GENERAL AD VALOREM CUSTOMS DUTY.

HC Deb 09 February 1932 vol 261 cc691-811

Question again proposed, That there shall, subject as hereinafter provided, be charged as from the first day of Mardi, 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 be charged on the following goods, that is to say,— (a) goods for the time being chargeable with any other duty of customs (not being a duty chargeable by or under any Act of the present Session for giving effect to this and any other Resolution), but not including composite goods except as may be provided by the Act aforesaid; or (b) goods of any class or description which may be exempted by the Act aforesaid from the duty charged by this Resolution."—[Mr. Chamberlain.]

The PRESIDENT of the BOARD of TRADE (Mr. Runciman)

In resuming the discussion on the proposals of the Government, I should like to remind the Committee that we were sent to the House to deal with an emergency, giving the country an undertaking of the openness of our minds and receiving in return authority to act with unfettered discretion. It is in those circumstances that I find myself at the Box to-day. When in the last Parliament the Government of the day introduced its various Measures, the Liberal party invariably agreed to their receiving a Second Reading however much they might differ from the Government on the provisions of the Measures to be dealt with in Committee. I would ask some of my hon. Friends whether they cannot see fit in this Parliament to follow the practice which was so uniform in the last. May we not ask for the National Government the same indulgence that was shown to the Labour Government? It will still be open to my hon. and right hon. Friends to vote on the various provisions as they come up one by one. Any proposals, no matter what they are, will have disadvantages as well as advantages. Let us weigh them by all means, but we ought to remember that we are here to deal with practical questions concerning the lives and occupations of our people and with the means by which they can be maintained. Some of the decisions which we have reached inevitably go very much against the grain with me—and I say so quite openly—as they must with any who have been hewn from the same trees as I was. But I am not going to allow any of the views that were appropriate to the conditions of pre-War days or pre-crisis days to interfere with that openness of mind or to restrict that unfettered discretion which I propose to exercise.

The paramount consideration for the moment is the need for the consolidation of the internal financial position, especially from a revenue point of view and with special relation to our obligations and our capacity to carry through transactions abroad. If we have not the capacity to buy abundantly abroad, we shall interfere with the food supplies of our people and the raw materials of our industry, and we shall inevitably restrict those services which provide us with one of the most useful of our invisible exports.

I hope the Committee will not think it superfluous of me to rim very rapidly through the figures that were laid before the Committee last Thursday by the Chancellor of the Exchequer. Nothing could have been more lucid than his exposition. In order to put, the whole case again, perhaps I might be allowed to remind the Committee of the dimensions of the problem which we now have to meet. We bought last year about £800,000,000 worth of commodities abroad for our own use. We paid for part of these with material exports of £390,000,000 and by various other services £300,000,000. There was a gap of £100,000,000 left and we provided that £100,000,000 by living upon our capital. There is no other explanation of the way in which the gap was filled. We lived upon our capital to the extent of £100,000,000 in 1931. If we go on living on our capital, we shall impoverish ourselves, we shall restrict the resources out of which we can make our foreign investments, and by that means we shall impede the recovery of the world and we shall ourselves be embarrassed in the means that we have for paying for all that we require.

The crisis of which this is an indication has not yet passed. It is no use to say we have no anxieties. We have very deep and grave anxieties. The Chancellor of the Exchequer, quite rightly, pointed with pride to the effort that had been made by the nation to get itself out of its difficulties, but that does not mean that those difficulties are now past. We were at the height of the crisis in August and September last. We are still paying for it, and we shall have to go on paying for it for some time to come. Do not let us, therefore, imagine that the crisis is over. I know it has been said in some quarters that the effects upon sterling, which we were elected to protect, of the trade questions lying behind the tariff proposals of the Government are quite swamped by the movements of capital in and out of the country. But the adverse balance of payments and the movements of capital are not entirely different things. They are very much interlocked. The movements of capital cause, naturally, those who are in control of our financial affairs grave anxiety. There is a constant draught of capital out of this country and a reduction in deposits here made by foreign financial interests and individuals. Every week the French balances are going down in the City of London. We are able to stand the strain quite well, but we cannot imagine that the crisis is over so long as that movement continues and, indeed, when you come to the latter end of these movements you must always recall the fact that no payment can be made on capital or any other account except ultimately in terms of goods or services.

Why is that capital moved? It is moved for various reasons. Its owners move it because they want to find something which they think is a little more secure than a country which is on a sterling basis. They are anxious to obtain a good rate of interest. Sometimes they are attracted in one direction and sometimes in another by the market rate. They move their capital also for credit purposes elsewhere. Finally, as the experience of all Europe has shown during the last few years, they like to put it where it can be found in its most liquid form. If the pound becomes of less value, or shows signs of becoming weaker, Frenchmen and Americans will continue their withdrawals. They will put their capital in what they think a more secure place, where values are less likely to decline. We cannot neutralise these movements of capital excepting only by providing ourselves with larger resources abroad or reducing our own adverse balance of payments, which we are now aiming at, and by ceasing to live on our capital. There is no other way out.

What is the present position, of sterling? This crisis began as far back as June last. It was at its height in August. We slipped off gold and, in doing so, we belied a great many of the prophecies which had been made in the House and outside. That was purely for the reason that, being now anchored, as we are, to trade and to a general degree of confidence, we have been able by our activity, by the integrity of our financial houses, and by the enterprise of our people, to keep our trade up to a surprisingly high level while the rest of the world has grown poorer and poorer. That confidence which has been maintained in this country, of inestimable value to us in preventing that vicious spiral which follows in the wake of inflation, has been maintained so well here that our price level is scarcely altered at all since the summer of last year, and the confidence of our people at home has naturally had its effect on the confidence in sterling held in foreign countries.

It is worth noting that pretty nearly a. half of the world is now working foreign business on a sterling basis. Gold, which was the international common measure, and probably will once more become the international common measure, has been displaced in many markets. A great deal of Northern Europe is working practically on a sterling basis. The Scandinavian countries find they can make their payments more conveniently in sterling than they could in gold, and it suits their market equally well. The Argentine is practically under a sterling influence. India is linked to sterling. Australia is working also on a sterling basis. Canada is somewhere between sterling and the dollar. The northern European countries are setting the pace and others will probably follow, well satisfied with the fact that sterling provides them with a solid basis. It only provides them with a solid basis so long as confidence in sterling is maintained in this country, and we pay our way so completely that, when our Budget is announced next April, we shall show that we have made ends meet without any undue inflation of the currency, that we are not dependent upon paper for the maintenance of our currency; and, if that can be achieved, I see no reason why the sterling circle need not be considerably extended. Going off gold, however, tended to check our expenditure on imports, and at the same time it had an effect, but very much less, in encouraging our exports.

Colonel WEDGWOOD

Why less?

4.30 p.m.

Mr. RUNCIMAN

It was for various reasons. One was that half of the world was not on a gold basis, and, therefore, in taking the exports from this country there was half of the world paying us still on a sterling basis, and there was no exchange bonus in the transaction. [Interruption.] The gold basis countries did provide us with considerable bonus. That, however, is bound to disappear as time goes on. I think that it will disappear for two reasons. One will be the extension of the sterling area, and the other will be due to the fact that by a readjustment in prices and so on the bonus somehow peters out. That has been the experience of all other countries and it will be ours also. But lying at the bottom of this was, of course, the Budget of last August and September. If we had not made ends meet in our Budget Estimates then, the reputation of sterling would have sunk. There would have been no sterling area. We ourselves would have been paying nobody. We should have found no bonus on exports, but exactly the reverse. That was avoided by an increase in our revenue and by a reduction in our expenditure.

Let me say a single word about both. They were both painful processes. Those who had to suffer the cuts or reductions in their household incomes suffered severely, but the suffering was not entirely among one class of the community. The experience of the last few weeks, which is so greatly to the credit of our taxpaying classes, has not been carried out without very great effort. As we know from the reports of the joint stock banks an immense amount of Income Tax paid since the beginning of this year has been paid out of borrowed money which cannot be borrowed at the present moment, with the bank rate at 6 per cent., for much under 7 per cent. Men have been actually embarrassing their own households in order that they might fulfil a patriotic duty. In my view, the strain placed upon those direct taxpayers has gone far enough, and the time has come when we ought to relieve them of some of that burden. If we do not relieve them we shall undoubtedly be doing injury to the people who are dependent upon them in the industries which are now requiring more and more capital for replenishing their stocks and the improvement of their plant. The capital issues made in the City of London upon which we depend very largely for the expansion of our industries cannot be made, if you are taking from the pockets of these taxpayers such an immense amount of money by direct taxation or in any other way, so much so as to reduce their own resources below the margin of comfort. At the same time we have had a considerable reduction in our expenditure.

Events in the Far East are causing us, naturally, a certain amount of apprehension. Until there is a return to stability there, we shall undoubtedly have to spend money on forces which otherwise would not have gone out of the Exchequer. If only the Far Eastern trouble settles down rapidly, we hope that there may be no increase in the Army or Navy Votes, but we should be foolish if we were to imagine that we had come to the end of the sum total of our expenditure in the Estimates of last September. It is a new fact for which we must make provision. Reference was made at Question Time to-day to unemployment having gone up. Let us not overlook the fact that unemployment payments have to be made and that the Exchequer will have to find for this new increase something like £130,000 a week more than would be anticipated on the basis of the figures one month ago. There may be other claims which may have to be made on the Exchequer. The amount we budgeted for was very large, but in so far as that amount is exceeded, so far we shall fall short of making the Budget balance, and the point which I am making now is that we have so little margin to work upon that we cannot afford to neglect any source of revenue open to us.

Let me make a very rapid summary, therefore, of the position in which we find ourselves. We are off gold. We are anchored to trade and confidence. We have only been able to achieve that anchorage by keeping our revenue right up to the level of our expenditure, or, if you like, keeping the expenditure down to the level of revenue. If confidence abroad slackens or is diminished, we shall find the effect of that upon our people here and our industries grave indeed. Indeed, the position will become increasingly worse. As I understand statements made here and elsewhere, there is no member of the Cabinet who says "Leave it alone and it will come all right." No one says that. All that has been swept away—all patient complacency—from the public mind. Neither the public in this country nor elsewhere would regard this country as being in a safe position if we were to allow things to drift. We cannot afford to do so.

There was a time when, by the ordinary operation of the foreign exchanges and so forth, it was possible to look to an automatic adjustment of our payments and balances abroad. If things went wrong a little turn of the exchanges began to assert its influence and they righted themselves in the course of time. Those were in the days, let me remind the House, when there was a perfectly free gold market, when gold was spread out all over the world for currency purposes, except only in the silver countries, where the exchanges were uncontrolled and therefore functioned quite freely, and finally in a world which was carrying on its trade operations very largely on the Landon three months' bill. Now all that has passed. There is no such thing as an automatic adjustment. Nobody will be so foolish as to imagine that your exports do not pay for imports; they always do in the long run. But you will have to fill up the gap, as I said early in my remarks, by a great contribution from your Capital, or, it may be, you put off your payment until a later date. You will be living to some extent upon credit. The actual truth is that, although exports must always equal imports, there are some such supplementary items which have to come into calculations of this kind which may mean loss of time and readjustment of purchases, and, as we saw inevitably during last summer, a very considerable movement of capital.

