with that accorded to goods coming from other countries, amounts to discrimination against the United Kingdom. The Board of Trade will be authorised, with the concurrence of the Treasury, to impose a duty which may amount to as much as 100 per cent., in addition to the existing duties, upon any goods coming from the offending country which may be specified in the Order. I am sure we all hope it will never be necessary to put that provision into operation. On the other hand, I think the Committee will be inclined to agree with me that we are less likely to have causes of complaint of this kind in future if we have the power to extend the principle of reciprocity in the manner which I have indicated. The second provision is designed to facilitate the lowering of tariff barriers in foreign countries by offering to reduce our own in return for an advantage of that kind. In this case also the initiative lies with the Board of Trade, which will conduct the negotiations and, on a recommendation from the Board of Trade, the Treasury will have the power to direct the removal or the fixing of a lower rate on any goods from the particular country concerned which may be specified in the order. We attach a, good deal of importance to this provision as a bargaining factor, but I should like to take the opportunity of stating clearly that we do not intend to conclude any arrangements of this kind with any foreign country until we have made our agreements with the Conference at Ottawa.
§ Brigadier-General Sir HENRY CROFT
Does that apply to the revenue tariff only, or to the higher duties?
§ Mr. CHAMBERLAIN
To both. I think I have completed the main outline of the description that I desire to give to the Committee of the proposals that are going to be put before them. I am not sanguine that they will altogether escape criticism, but it may well prove that those who say our proposals go too far may be answered by those who may say they do not go far enough. There is one point to which, as in duty bound, we have throughout devoted our particular and serious attention, namely, the avoidance of anything that might entail a serious rise in the cost of living. After careful calculation, checked over and over again by competent observers, we have satisfied ourselves that there is no danger of anything of the kind in our proposals. There are at present very large stocks of foodstuffs in the world which are being pressed upon the market by the sellers at prices which have very little relation to their cost of production. Apart from that, and apart also from the effect that a tariff may be expected to have upon the value of sterling, our calculations have convinced us that there is no like lihood under these proposals that the cost of living could rise to a higher level than has already been attained more than once in the course of the last 18 months.
I hope the Committee, however, will not forget that really the essential point is the value of sterling and, if by our proposals we can correct the adverse balance of trade, if we can attract foreign capital to come to this country to be invested in British factories, if we can check the withdrawal of foreign short-term balances by the restoration of confidence, then indeed we shall have got a most valuable insurance against a rise in the cost of living which might well be far greater than anything that could conceivably come out of the imposition of a tariff. If there be any here who will say that we are not going fast enough and who would seek to plunge us headlong into a system of high Protection, I would venture to say to them that these proposals do not represent a compromise between Protectionists and Free 296 Traders. In fact, we are not agreed. These proposals represent a carefully thought-out plan, one which we who believe in the proposals, we who belong to different parties believe to be in the best interests of the nation and best adapted to its present condition and to its present relations with the world as it exists today. It may be—I daresay it is—imperfect in its details, but I am convinced that it will be accepted by reasonable men as a practical working plan by which we may gradually hope to rebuild the prosperity of our country.
Now I hope I may be excused if I touch one personal note. There can have been few occasions in all our long political history when to the son of a man who counted for something in his day and generation has been vouchsafed the privilege of setting the seal on the work which the father began but had perforce to leave unfinished. Nearly 29 years have passed since Joseph Chamberlain entered upon his great campaign in favour of Imperial Preference and Tariff Reform. More than 17 years have gone by since he died, without having seen the fulfilment of his aims and yet convinced that, if not exactly in his way, yet in some modified form his vision would eventually take shape. His work was not in vain. Time and the misfortunes of the country have brought conviction to many who did not feel that they could agree with him then. I believe he would have found consolation for the bitterness of his disappointment if he could have foreseen that these proposals, which are the direct and legitimate descendants of his own conception, would be laid before the House of Commons, which he loved, in the presence of one and by the lips of the other of the two immediate successors to his name and blood.