For some time there have been changes developing in the world, particularly in this country, which upset to a large extent that easy flow of automatic adjustment. From 1913 up to last year the imports of luxury goods have gone steadily up in volume, but imports of common goods, oddly enough, have gone steadily down in volume, and the exports of manufactures in volume appear to have declined. It therefore follows that we cannot expect the same kind of adjustment appropriately now as was the case before the War. These three important facts have had a great deal to do with the rate at which our payments have to be adjusted.

There are much simpler influences also at work. Half the world is on gold and half is off. The adjustments which took place by means of gold in the pre-War days cannot operate now, and they do not operate now. Moreover, the gold is so distributed that it is at the service practically of two countries, and of none other. Gold has ceased to function, both in South America and in Europe and in Asia, with one or two exceptions. Then, simultaneously, in the absence of that service of gold, there has been the creation of new national boundaries accompanied in almost every case by a sort of economic nationalism which has run mad. One of the effects of that nationalism run mad has been to destroy a great deal of international trade, not to direct it into more profitable or saner channels, and it has had no close connection with currency. It was done blindly and with out any consideration for its ultimate effect, and is one of the causes of the embarrassment in Central Europe to-day.

Is it not incumbent upon us, therefore, if we find that the natural adjustments do not operate, to find other means of dealing with the situation? If sterling slides down, where is it to stop? I know that there are some people who think it will not slide down. I observe that the right hon. Gentleman the Home Secretary expressed great confidence in sterling last Thursday. He said, "I do not think that it can decline." He denied that it can decline. I am not quite so confident about that. If this House were to do foolish things it might very easily de- cline, and if we were to do nothing it would certainly decline. One of the reasons why I want to see sterling on a strong basis is that I, naturally, want, as every sensible person does, to see the capacity of this country to buy its main food supplies and its main raw material for its industries without let or hindrance. [HON. MEMBERS: "Hear, hear!"] You need not be anxious about that. We are just as much aware of that as you are. One of the things that we can do is to prevent imports coming into this country and by that means put an impediment in the way of those who would use our purchasing capacity abroad for things which are not necessary and not essential to our national or individual existence. We want to put the brake on. There is no harm in having a brake even on the newest of motor cars. We want to prevent an undue importation into this country beyond what can be provided by our purchasing capacity abroad. If we throw too heavy a strain upon our capacity it will at once be reflected in the value of sterling abroad and perhaps also in this country. The Government's powers are limited for dealing with the balance between exports and imports. We cannot do very much to extend exports. No Government can do very much to extend exports.

Mr. ANEURIN BEVAN

Why?

Mr. RUNCIMAN

Well, we have seen it tried by Governments in the past, and it has always failed. It failed in the coal trade. The Coal Mines Act has not extended the export of coal from this country and it has in fact by Statute limited it. [Interruption.] If it cannot extend the coal trade, no wonder they are faced with depression in the coal trade. The coal trade depends to a very large extent upon export. One of the disadvantages which we have seen recently exhibited in the legislation under which the trade of this country has been deliberately hampered is that our Abnormal Importation Orders have been selected, and have included articles which were put into the list because there have been undue importations and because there were abnormally large stocks in this country. Partly they were to deal with forestalling, and partly they were to deal with the importation and its effect upon our foreign exchanges. They were not scientific and it was never pretended that they were. We have discovered very amusing results from our Abnormal Imports Orders. Who would have thought that one of the articles in our Order would have interfered with funerals on the Gold Coast? By preventing the importation of frock coats from the United States of America to Stepney, where they are refaced and prepared for export to the west coast of Africa, we have added considerably to the expenses of negro obsequies. I have always admitted that these Orders would do some harm. The Orders are, indeed, a kind of surgical operation. What we propose in the policy which I commend to the House to-day is not a surgical operation but a slimming process. In commending these proposals to the House to-day I do so mainly as a director of slimming.

I also, and I say it quite frankly, do so with the idea of raising more revenue. We want to make sure of our revenue. We cannot afford to reach the 31st March short of the full revenue to meet the expenditure of the year. Other countries have done the same thing. Holland has a 10 per cent. flat duty for revenue purposes, and the Dutch have always shown themselves to be very shrewd financiers. They are by no means the most foolish people in Europe. They know on which side their bread is buttered. They have a very keen eye as to the value of raw materials and they know that a 10 per cent. flat duty keeps them, in Continental opinion, within the range of Free Trade countries. According to the Free Trade estimate of the various tariff countries on the Continent, Holland is a, Free Trade country. It has been a very successful country, considering its size. I have never known any of the misfortunes which were outlined to us last Thursday to fall on the Dutch.

I admit at once that it is possible to take any one section of our proposals piecemeal and destroy them. You can do that with almost any policy. There was the alternative policy of the Home Secretary expounded on Thursday. In so far as I disagree from it, I think it is very easily destroyed. In so far as I agree with it, I propose to emphasise the fact this afternoon. I do not disagree with his judgment of the 10 per cent. tariff that it will not redress the balance of trade. Nobody ever said that it would. It will only contribute to that end. The additional duties will fill up the gap which the 10 per cent. tariff is not sufficient to do. He said that the 10 per cent. tariff will not stimulate exports? Can the Home Secretary name any tax in the world that would stimulate exports? He says that "the 10 per cent. tariff will not lead to the reorganisation of our industries." "It won't wash clothes." Do not ask too much of the 10 per cent. tariff. What it will do will be to provide anything up to nearly £30,000,000 of revenue, and it will do it without doing any undue harm to the country. It will tend to put on one of the great influences which are necessary to keep down the importations into this country.

Mr. BATEY

And increase the cost of living.

Mr. RUNCIMAN

No, I do not think so. I do not think that it will increase the cost of living at all. It will do nothing of the kind. Even when you have the list of raw materials which are not to be subject to the tariff, when you exempt the chief foods of the people from the list of the articles to be taxed, I say that there may still be something approaching £30,000,000 of revenue available for the coming financial year. That is a contribution of the greatest value to us. It is not a mere matter of reducing the direct taxation, which is far too heavy, it is not a mere matter of setting right the accounts of the year, but of aiding the confidence of the world in our capacity and our determination to maintain our currency on a sound basis.

I find that it is condemned because it is a Measure of gentle protection. It is very gentle. I do not know why it should be condemned on the ground that it protects. Those who have criticised it because it is protective are themselves in favour of a different kind of protection, but protection nevertheless. Finally, it is said that it is no good as a basis for negotiation. I must refer to the effect which these proposals, if they are carried out, will have on our negotiating tariff capacity. I believe that one of the ways in which we can do something towards increasing our export trade is undoubtedly by persuasive power, if you like, or by other influences to induce those who have built up tariff barriers to lower them. But it is a. very difficult and slow process, and we have had very little encouragement in our attempts to pursue it in the past.

My right hon. Friend the Home Secretary said that he detected a tendency to lower tariffs in Northern Europe. I have had my ear very close to the ground for the last few months and have not been able to detect the same things as my right hon. Friend. He said that there had been a definite move towards lower tariffs within the last few months. I will take the official statement of the Board of Trade Journal, published on 7th January, on this very subject. This is what it says: New tariffs came into force in 1931 in Estonia, China, Colombia, Siam, and a few British Colonies, and what amounts to a general upward revision of the Netherlands Tariff came into operation on 1st January, 1932. In many other countries very considerable tariff changes were made during the past year, many of which are due to abnormal conditions, whether affecting the trade of a particular country or connected with the existing general disturbance of international economic conditions. In the earlier part of the year tariff changes were not abnormally frequent, although fairly extensive in some countries, including Austria, Argentina, Chile, Egypt, Australia, Canada, the Union of South Africa, and India. In every case an increase and not a decrease. Where was there detected any lowering of tariffs? The only important cases of reduction were in Greece and Rumania. During the last few months of the year there has been an increase of Customs duties in many countries and, what is worse, the establishment of import control in various forms. Importation into some of these countries is now subject to licence. In others it is limited by the quota system. I see no indication in any part of the world at the present moment of there being an automatic desire on the part of these foreign countries to lower their tariffs. But I do not, despair. We are now working in a new world, and I hope that we shall be able to use the means which the House is conferring upon the Government to this good end. The 10 per cent. will not prevent negotiation. The 10 per cent. can be reduced if we get a quid pro quo. [Interruption.] There is no reason why we should despair of the Dominions giving us a quid pro quo, until we have heard their case. We have ranged our- selves quite definitely on the side not of high tariffs but of low tariffs.

How are you going to negotiate if you do not negotiate with duties which are already imposed? It is said that if you travel about Europe now you will find indications in some quarters of a desire to reduce duties because they are a little afraid of our tariff. It has been called in some quarters the tariff in terrorem. That means that they are afraid of a tariff which has not yet been imposed. How are you going to negotiate with them if you do not impose tariffs? Are you going to tell them that unless terms are reached duties will be imposed on recalcitrant countries? If so, that will involve you in a tariff programme. If they are still recalcitrant, are the duties to be put up in this country? If the attitude is all bluff and nothing is intended to be done, may not the bluff be called? I prefer, as a negotiator of some experience, to say: "Here is a schedule of duties which means business. Lower your tariffs, and we will lower ours." I admit that that is not a tariff in terrorem but a tariff in being.

The other objection taken to our proposals is that they are permanent. Nothing in this life is permanent. Certainly, nothing in our fiscal system is permanent. The yearly Budget comes up for discussion here and for examination in Committee of Ways and Means and is varied from time to time according to the constitution of the House and the opinion of the electors. A plan can be varied and adapted to suit conditions, and this plan can be. The effects will be watched very carefully, and there is no doubt about it that everybody, professional and amateur alike, expert and non-expert, will meet with many surprises. What is now necessary for the chaotic and abnormal conditions of the world may become quite unsuitable when the world price level settles down and we once more get into the region of stability. If we can do very little by negotiations there is no reason why we should not make the attempt. We propose to make the attempt. First of all we must put our own house in order, and having done that we can go ahead.

5.0 p.m.

I come to the additional duties. Oddly enough, the criticism of the additional duties was much milder than that which has been devoted to the 10 per cent. tariff. The additional duties are to come along to help the 10 per cent. tariff when the 10 per cent. tariff is not strong Indeed, there are occasions enough. when, in addition to calling out the police, it is well to have the troops standing by. What are likely to be the main disadvantages of the additional duties? If they are to be imposed by discussion in this House, I need hardly say that lobbying here will become just as active as in some other countries. Already we have seen pretty active lobbying by those whose interests are touched. I do not blame them. It is very much better that you should put the control of these matters under an independent body, which has no axe to grind and which does not care what party is in power. It will not be playing for the popular favour. What is to be the constitution of this Committee? It is to consist of from three to six strong wise men. They are to have a, mandate. They will receive instructions to the effect that they

5.0 p.m. Should have regard to the advisability in the national interest of restricting imports into the United Kingdom and the interests generally of trade and industry in the United Kingdom, including those of trades and industries which are consumers of goods as well as those trades and industries which are producers of goods. Having received that mandate, we shall leave them with the greatest degree of freedom. The ultimate responsibility must rest with the Government of the day, particularly with the Chancellor of the Exchequer, but we shall leave them as much freedom as possible. They must be free if they are to be independent. I do not see much difference between our advisory committee and the industrial commission recommended by the right hon. Member for Darwen (Sir H. Samuel). Indeed, it is remarkable how often we agree. Take the case of the additional duties—I know that he will not mind my pointing these things out to him, because, obviously, he would much rather be in agreement with us than otherwise. He would like to see these additional duties used in such a way as to encourage the reorganisation and rationalisation of industry. So should we; the difference being that we should use the Cabinet and the advisory committee while he would use a commission. There is practically no difference between us there. We say that if there is to be anything in the way of reorganisation and rationalisation you should give these industries a chance of doing it with a little shelter while the change is going on. My right hon. Friend did not use the word "shelter"; he used the word "security," but he meant the same thing.

We retain the power to check profiteering, because, obviously, if any attempt at profiteering is brought to the notice of the Government, they are not going to allow it to pass; and the simplest way of getting rid of profiteering is to withdraw the duty. That is the way they Lave been doing it in Canada. We are almost in agreement with the right hon. Gentleman here. He would like to have a consumers' council, while we prefer to rely on au advisory committee; but they may be the same individuals sitting in a different office with a different title.

If I may refer to the general position in which some of us find ourselves, I should like to remind the House of a fact which may have been forgotten in the last few weeks, that I am still a Free Trader, that I can still look at these things from the point of view of the Free Trader. I have not forgotten my Free Trade teachings of the past; not at all. I can understand a Free Trader being opposed to all import duties. The old doctrine used to be that import duties were all right if a countervailing Excise was imposed. There is no suggestion in the proposals of the Home Secretary last Thursday of a countervailing Excise. He did not think of that. I am not at all sure that I do not agree in the main with the Free Trade attitude he adopts. He does not want raw materials to be made expensive. Neither do I; and I think we can avoid it. We are doing our best to avoid it. The House is very anxious to know what we propose to put in the Schedule. All particulars will be given of what is proposed to be put in the Schedule when the Bill is circulated. It is not usual to give full details before, and we are not going to be so foolish 'as to destroy industries by making it impossible for them to buy their raw materials.

There is one thing I should like to say in conclusion and it is this. I make no reference to the use made of experts, or that should be made of experts, before we arrived at our decision, hut I wonder if we had asked for guidance from Sir Walter Layton, Dr. Sprague, Sir Josiah Stamp, Mr. Clay and Mr. Keynes, who are some of the best known economists in this country, whether we should have got an agreed and identical opinion? We could not have sheltered behind their diverse views; we should have been bound to have taken action. Hon. Members who were in the House before the General Election will remember that we had two distinguished economists upstairs giving us their views about the situation and their forecast as to the future. I have not seen a verbatim report of what they said, but to the best of my recollection the two principal prophecies of these two distinguished gentlemen were belied in about a fortnight. I do not blame them. I do not believe anybody could have foreseen what was going to happen in a fortnight, but I do say that those who in our own experience gave divergent views, and who in a short time did not find their prophecies come true, are not the people to whom we should hand over our personal judgment.

I do not know exactly what is meant by "an expert." I can understand an expert in foreign exchange. There are few people who know much about foreign exchange. One of the most distinguished members of the financial community in the City, a near relative of the Home Secretary, for whom he and I had the greatest regard, Lord Swaythling, once said to Mr. Asquith that there were only two men in the City of London who understood the underlying economics of foreign exchange, and "I have grave suspicion about the other one."

I come to these questions, not as an expert, but as a practical business man. I make no pretension to anything except to having lived for 40 years in a business atmosphere, except when I was a member of Mr. Asquith's Administration—and that was a business atmosphere. Therefore, what I do as a practical business man is to ask in every case what is the best and safest thing for the country as a whole, and I ask now, as I asked before the crisis and from below the Gangway, not what theory appeals to my mind as the most attractive but what condition of trade and what incidence of taxation, are the best for British finance, industry and commerce in these strange times. Practical tests and considerations made me in pre-War days a Free Trader. The same tests applied during the present emergency make me a supporter of these proposals.

The appeal to be made now is an appeal to reason. These are matters which do not call for a parade of conscience, but for the exercise of well-balanced intelligence based on knowledge and experience. I have not felt comfortable at any stage of this crisis; there is far too much hanging upon our decision. I have to face facts, however ugly. We have to act; and it is no use being optimistic at the present moment. Optimism can be dangerous, very dangerous indeed, in those who have responsibility; and when we are told that we may not see the same crisis as we saw last August and September I say quite likely not; these things do not repeat themselves exactly in the same shape and form, but we are not yet out of the wood.

The account given by the Chancellor of the Exchequer on Thursday was true in fact and in spirit. We are still off gold. Our currency is anchored to nothing except trade and confidence. We are still living to some extent upon our capital. Fifty million pounds was repaid by the Bank of England with amazing punctuality only a short time ago to those who had lent to us during our time of need last year. We still have £80,000,000 to be repaid by the 1st September next. That £80,000,000 is Government credit which was granted in August and September last. It helped us then through a very critical period, but the crisis is not over until these amounts have been repaid. There were roughly £200,000,000 of withdrawals from this country just before September last year. Those withdrawals must come to an end before we know that we are safe. Confidence can only be restored by stopping the leaks, by paying our way at all costs, and by a first call on such foreign devisen as we need, to be selected or influenced by Parliamentary action.

If it really came true that the pound was declining internally there is no end to the misfortunes which might befall this country. It remains level. It is a pity that the Press of this country talk about the pound being worth 14s. It is worth 20s. If you are going to use an outside barometer, let the pound be interpreted in francs and dollars. Our 20s. buys as much as it did before, but if the purchasing capacity of the pound were to go down to three dollars or 2.50 you would be doubling the cost of the food of the people which is imported from abroad—and nobody can be dead certain that it will not reach that. We are not going to take the chance of it doing so; that would be gambling with the food of the people. I am not prepared to take the risk. I am going to play for safety in matters affecting the food of the people and national trade. We cannot let these matters correct themselves; we have not time. We dare not; and we will not wait. It is easy to be a doctrinaire if you have not to act, but prompt action is our most urgent. need.

Mr. GEORGE HALL

It has been my difficult task either to follow or precede the right hon. Gentleman the President of the Board of Trade on the last three occasions on which he has addressed the House. This afternoon I should have preferred that the Home Secretary had replied to the speech to which we have just listened, because I am sure we should have had another indication of the unity in the Cabinet for dealing with the present emergency. Some of us thought that the Prime Minister was rather shrewd in selecting the heads of Departments when forming his Government. We were surprised that the Colonial Secretary was removed from the Board of Trade; presumably it was because his tariff ideas were too strong for the Prime Minister. We rather welcomed the right hon. Gentleman being put into that position. But his speech this afternoon is such that he has out-Heroded Herod. He has swallowed the whole hog.

I know that the right hon. Gentleman is an accomplished politician, an excellent speaker and a very competent business man. I should have thought that even before he occupied the position of President of the Board of Trade he had made up his mind on this tariff controversy. He told us that he had been a Free Trader all his life, and that he was still a Free Trader. A very peculiar kind of Free Trader. During the General Election he said that there were some aspects of the tariff question which would have to receive his consideration, but under no consideration whatever would he agree to a tax being placed on the food of the people. The right hon. Gentleman also said that we could not right the foreign trade of any country by dodges. He himself is now one of the dodgers. He referred to the fact that there were thousands of miles of new tariff barriers in this little Continent of Europe, set up since 1918, impeding international trade. That is a new fact. But you cannot get rid of that disagreeable new fact by putting on a tariff in London. That is just what the right hon. Gentleman is going to do.

The Cabinet are a happy family. The Chancellor of the Exchequer, the whale, has swallowed Jonah, and he is not going to give up Jonah for a while. Jonah is quite happy in the destination where he finds himself. So unlike the Home Secretary after his speech on Thursday. But I understand that the Home Secretary has promised, in the conference between himself, the Lord President of the Council and the Chancellor of the Exchequer, that owing to the attitude of hon. Members who support the Government from the back benches, he will be a good boy, and that he does not intend to take any further hostile action against the proposals now before the Committee. Still, he and his friends are cuckoos in the nest. There can scarcely be very much co-operation amongst Members of the National Government whilst the right hon. Gentleman occupies the position that he occupies now.

Very little reference has been made to the Lord Privy Seal and his attitude during this tariff controversy. Some of us remember speeches which the right hon. Gentleman made in this House and in the country. One would have thought that above anyone else he would have been the first not only to hand in his resignation but to insist on it being accepted. I have here a statement which was credited to him less than two years ago. He then said: I speak upon a matter of which I have the most painful experience. The introduction of a tariff system in this country would strike at the very root of the political life of the country. Parliament would become a sink of corruption. Members of Parliament would go there, not to represent national interests, but pledged to sup- port the selfish interests of particular industries. I wonder whether the right hon. Gentleman now stands by those words?

We shall oppose these proposals. The right hon. Gentleman himself let the cat out of the bag on more than one occasion during his speech. These proposals are as much revenue proposals as anything else. The sympathies of the right hon. Gentleman and his friends are for the direct taxpayer. They think that any device to remove the incidence of taxation from the shoulders of the direct taxpayer on to the shoulders of the poor people will be popular. The right hon. Gentleman wants to go back to the old Protectionist days, when Free Trade had to come to the rescue of this country, to save it from economic conditions which were worse than they had been in this country for generations when economic conditions were so bad that 80 per cent. of the taxation of the country was paid by the indirect taxpayer. Behind these proposals we see the possibility of such an extension that the last rag can be taxed from a man's back and the last bite taken from a man's mouth.

In his speech the right hon. Gentleman referred to conditions as they exist in this country, but he knew in his heart of hearts that similar conditions exist in almost every country in the world. In Protectionist countries, or some of them, the conditions are infinitely worse than those here. In the Index of Production of the League of Nations, the most recent figures show that this country has suffered less as a result of the world economic blizzard than almost any other country in the world. We are faced with a crisis, but the financial stability of this country is unquestioned. On Thursday last the Chancellor of the Exchequer indicated the strength of the financial position of this country, and it is reported in some of the newspapers to-day that last night he addressed a meeting of certain Members who sit behind him, and indicated to them what the financial position of this country is. It is rumoured also that he gave an indication of what is to be done with the proceeds of these revenue duties. Where is there a country which is standing up to this difficulty as this country is? Of course our export trade is down, as is our import trade.

The right hon. Gentleman referred to the balance of trade when he dealt with this matter last Thursday, and said that as far as merchandise was concerned the adverse balance was something like £27,000,000. The adverse balance is caused very largely as the result of the falling off of invisible exports. Are these tariff proposals going to assist invisible exports They will so upset the trade of the world that the £4,000,000,000 which have been accumulated as a result of the profits accruing from the Free Trade system and invested abroad, or rather the dividends upon those investments, will gradually diminish and become even lower than they are now. I wish the right hon. Gentleman had referred to the position of the Argentine and other countries where large sums of British money are invested. Above everyone else he ought to know what the position of shipping is. I should have thought that the right hon. Gentleman would have been the last person in the world to engage in a tariff war. No one knows international trade better than he does. But there he is, swallowed up; lost.

Can any Protectionist country teach this country anything? We have built up large foreign investments, built up shipping, and although we on this side are not satisfied with the standard of life which exists in this country, far from it, the standard of life here, built under a system which this Resolution is now changing, is such that it is the envy of most other peoples of the world. We have social services which are a. credit to us. We have less unemployment than most other countries of the world. What is even more important, the wage rates of our people are higher than they are in most of the Protectionist countries in Europe. I feel that this step is being taken at the wrong time. On this question of the balance of trade I wonder whether the President of the Board of Trade has read a letter by Professor Henry, Clay in the "Times" of to-day. The right hon. Gentleman does not like experts. There he is so different from his right hon. Friend the Prime Minister, who always depended on experts. It was the experts who advised the Prime Minister regarding the gold standard, and told him what would happen if this country dropped the gold standard. There is scarcely an expert in this country, an economist or financier, who believes that the proposals of the Government, the 10 per cent. or even the additional duties, will balance trade as between this country and other countries. The Home Secretary dealt with that matter very fully on Thursday.

5.30 p.m.

This country is now engaged in a tariff war which must inevitably affect this country as much as, if not more than, almost any other country in the world. The right hon. Gentleman referred to the coal industry. Half the adverse balance of merchandise last year was caused by a falling off of the coal export trade. We have seen the coal industry of this country gradually dwindle. Last year the total output of coal was 223,000,000 tons, compared with 283,000,000 tons in the peak year of 1913. The output this year is down compared with last by something like 24,000,000 tons. The number of men employed in the coal industry is smaller than for many years. In South Wales there are fewer employed, and the output is lower than it was as far back as 35 years ago. Then you had an expanding industry; to-day you have a receding industry. Unfortunately it is the coal industry which is the first to be attacked in tariff countries. Already, as a result of the proposals of the Government, restrictions have been imposed in most European countries. France to-day is taking 62 per cent. of the import of coal from this country as compared with the monthly average for the last three years. Germany has followed suit, and other countries are going to follow suit, but the action of France and Germany alone is responsible for putting 25,000 miners out of employment in this country. In South Wales that has had a serious effect because 53 per cent. of the coal exported to France from this country comes from South Wales. The number of men employed in the production of coal in this country for export and bunker purposes is 250,000 and another 250,000 are indirectly employed. The livelihood of these men is in jeopardy, very largely as a result of the tariff war in which this country is at present engaged.

The right hon. Gentleman said that these proposals were double-barrelled; that the 10 per cent. duty was one barrel and the appointment of the Tariff Commission the other barrel. He indicated some of the duties of the Tariff Commis- sioners. I ask him whether those Commissioners are to have any direct responsibility regarding the reorganisation of industries which may seek Protection where those industries are not efficient. I also ask him will there be on that Commission not only a direct representative, of industries which are consumers of raw material, but a direct representative of the consumers of foodstuffs in this country, or is it going to be confined to the experts whom the President of the Board of Trade decried. I realise that the men who are to occupy the position of Tariff Commissioners will be key men. It will be necessary to have excellent men to fill those positions, and I hope that the right hon. Gentleman will try to see that every interest is properly represented.

Then there is the question of the free list and the import of raw materials. I understood the Chancellor of the Exchequer to mention only two items, namely, raw cotton and raw wool. Is there to be any extension of that, list as regards the import of raw materials. Almost every industry in this country is dependent upon a certain amount of raw material for its existence. I hope that, in preparing the Schedule to the Bill, which I understand is to be presented in the course of a few days, the right hon. Gentleman will consider a very large extension beyond the two items which he mentioned on Thursday. Then we come to the question of the tax upon food, about which we on this side are very concerned. We may be told that it is only a 10 per cent. tax. Hon. Gentlemen opposite who have been Protectionists almost all their lives, while expressing satisfaction with the proposals of the Chancellor of the Exchequer, were not really satisfied so much with the 10 per cent. duty suggested, as with what was likely to accrue as a result of the work of the Tariff Commission. Had the right hon. Gentleman limited his proposals to the 10 per cent. tax, I think that 75 per cent. of the Conservative party would have opposed those proposals. But this 10 per cent. is only a start. It will be extended and, as far as we know, it will be extended, not only as regards manufactured goods, but over the whole range of imports. But 10 per cent. in itself is serious enough. We have such commodities as flour, butter, eggs, fresh fruit and other foodstuffs imported into this country from foreign countries and almost every article imported will have to bear this 10 per cent. duty.

It is useless to say that prices will not increase. The Lord Privy Seal recently said that a 10 per cent. duty on food would mean, at least, a 15 per cent. increase upon the food before it reached the consumer. It has been recorded that the late Lord Balfour on one occasion, when asked whether Protection would increase the cost of commodities said, "Of course Protection will raise prices." The late Lord Melchett, in his better days, when he was dealing with Safeguarding said that Safeguarding would increase prices and that it would be of no use if it did not increase prices. The whole purpose of these tariffs is to increase the prices of commodities which are essential for the well-being of the people. The Home Secretary referred to the pitiable plight of the unemployed. What is the situation of a single man with 15s. 3d. a week, of a husband and wife with 23s. 6d., of a husband, wife and two children with 27s. 3d—

Brigadier-General Sir HENRY CROFT

All under Free Trade!

Mr. HALL

Yes, and it is 27s. 3d. more than they would get in Protectionist America. Then there are tens of thousands, nay, millions of people in this country whose wages average £2 a week. A 10 per cent. duty, which really means a 15 per cent. increase in the cost of foodstuffs, means a great reduction in the real wages of those people. I ask the Government, therefore, even at this late hour to consider modifying these proposals as far as the food taxes are concerned because they are proposals which are going to inflict real hardship on the people. But I feel that it is almost useless attempting to prevail upon the Government to modify their action. The real purpose of these revenue taxes was disclosed by the President of the Board of Trade. Already those whom hon. and right hon. Gentlemen opposite represent are quarrelling over the spoils. There was scarcely a week-end paper which did not indicate what is going to happen with the proceeds of the revenue duties. Some suggested that we should see a penny coming off the price of the pint of beer—[An HON. MEMBER: "And a good thing, too!"] Yes, an increase of a penny a pound on butter to reduce the tax upon beer by a penny a pint is what an hon. Member opposite would call "a good thing."

The remainder, we are told, is to be used for the reduction of direct taxation. In the very first Budget which the Conservative Government introduced after the 1924 Election, they reduced direct taxation upon the wealthy people of this country by something like £40,000,000 a year. Almost the last action of the Conservative Government before leaving office in 1928–1929 was to give to productive industry, by their de-rating scheme, a gift of over £30,000,000 a year. It has not done the slightest good. It was to cure unemployment, but since it has been put into operation unemployment has increased to dimensions which we hardly care to mention. The next Budget we shall await with interest, but there is no doubt in my mind as to what is going to happen. This Government may be called a National Government, but they are a Tory Government. As good Tories always do, the Government are going to look after the interests of their friends.

Sir H. CROFT

I hope that the lion. Member for Aberdare (Mr. G. Hall) will forgive me if I refer only briefly to his remarks. He advanced arguments which have been heard here so often that it would be unprofitable, in the new conditions in which we find ourselves, to pursue them at any length. I am, however, distinctly surprised that any hon. Gentleman speaking from that bench should oppose the proposals of the Chancellor of the Exchequer, because I think I am right in stating that the hon. Gentleman's own leader, Mr. Henderson, confessed that the majority of the old Socialist Cabinet were in favour of an all-round revenue tariff of 10 per cent. [Interruption.] I hope that hon. Gentlemen above the Gangway will not be angry at that statement. I do not know whether they wish to repudiate what has been said by Mr. Henderson. [Interruption.] It is accepted, then, I take it, that there was a majority in favour of a 10 per cent tariff, and I do not pursue that matter any further. The hon. Member for Aberdare mentioned the pitiable story of the condition of South Wales, under the Coal Mines Act which his party introduced. South Wales is stricken in many ways. I was there last Friday and Saturday and one has only to go a few yards in that part of the country to realise the appalling distress caused by those great steel industries at Dowlais and Ebbw Vale and other industries, being out of business. The report of the Coal Commission which was presided over by the present Home Secretary emphatically laid down that the only hope of the restoration of the coal industry lay in the revival of the heavy industries. I hope that that, is something towards which the Government are going to contribute.

I must say something regarding what I feel to be the great event of the introduction of these proposals. It is particularly fitting that the present Chancellor of the Exchequer should have charge of this Measure. It is more than 28 years since the late Mr. Joseph Chamberlain asked me to enter the ranks of his army and fight for this cause. Much water has flowed under the bridges since that day. There have been advances and retirements, and there have been again bold attacks and then some humiliating retreats, but I hope that history will record that the men who dedicated their services to Mr. Chamberlain's great ideal have not been unfaithful to that cause throughout the years.

May I, for a brief moment only, regret the fact that it has taken nearly a quarter of a century for this policy to be definitely brought by a Government before this House? In my own view, great misery and distress might have been avoided, and we might have seen an entirely different economic life for the whole of the Empire, if we had listened to the patriotic words of that remarkable man, whose prophecies have come true in practically every particular. But I want to tell His Majesty's Government that, as far as my friends in this House and I are concerned, we feel that the principles of this great Measure are in every way satisfactory. The main objective is undoubtedly acceptable, not only to all the Government's supporters who sit behind them, but in the country outside, and I only want, to mention one or two brief points in connection with these proposals, not in a critical spirit, before I refer to the diatribe of the right hon. Member for Darwen (Sir H. Samuel) last Thursday.

This has been pressed upon us, both by the right hon. Gentleman and his colleagues in the Government, as a revenue tariff. I have never been one of those who have been particularly anxious to see a revenue tariff, although I think that in the days of the extremity of the British taxpayers and the real misery through which people have had to go in order to pay their Income Tax in the last two months the case has been different. I am not referring to rich people, but to those thousands of people in my constituency with incomes between £300 and £500 a year, whose sufferings have been intense; and that ought to be realised. Therefore, I am in no way hostile to the idea of a revenue tariff, because I think it is time we relieved the British taxpayer at the expense of the foreigner, instead of going on as we have done up to now.

But I hope that directly our revenue position is clearer we may see evolved from this policy something in the neighbourhood of high tariffs on fully manufactured goods, scaled down according to the process of manufacture, with ample margin for preference for friendly foreign countries and a still greater margin—complete Free Trade, as I hope, so far as this country is concerned—for Empire products oversea, as I am glad to see is embodied in the principles of these proposals. When we have achieved those objects, then I say, quite frankly, that if the revenue position has improved, I should like to see complete Free Trade in all raw materials which we cannot produce in the Empire ourselves, and I believe that that is probably the aim of those who sit on the front Government Bench.

One important argument that I want to use with regard to these proposals has reference to the Advisory Committee. It has been stated in some of the newspapers that by the setting up of this Advisory Committee we have got the precise policy which a Conservative Government would have introduced had the status quo before the election existed, but I think that is quite inaccurate. I believe that our policy, had we had a complete national mandate for a Conservative policy, would have been immediately to introduce a, tariff of an average of, say, 33⅓ per cent. on all manufactured and partly manufactured goods coming into this country, and thereafter we would have had speedily set up a Tariff Commission or Committee of an impartial character in order to make scientific adjustments of that tariff. In that case, of course, the Government would have taken full responsibility for the original duties, and the Commission would have scaled them scientifically up.

Under this present policy, the Government, through force of circumstances which we can all understand, have had to meet the views of some Of their friends. The Government are divesting themselves of responsibility in that respect, and placing it on the shoulders of a Committee. Personally, I think that is a mistake, but I do not think it matters very much. What does matter is the spirit in which your instructions are given to the Committee. By that, I do not mean instructions in regard to any single industry, but is it your purpose, when you have immediately, as I hope, set up this Committee, to give them positive instructions to recommend immediate duties adequate to protect all industries needing protection, and will they have powers, as in the case of the Abnormal Imports Duty, to take a range of manufactured goods, such as iron and steel and other groups, so that they can take effect? I think there is nobody supporting the Government who wants to see the long procedure 'that we saw under the Safeguarding Acts continued in this case, and, after all, it is very urgent that we should act.

It is five months now since the first National Government took office, and, in my honest belief, had they acted on the original Conservative plan, we should have seen some hundreds of thousands of persons extra in employment in this country to-day. I know at this moment of at least 20 industries which will double their plant or set up new factories directly they know where they are. I know also of large orders of machinery which are merely awaiting the word "Go." Uncertainty is holding all this up at the moment, and abnormal imports, which have been the price that we have had to pay for a certain amount of compromise, will continue until your Committee is able to get to work. Speed is of the essence of the contract. That must be clear now to everyone who has watched what has been happening. It is absolutely vital to the success of the Government's plan, in my belief, that the Committee should shelter all industries adequately while the necessary investigations take place.

The other word that I want to say is in regard to agriculture, although I shall be very brief in this connection. In my opinion—and I think it is shared by most people—the Government's policy as it applies to agriculture is wholly inadequate. We understand that we are to have a statement from the Minister of Agriculture in a very few days, but I do beg the Leaders of this House to realise the desperate condition of that great industry. I spent the whole of the Recess in touch with farmers and on the corn markets in different parts of the country, and ruin is facing thousands of the best of our countrymen, through no fault of their own, at the present time. I particularly urge the Government to realise this fact, which I think the House does not yet appreciate, that owing to the vast supplies of Russian corn of various descriptions coming into this country last year, you have inflicted a deadly blow, not only upon your own corn growers in this country, but equally upon the wheat growers in the Dominion of Canada and in the Commonwealth of Australia.

I do not know if it is realised that more wheat came from Soviet Russia into this country last year than from Canada, that more barley came here from Russia than from any other country, and that with regard to oats Russia stood second. That would not matter if you were dealing in trade with an ordinary trading nation, but the Russians are sending their corn products here to be sold at any price. That must murder our premier industry. I heard the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) make a wonderful speech, standing in this very place, in which he said that you cannot carry a monster like that on your back. Of course you cannot. It means complete ruin to your cereal producers unless you take steps to see that they are not undermined by stuff which is clearly dumped, according to the widest interpretation of that word.

I warn His Majesty's Government also that, owing to the alarming fall in the price of meat products throughout the world, your stock raisers and pig producers of this country may very shortly be in precisely the same position as your cereal farmers unless we take action. Therefore, I hope His Majesty's Government may concentrate on this very important subject in the very near future. I have offered these two proposals, not in any carping spirit, but solely with the desire to see speedy results from the Government's policy, because I believe they have started upon a road which will lead this country through these difficult times to a new era of prosperity. I beg the Government to be bold and courageous. Leadership in this country during many years, I think, has been such that our leaders have been inclined to wait until the house has been three-parts gutted before sending for the fire brigade. The Government should give us leadership, should give us courage, and I believe the country will rally to you and that you will not only have won the last election, but that you will win the next -and the next, because you will have solved this great problem that is confronting us.

Now I want to say a, few words with regard to the speech which was delivered by the right hon. Member for Darwen last Thursday. I read in the Press, as no doubt many of my colleagues did, that this was an agreement to differ like gentlemen, and that the right hon. Members who differed from their colleagues would with dignity declare their reasons for dissenting, but that such was their patriotic desire to see the national unity maintained that at all events they would play the game. We certainly did not imagine that we were going to listen to a speech such as we heard last Thursday. If I may break for one moment into sporting parlance, the moment the Darwen player took the field, wearing the national colours, it was evident that he was using all his brilliant talents and energies to foul his own side and prevent his colleagues from defending the national goal.

We had a torrent of words, most eloquent, almost every sentence of which was calculated to injure the Government, was calculated to impair the confidence of the people of this country in His Majesty's Government if they believed those words, and was calculated to raise the cheers of his erstwhile friends on the Front Opposition Bench. For two years the right hon. Gentleman showed how he could swallow his pride, how he could curb his vocabulary, how he could give wonderful fidelity to the Socialist Government, of which he was not a Member, and how he shared the responsibility for that deceased Government, and indeed, as we have been told, egged them on in the fury of their financial follies.

6.0 p.m.

When in turn he rounded on his erstwhile friends and took their place in His Majesty's Government in order to try to save the country from the ruin which he and his friends had so largely brought about, optimists expected that at least he would give the same fidelity to the National Government, of which he was a Member, as he had given to his late allies. But they were disappointed. I remember warning the electors of Darwen, when I visited that salubrious spot, that if the right hon. Gentleman was returned to this House, he would do everything he could to obstruct and defeat proposals for national reconstruction such as the country desired, whatever the national verdict on that occasion might be. I remember that my right hon. Friend the Leader of the Conservative party, who is always so ready to think well of his opponents, did not share my views. He gave a great message of encouragement to the right hon. Gentleman, and persuaded thousands of Conservatives in Darwen to vote for him—

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

No, Sir; 600, I think.

Sir H. CROFT

The right hon. Gentleman's arithmetic in his constituency seems to be as difficult to understand as his arithmetic in this House. The fact remains that Darwen is a traditionally Conservative place, and a Conservative candidate has been in the field a long time. I happened to be in Darwen on the day when this bombshell appeared in the papers, and I was told on every hand that scores of Conservatives had felt it their duty—

Sir H. SAMUEL

Six hundred.

Sir H. CROFT

We will not pursue the figures. The fact remains that the right hon. Gentleman received the loyal support of the Conservative Leader on the very clay that it became known that he was launching 76 Liberal Free Trade candidates in opposition to National Conservatives who were either sitting Conservative Members or candidates in the field.

Sir H. SAMUEL

Were there no Conservative candidates opposing sitting Liberal Members who supported the National Government?

Sir H. CROFT

I cannot say, but I did all I could to keep the right hon. Gentleman out.

Sir H. SAMUEL

I am most grateful to the hon. and gallant Gentleman for his speech in Darwen; it contributed largely to my majority.

Sir H. CROFT

I am sure that when the electors of Darwen see the right hon. Gentleman's conduct, they will agree that my diagnosis of his future conduct was correct. He was primarily moved, I think, to make his speech of Thursday last on grounds of conscience. He wanted his conscience to be quite clear. He stood there exactly like Caesar's wife. His conscience could not permit him to support a revenue tariff of 10 per cent., though it had permitted him to support abnormal duties of 50 per cent. a few weeks ago. His conscience told him that he must not vote for anything of a permanent character. In his speech last Thursday he informed us that all duties tend to become permanent, yet he had voted for the abnormal duties. In what riotous living the right hon. Gentleman is engaged fiscally at this time! His conscience told him that so low a duty would not restore the balance of trade. I suppose that the Chancellor of the Exchequer was too moderate. Free imports are no longer possible; the right hon. Gentleman has proved that by his action; but a 10 per cent. revenue tariff is too low to be any good.

His conscience told him that these duties will restrict imports and put a burden upon the consumers. His reason compelled him to admit in his speech that they will exclude an exceedingly small proportion of the goods which it is proposed to tax, and that only some 8 per cent. of the whole will be excluded. That must mean that the foreigner, where he is in competition with British and Empire products, is clearly going to pay the duty if his products in such large numbers still enter this country. The President of the Board of Trade mentioned the magic word "Holland." I have been equally shocked by these proceedings, because many a time I have heard the right hon. Gentleman say that Holland and Denmark were the two great Free Trade countries of Europe. They have now strayed from the path of virtue, or is it that the 10 per cent. tariff is quite an excellent thing in Holland, but must not be tolerated in this country by Free Traders?

The right hon. Gentleman explained that he was not bigoted, and he went on in a broadminded spirit to say that he was prepared to give Protection for a short period of years as in the case of the Dyes Act. That is to say, that 10 years for a Measure like the Dyes Act would be all right, but 15 or 20 years would be a violation of the sacred cause of free imports. I suggest that if at the end of 10 or 15 years we find these duties are not successful, the House will not hesitate to get rid of them; and when it is remembered that we can deal with them in our annual Budget that argument will not hold much water. The right hon. Gentleman agrees with duties on agricultural productions, protection as in the Dyes Act, the quota for wheat and 50 per cent. abnormal import duties, but his conscience forbids the 10 per cent. tariff on foreign supplies. I am afraid there must be a great deal of distress below the Gangway, especially on the part of the hon. Gentleman for East Edinburgh (Mr. D. Mason), because the Home Secretary is no longer a Free Trader. At least, he is not pure white. He is piebald. He has the Free Trade disease in patches, with temporary exceptions for industries which cannot survive the effects of Free Trade.

He got really eloquent over raw materials, yet he did not hesitate to support the Coal Mines Act in the last Parliament. Coal, if anything, is a raw material with very little or practically no competition from outside. [Interruption.] At present there is not much coal coming into this country and the competition with coal production in this country is for the moment nil, so that there was nothing to intervene there to regulate prices. In fact, I remember our late lamented friend in this House, Mr. William Graham, stating quite definitely that the Act must raise the price of domestic coal. Now the right hon. Gentleman accuses his colleagues in the Government of raising the price of the food of the unemployed. Did he accuse himself of raising the price of coal of the same section of the community?

Sir H. SAMUEL

The hon. and gallant Gentleman sets out to assume that I supported those provisions of the Coal Mines Bill. I did not.

Sir H. CROFT

My recollection is that but for the right hon. Gentleman and three of his colleagues, who formed the majority of four, the Bill would have been killed. When he dealt with the food of the unemployed, he became very eloquent. Did he or did he not support the agricultural duties? Duties on tomatoes are a virtue for him, but duties on American tinned salmon are a deadly sin. He even tried to make capital out of the wheat quota and declared that it would mean a halfpenny on the four-pound loaf. His figures are somewhat exaggerated, for the authorities think that the most it will be is a farthing. With 20s. difference in the cost of wheat in the last 10 years and a variation of only one halfpenny, it is hardly likely that there can be such a rise in the price of the four-pound loaf.

I asked the right hon. Gentleman during his speech whether he did not support the quota, and he replied, with the honesty that he always shows, "Yes." Why, then, did he seek to make capital out of this question and to create prejudice against his own Government, which he supports on all other questions except the revenue tariff? If it is wicked to use the fiscal method with its possible reactions against the food of the people, it must be equally wicked to use the quota method where he declares that there will be an actual increase in price. The right hon. Gentleman became terrified that these foreign revenues might be used for the relief of the direct taxpayers of this country. He asked if the £30,000,000 or £40,000,000 was needed. I remember Mr. Snowden, as he then was, at this time last year told the country that taxation then was so high that it was the last straw, and that any further taxation would break the backs of industry and of the direct taxpayers. The right hon. Gentleman knows that there was enormously increased taxation in the last Government, which was very hurtful to the taxpayers, but he says we must not relieve direct taxpayers at the expense of the foreigner. I hope that it will be realised that he is the leader of the Liberal party, the party of retrenchment, and that the taxpayers will note that particular part of his speech.

He spoke with great concern with regard to the possible addition to the cost of living to our 2,700,000 unemployed, because of the quota and the duties on foreign products. I tell him, and I believe that nearly everybody in his heart of hearts agrees, that it is mockery to speak to the unemployed in these terms. Cheapness is no good to the man who has not a copper in his pockets. What he wants is a fair wage and continuous work. That is the bread which we offer to him. Free Trade has given him only a stone and despair. Free Trade has given this country a higher average of continuous unemployment per head than has existed in any country in the world since the War. I ask the right hon. Gentleman, this question. Is there an economist or a banker in this or in any other country, or a political leader, who does not admit that cheapness at the present moment is the curse which is responsible for the economic paralysis of the world? The right hon. Gentleman in the same speech referred to the drop in the price of commodities as catastrophic. There is a reason for that, and it is that the primary producers of the world are not able to produce at a profit. That is what is inflicting the whole of the agricultural countries, and the result is that they are out of the market. They cannot buy from the manufacturing nations of the world, and you have a vicious circle.

We who support the Government are determined that our industry and agriculture in future shall have an economic life so that they are able to pay reasonable wages and so that there shall not be this perpetual undermining of and attacks on the status of our people and the social conditions we have built up through the years. I submit that when the right hon. Gentleman joined the Cabinet and accepted the policy which gave a free hand to the Prime Minister to adopt any methods, not excluding tariffs, he must have been guilty of a political confidence trick. If he meant to give a free hand to the Prime Minister in these difficult days, with the crisis not solved and with the difficulties immensely greater, why was he not able to meet his colleagues half way? Does he not know that the Chancellor and his friends have produced a policy far different in its scope from what we would have desired? We know that our right hon. Friends have done this in an endeavour to meet the obvious difficulties of the situation. Surely it would have been right and proper if the right hon. Gentleman and his friends had merely dissented from this policy, had given their support to the Government on other grounds, and had declared that they differed from them on these fiscal proposals and would take no further part in the consultations, or in any decisions on them.

We are told that had the right hon. Gentleman resigned there would have been serious trouble abroad, that foreigners might have thought the national unity was impaired. I agree that his resignation would have caused interest in Darwen, and also possibly in Dartmoor, but I can assure the House that from Denmark to Devil's Island, which is another place where convicts dwell, there would not have been a ripple on the diplomatic surface of the world. It takes much more than the resignation of one, two, three or four Ministers to make foreign nations imagine that this country is dead. When foreigners look at our united Government, and see in it those two brilliant statesmen the Foreign Secretary, whose name is already made at Geneva, and the President of the Board of Trade, they will be inclined to regard those two gentlemen as representing the more serious element in Liberal politics. What the country desires is a strong, united Government. If our Government are united the whole world will respect them, but I cannot see how the electors of this country or the people in foreign countries can have much respect for our Government if we have a repetition of what happened last Thursday, which I hope was a convulsion such as we shall not see again. We heard in that speech all the old arguments appealing to sectional interest and insular prejudices, arguments which have as little relation to this great crisis as a, hansom cab has to modern transport. We are living in a day of danger. We must not divide the strength of this country. We must maintain the confidence of the people. The speech which we heard did not deal with the situation as it is to-day. The adverse balance of trade, which was £256,000,000 when the right hon. Gentleman first took office, was £408,000,000 by the end of December. Those are facts. We as a nation have to fight to get over those difficulties. I believe the speech of the right hon. Gentleman last Thursday will not be taken very seriously by those in the country who wish good will to His Majesty's Government. I think it was the death rattle of Free Trade.

Sir H. SAMUEL

Does the hon. and gallant Member really say that the adverse balance of trade is £408,000,000?

Sir H. CROFT

The right hon. Gentleman is again disputing facts which have been given by his colleagues. I thought he was going to differ on only one subject. [Interruption.] Am I wrong? The balance of trade is £408,000,000. I thought that was generally accepted, and that it was generally agreed that he and his colleagues went to the country and said, "We have balanced the Budget and now we have one supreme duty, which is to balance our trade." They won the confidence of the country on the distinct understanding that they were going to achieve that. I can only say that I hope His Majesty's Government, having tried adopting their friends, and having found that they have failed, will go forward now, regardless of treason within or obstruction without, towards their great purpose, in which case this country will bless them.

Major GWILYM LLOYD GEORGE

I do not intend to follow the hon. Baronet, except to make one or two comments on his observations. He seems to think the balance of trade is £409,000,000. I would remind him that we do have such things as invisible exports. He also said that Free Trade gave our people a stone instead of bread. I do not think it is necessary for me to point out that under Free Trade the standard of living in this country rose enormously. [An HON. MEMBER: "In spite of Free Trade."] In the 27 years after this country became Free Trade our exports quadrupled and the standard of living rose enormously.

The deliberate policy of the people of those days was to encourage the importation of raw materials and to send out in exchange our manufactured goods. That policy raised the standard of living of our people, and that is what we seek to do now. The hon. Baronet also expressed the hope that the Safeguarding procedure would not be followed under these new proposals. I can well understand his saying that, because under the Safeguarding procedure every industry had to make out a case in order to be safeguarded, and that would not appeal to him.

We have had this afternoon, as one would expect, a very interesting and, if I may say so, an entertaining speech from the right hon. Gentleman the President of the Board of Trade. All I want to say about it is that I have heard him make just as able speeches and come to a different conclusion. He says that he has changed. I will reply to that in his own words by reminding him that he once said the rules of arithmetic do not change. He enjoyed himself very greatly at the expense of the right hon. Gentleman the Home Secretary. I do not see a great deal of difference between them. He has changed his mind, and the right hon. Gentleman apparently has not. But on one thing, at any rate, they are agreed, and that is that it would be a national disaster if either of them had to leave the National Government. I do not think I shall be accused of exaggeration when I say the Division to be taken to-night is one of the most momentous in the history of this country. When we substituted Free Trade for Protection as the fiscal policy of the country we there and then laid the foundation upon which the economic life of the country was built, and, whether we like it or not, the development of the country and the prosperity of our people have run along the lines of Free Trade.

I am fully conscious that I am speaking the sentiments of only a small minority in this House, but I feel entitled to protest against these proposals because I resigned from the Government last October when I foresaw that an election on the lines contemplated would have no other result than we see before us to-night. [Interruption.] I said, "On the lines contemplated," and that meant a national appeal in order to get one party's policy adopted. There is no doubt whatever that large numbers of Free Traders voted for National candidates because they were assured that a change in the fiscal policy of this country was not the issue at the election. [HON. MEMBERS: "Oh!"] I know of Liberal Free Trade candidates who went on to Conservative platforms because they had an assurance from the Protectionist candidate that in his judgment, at any rate, a change in the fiscal policy was not an issue. I know candidates who did it. [HON. MEMBERS: "Give us the names!"] I can give the names, but would rather not do so now. I would not have said that unless I had their names. There is no doubt that large numbers of Free Traders were under the impression that it was not an issue. I must say, in fairness to the Lord President of the Council and the Chancellor of the Exchequer, that in most of their speeches they left no doubt, in my mind at any rate, as to what the policy would be, if they could influence it; although I believe the Chancellor of the Exchequer did, at a subsequent meeting, tell the electors that they were not going to vote on the morrow upon whether the country was to have Free Trade or Protection. Still, I must say, in fairness to him, that most of his speeches left no doubt in my mind as to what he was after. But the appeal was a national one. There were two other parties to this appeal, and what was the impression left upon the minds of the supporters of certain of those gentlemen who spoke when they said it was not an issue? Lord Snowden stated definitely in his broadcast speech, which is much more important than speeches that appeared in the Press: If Free Trade or Protection were an issue at this election I should be on the side of Free Trade. I do not believe that the Conservative leaders would regard a majority obtained in the circumstances of this election as giving them a mandate to carry a general system of Protection.

Sir H. CROFT

Is it not a fact that the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) declared that it was an issue and urged every Liberal in the country to vote against Conservatives because it was an issue?

Major LLOYD GEORGE

Certainly, and I did the same thing in my con- stituency, where, I am glad to say, I was successful. It must be remembered that at that time the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) was, to say the least of it, not in good health, and had no control whatever over the number of candidates who stood, which was the important thing. The Minister of Education told us last night that the Conservative party made it clear what they were going to the country on, and the Liberal party made it clear. What was not made clear by him was that in nearly, 400 constituencies in which Conservatives were fighting no Liberal Free Trader appeared; and if Liberal Free Traders were advised by those who, at the time, were leading the party that Free Trade and Protection was not an issue, and that the thing that mattered was to get national candidates returned, it is small wonder that hundreds of thousands of Free Traders voted for candidates who have now turned out to be fully Protectionist.

6.30 p.m.

The Home Secretary was then in a position of great authority in the party and he, by his broadcast speech, must have influenced thousands of Free Traders. Last Thursday he made a great attack upon the proposals which have been brought forward. As one would expect, it was a very able defence of the Free Trade position. I have only one thing to say about that speech. It would have been far more effective had it been made from this Box, and would have been most effective if it had been made before the election. The only difficulty is that if it had been made before the election, I doubt whether we should have had the privilege of hearing him last Thursday. I confess that I find it extremely difficult to understand his position. He is definitely opposed to these proposals, yet these proposals are the main plank in the Government's programme; but, as he says, there are other things besides Free Trade in the programme. I think I should be in order if I referred to the right hon. Gentleman's attitude on those other things. Speaking at Buxton on 15th May, 1931, the Home Secretary said: With regard to peace and disarmament, the spirit of the Tory party was far indeed from that which the times required in this supreme issue of modern world politics. They could not be sure that Conservatism in power could carry out an Indian policy acceptable to Liberals …. It is impossible for any Liberalism worthy of the name to align itself with the Conservative party. I often view the proceedings of the Labour Government with dissatisfaction, but I view the prospect of a Tory Government with dismay. I know where I want to go; I see my destination definitely before me. If I come to a river I look for a bridge; if I come to a swamp I walk round it. Some say that this is not heroic; that this is mere tactics. Let them if they wish march head high, hand on heart, into the river or the swamp. I prefer to arrive where I wish to go. The right hon. Gentleman says that he is opposed to these proposals because they are not in the national interest, and yet in regard to a proposal which is not in the national interest he still remains in the Cabinet. The reason which the right hon. Gentleman gives for this course is that it is not to the advantage of the National Government that Liberalism should fail to bring its own distinct contribution to the National Government. I trust that future Liberal contributions will be treated with a little more respect than this one. I find it very difficult to understand the position of the right hon. Gentleman, and from the speeches which I have heard and things which I have read, I feel that that difficulty is shared to a much larger degree by Conservative Members of Parliament. If I may offer a word of friendly warning to the right hon. Gentleman, I would advise him to be careful, because I am sure that he will find it exceedingly difficult both to keep his porridge and fling it in the face of the warders.

These proposals were brought forward last Thursday, and many reasons were given for their introduction. There is one observation which is very commonly made, and it is that Free Traders live in the past, that they know nothing and learn nothing. I expected to find that some new light would be thrown on this subject last Thursday, but I regret to say that I have been greatly disappointed; in fact, the Chancellor of the Exchequer gave us what might be called a glowing account of the position. The right hon. Gentleman said that never before has the Income Tax come in so rapidly, and that it had come in in a way which was the envy of other less happy lands, which, by the way, are lands of a Protectionist character. The right hon. Gentleman told us that the cost of living remains prac- tically the same; in fact, he said it was a little lower and trade was improving, although to a very small degree. Those are observations which can be made in respect of no other great country in the world to-day. After hearing that account of our prosperity, I wonder why in the world it has become necessary to revolutionise the whole fiscal policy of this country.

The Government claim that they have a mandate to apply to this subject, an unprejudiced mind free from fetters, but the ideas which were expressed in the speech of the Chancellor of the Exchequer were similar to those which were expressed for 30 years in this House. We have been told that the Liberals are the only people who do not change their views. My suspicion on this point has been confirmed by what the Home Secretary told us when he said that he regretted that the Government did not first obtain the considered opinion of experts in finance and trade and well known economists before submitting their proposals. I think it would have been much better to have had a thorough scientific examination into so complex a subject. We have not had such an independent inquiry.

The Chancellor of the Exchequer has stated that there has been no compromise about this policy, and that means that to-day we are getting the Conservative policy which we should have got if a Conservative Government had been returned at the last election. So much for the national character of this Government. I stated before the election that if a National Government were returned it would in fact be a Conservative Government, and I do not think that I was far wrong. The right hon. Gentleman told us that the correct way to balance our payments was to increase exports and diminish imports, but later on he said that when you increase exports you are bound to a certain extent to increase imports. I suggest that the converse is equally true, namely, that if you decrease imports you are bound to decrease your exports. To-day the whole world is trying to do the same thing. Every country in the world is trying to decrease its imports and increase its exports, which is obviously absurd and impossible. The President of the Board of Trade said that on this question foreign countries had gone mad, but is there any reason why if everybody else goes mad, we should also go mad? In the past we have led the world in these matters, but to-day we are going to follow them wherever they may lead us. The whole world at the present moment is trying to increase its exports and to diminish its imports. I have here a quotation which, I think, I ought to read to the House, from the International Bankers Committee: The nations of the world are contending each for a disproportionate share of dwindling world trade. With a different policy they could share with one another an expanding world trade. It is essential that trade policy should permit goods to move in the settlement of international debts, and that countries should make markets for one another. With trade lines open labour, now idle in one country, could be at work, producing goods to exchange for goods which would he produced by labour now idle in another country …. But the trade barriers stand between them, and both remain idle. We are adding to those difficulties by the proposals of the Chancellor of the Exchequer who told us that the balance of payments against us amounted to £200,000,000. The right hon. Gentleman also told us that our invisible exports, connected mainly with shipping, had shown a big drop, and although there had been no increase in the imports, there had been an enormous decrease in our exports. That is shown clearly in the returns of our shipping industry. Unfortunately, said the Chancellor of the Exchequer, these items are those which it is least possible for the Government to influence, because the hulk of it consists of receipts from shipping and so on. It may be very difficult for the Government to change this tendency in an upward direction, but pit is very easy for them to make it travel in a downward direction. As our shipping carries the vast proportion of these goods, I should have thought that the best thing to do would have been not to decrease the service rendered by our ships, which is most likely to cause a decrease in our invisible exports next year.

The Chancellor of the Exchequer has told us that his desire is to fortify the finances of the country without placing any undue burden upon any section of the community. The hon. and gallant Baronet the Member for Bournemouth (Sir H. Croft) has told us that the foreigner will pay all this taxation, but I should have thought that that argument had been blown sky high by now. There is only one person who can pay this kind of taxation, and that is the man who buys, the consumer. We are told that it is the cheapness of imported articles that is unsatisfactory, but the cheaper articles are those which are bought by the poorest of the people, and whatever tax you put on those articles will have to be paid by the masses of the people of the country. The right hon. Gentleman stated that he wished to prevent a rise in the cost of living, and he proposes to do that by imposing a tax which will automatically raise it. We are told that the cost of food has not risen because sterling the basis in many foreign countries, but has the right hon. Gentleman considered the other side of the problem? Surely every artificial method used to improve the value of our currency has the effect of making it more easily possible to import, and more difficult to export. If you raise the value of your currency, you are increasing imports and restricting exports.

We have been told that the object of these proposals is to transfer work from foreign countries to our own countries, and when the Chancellor of the Exchequer made that statement, he was loudly cheered by hon. Members behind him. Our imports are another country's exports, and as you diminish their exports so you diminish their purchasing capacity—[Laughter.] Hon. Members opposite laugh, but there is only one way of paying except by gold or borrowing. Therefore, if you do give employment to a certain number of British workmen making goods by stopping importations, you are giving work to a certain number of foreigners who are unable to take your exports, and, on balance, we lose because, as a rule, we carry the goods of our own and foreign countries in British ships and our shipping industry is one of the greatest industries in this country. Directly and indirectly there are millions of people dependent upon our shipping. We stand to lose far more than we stand to gain by this policy of shutting out imports.

With regard to agriculture, I say quite definitely that the majority of farmers in this country will be hit by these proposals, because the price of their produce is not going to be affected to any great extent, but the price of what they have to buy is going to be affected. In this month's Journal of the Ministry of Agriculture—which I am told is an absolutely reliable document—particulars are given of seven Devon farms. One finds that the first three products of these farms are cattle, sheep and pigs, all of which are to be unprotected. They form nearly half the products of the farm. Dairy produce and poultry constitute a pretty large part—about 20 per cent.—and yet we find that the Dominions are still going to import perfectly freely into this country, and in some dairy products our greatest competitors are the Dominions. There are other sundries which do not make much difference. As regards expenses, we find that wages, feeding stuffs and manures are the three biggest items apart from rent, and the result of this policy will be to increase the cost to the farmer of all of these items without giving him any extra return for what he produces. I can best sum the matter up by quoting a telegram which I received to-day from one of my constituents: Potato shortage; therefore imports taxed. Bacon glut; therefore imports free. Pig feeding profitless; therefore pig food taxed. This is sugar beet wisdom. I was rather surprised to find that the right hon. Gentleman referred to the old policy of using tariffs for bargaining purposes, and I was very surprised to see the President of the Board of Trade joining him. He referred to the tariff as a good bargaining weapon, and then proceeded to state that there had been a steady rise in tariffs, as far as he could make out, all over the world. Why the effect of a tariff for bargaining purposes should be different in this instance from what it has been throughout history, I do not know. I should say that competitive tariffs lead to freer exchange of goods in about the same ratio as competitive armaments make for peace, because the fact is that the result of all these tariffs throughout Europe has been that the tariff levels of the world to-day are higher than they were before the War. With regard to Empire Preference, I only want to point out that the proposal which the right hon. Gentleman suggests ties his hands beforehand in reference to any negotiations with foreign countries regarding tariffs. I am ali for Empire development, as everyone else is, but not entirely at our expense. Why cannot we take a leaf from the Dominions' own book? They say they will do anything they can for us, but Canada must come first, Australia must come first, and so on. Why cannot we say, for a change, that Britain must come first?

We have very good friends outside the Empire. It is possible for us to develop the world without confining ourselves to Empire development. As far as trade is concerned, we have even better friends outside the Empire—[Interruption]. So far as treatment of our goods is concerned, that is the case, and it is a mistake to antagonise very good friends in countries where millions of our capital are invested, giving employment to British people in making railway material, engines, carriages and so forth. I maintain also that it is definitely dangerous. Does anyone here think that we can peacefully maintain and control millions of square miles of the earth's surface for the economic advantage of this country and the Dominions exclusively? I do not think it is possible. I maintain that wholly inadequate reasons have been given to us for changing the fiscal system of this country. Let us imagine that this country is a business concern. For the first time in history, I believe, since we have had trade balance figures, we make a loss, at a time of acute depression, when other countries are doing, if anything, a little worse than we are, and the board of directors comes along and says, "Good heavens, we are making a loss. We have had an average balance on the right side far the last 10 years of something like £100,000,000. Now we have made a loss, and we must change the whole policy of the company." What is the new policy going to be? The policy that is succeeding very badly in other countries.

In the last century, under Free Trade, we developed undeveloped parts of the world, sank British capital there, and got from those lands the raw materials which we manufactured and sent abroad again. That is the policy upon which we have built up the greatest mercantile marine that the world has ever seen. We have spent thousands of millions in building railways and harbours, and developing even the United States of America. What for? To bring trade here? No; to put up duties and stop anything from coming in at all. We have built up this enormous business, and now we are going to throw the whole thing over, because other countries which have tried this method are weathering this storm very much worse than we are. The policy that we are throwing over to-night is the policy which we owe to the foresight, the initiative and the courage of our forefathers—the policy that has made this small country one of the greatest countries the world has ever seen. Tonight we are going to be asked to turn down that policy. Because I think that in doing so we shall be taking a retrograde step, because I think it is a step that will eventually impoverish this country, and because I am certain that it will lower the standard of life of our people, I shall use all the energy that I have to oppose these proposals at every stage.

Mr. MACPHERSON

I am certain that the House has enjoyed the brilliant speech to which we have just listened. I regret that I cannot see eye to eye with my hon. and gallant Friend on this occasion, but none the less I have a profound admiration for the sincerity of his convictions and for his ability. I am speaking in this Debate to explain how and why I shall vote, and I am also speaking on behalf of that group of the Liberal party—the Liberal National group—with whom I work. My hon. and gallant Friend made a magnificent defence of Free Trade. It was the sort of defence which many of us would have aspired to make if no crisis or emergency had arisen. But we are justifying by our vote to-night the position which we took up, holding the same strong Free Trade views as my hon. and gallant Friend, but sacrificing them because we were told, and we believed it to be true, as we believe it to be true now, that a national emergency and crisis existed in this country.

My right hon. Friend the President of the Board of Trade has spoken from the inner Cabinet for himself and for my right hon. Friend the Secretary of State for Foreign Affairs. My right hon. Friend the President of the Board of Trade, the Committee will agree, spoke with his usual eloquence and power. My two right hon. Friends, who occupy very high positions in the Cabinet, represent many Members on these benches, and they represent millions of electors outside. With all respect to the other Ministers of the Liberal party in the Government, no one would suggest for a moment that my two right lion. Friends were the least distinguished of them. Indeed, it would be idle for anyone to deny that, for experience and intellectual capacity and ability to judge the needs of the national economic and industrial situation, it would be difficult to find a more powerful combination than these two. In addition, they have wielded a potent influence in the councils of the Liberal party for many years and in many Governments.

There is no dubiety as to where my hon. and gallant Friend stands, and that is to his, credit; but Liberals on this side of the House were returned, in larger numbers, probably, than many expected, as out-and-out supporters of the Prime Minister's manifesto and policy, and almost all of them got the support of the Prime Minister and the Lord President Of the Council, with all the advantages of their popularity, authority and prestige. I am speaking for my own immediate colleagues on these benches, and I am going to point out what were the views that were advocated before the country, and what are the views that we hold to-day. They are the same. We promised definitely to support the National Government in the emergency without reservation, because we foresaw that support of that Government with reservation would be bound to end in ambiguity, misunderstanding, and, in the long run, an embarrassing situation. We placed before the country three issues, which I will state in three sentences.

We asked the country, first of all, to record its disapproval of the Socialist Government which had brought this country to the verge of disaster. Secondly, we asked for a vindication of the formation of a National Emergency Government in the eyes of the country and in the eyes of the whole world. Thirdly—and this is the most important of all, to-night particularly, when we have to take action—we asked for support for a free hand for the Government in any policy, not excluding tariffs, which they thought necessary. Most of us, indeed all of us, have been Free Traders all our lives, but we were prepared, as we are now, to give tariffs a trial, since all else, so far as we could see then, and so far as we can see now, has failed. In those days we had no thought of Cabinet divisions. The only issue in our minds was as to whether, if a tariff was decided upon, it should be a high one or a low one, a moderate one or an extreme one. The only reservation that some may have felt, and it was a reservation that was not restricted to members of the Liberal party, was the reservation with regard to taxing the food of the people.

7.0 p.m.

I now, as my hon. and gallant Friend did, turn for a moment or two to the speech of the Home Secretary last Thursday. The House will remember that that very morning there appeared in the Press a forceful, pungent, merciless letter, emanating from the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), whose absence from our Debates we all deplore. That letter must have caused a flutter among the leaders of the official Liberal organisation. In any case—and my right hon. Friend will understand that I hope my criticism will be fair—the speech of the Home Secretary that afternoon was singularly and remorselessly devastating in its hurried restatement of the familiar Free Trade case. But if it was devastating in one sense, I venture to say with the greatest possible respect that it was purely destructive, in its criticism on all practical points, as well as singularly disingenuous. Most of us were amazed that, after his short and hectic 50-per-cent. tariff record in the present Government., a complete reversal of the practice of Free Trade, he should suggest that the policy which has now been advocated by the Government was one for the rich as against the poor, particularly as he himself said in his speech, in answer to an interruption, that he was in favour of a quota on wheat. Notwithstanding all that, he desired the House to believe that he was a defender of Free Trade, and that those of us who took the opposite view during the General Election and since were outside the pale.

If I read his speech aright, and I read it again this morning, he is not opposed to all tariffs; he merely objects to a portion of the present scheme. The House will remember the proposals that were put forward by him as an alternative scheme. He would have an indus- trial commission which would invite industries to prepare schemes for their reorganisation and rationalisation, and for obtaining such new capital as might be needed. What is the source from which the Home Secretary thinks this capita/ would come? I understood him then to suggest that, if need be, and in the last resort, these industries should get a subsidy.

Sir H. SAMUEL

I made no such suggestion.

Mr. MACPHERSON

I am very glad to hear it from my right hon. Friend. Of all things that the Free Trader abhors it is the subsidy. In the course of his speech he said that in the meantime, if things did not go right—and this is part of his alternative proposals—or while the Measures are being put into effect, he was prepared, if a measure of security is needed, to advocate for a short period of years any protection or quota, or in any other way. What did he mean by "in any other way"? Tariffs. There is no other explanation. He meant that, if need be, he was prepared, for a period of years, to support industries by licences, by quotas, or by tariffs. If that be so, why did he use the phrase "in any other way"? Why did he not say outright that he meant to employ a tariff? In that connection he cited the Dyestuffs Act, and recalled in the course of his speech that he opposed its renewal. On this occasion he cited it as a very good model to follow, but what happened with regard to the Dyestuffs Act would indubitably happen with regard to his licences, his quotas, and his tariffs.

Perhaps the most astonishing part of his speech was when he went on to say that he would gladly concur in a close examination of this aspect of the whole question with a view to promoting, industry by industry, a, definite industrial recovery. That was a very admirable suggestion for normal times, but are we in a state of emergency, economic and industrial, or are we not? If we are, as we are assured we are even by the right hon. Gentleman himself, such a proposal is like prescribing a long sea voyage as a cure for persistent haemorrhage when for the sake of the patient you should try to stop the bleeding. As between the two policies, there can be no hesitation in the, minds of most Members of the British House of Commons.

In conclusion, I am convinced that there are many hundreds of thousands of life-long Free Traders who were and are prepared for the time being to sacrifice their principle, and to give a free hand to the National Government, in the full belief that such a Government can be relied upon honestly to apply, on national grounds only, the quickest and most effective methods in this emergency to restore the balance of trade or the balance of payment, and to attain the financial stability of this country. That is the reason that my colleagues of the Liberal National Group are prepared to support the policy now before the House.

Mr. BATEY

I venture to step in between the two wings of the Liberal party. Perhaps that will give them a little time to cool down and reconcile their points of view. I am sorry to see that the hon. and gallant Member for Bournemouth (Sir H. Croft) is just going out, because he made two statements which, at the beginning of my speech, I wish to deplore. He said to the Labour Front Bench: "You ought to be prepared to agree to this 10 per cent. revenue tariff, because Mr. Henderson was in favour of that 10 per cent." If he had been in his place I would have reminded him that Mr. Henderson, while making no secret that he would be prepared to support a 10 per cent. revenue tariff, would have done that rather than have agreed to cuts in unemployment benefit. The Parliamentary Labour party had no opportunity from the Prime Minister of considering the 10 per cent. revenue tariff policy, because the Prime Minister simply smashed the Labour party and left it without an option, and without the opportunity of considering 10 per cent. tariffs or anything else.

The other demand of the hon. and gallant Gentleman was this: He referred to the policy of this country during Free Trade and actually went to the length of saving that under Protection there would be abundance of work and that wages would be better. He was going an extremely long way in making a prophecy like that. Once under Protection, the condition of the working classes will be altogether different from what that position is at the present time. He appeared to forget that Protection is not new, and that we are not accepting something that has not been in this country before. He forgets that for 30 years this country had an experience of Protection, and that, after that 30 years' experience, which included the "hungry forties," the Prime Minister, Sir Robert Peel, smashed his party and marched this country into Free Trade. It is just a little bit strange that, nearly 100 years after that, we witness the present Prime Minister, who was a Socialist Prime Minister, turning his back on his principles, smashing his party and marching his country into Protection.

I listened with interest to the speech of the President of the Board of Trade this afternoon, and before he sat down he recalled to my mind something that I have often thought of before, and that is the fear of the clever politician. I confess that the longer I am in this House, and the longer I am in politics, the more afraid I become of the clever politician. When the President of the Board of Trade to-day was finishing his speech, that was the thought that came into my mind. He reminded us of the meeting that was held upstairs, at which two economists addressed the Members, and that their prophecies were proved false. We are coming to the position not only of not being able to rely upon economists, but of not being able to rely upon politicians. The President of the Board of Trade is altogether a different man from what he was before he took office. In his speech to-day he expressed sympathy with the direct taxpayers, and said: "The time has come when we should relieve them." At a luncheon of the Free Trade Union that he attended in London on 22nd June, 1931, he dealt with this very principle. I will read to the President of the Board of Trade, lest he may have forgotten, what he said on that occasion. He said: The reason why the Protectionists of the Conservative party have secured support is simple. Everyone is groaning under the burden of direct taxes, and there are, I am afraid, a great many deluded people who imagine that if only we had a general tariff, direct taxes would be lowered. From what knowledge I have had of public life, both inside and outside the Treasury, I am inclined to think that if you had a tariff, direct taxes would remain exactly where they are. The President of the Board of Trade said this afternoon that if we supported this policy it would relieve the direct taxpayer. He also said that he was recommending these proposals as a "slimming" process. If the President of the Board of Trade would go to the North of England with which he is so familiar, or to his own town where he was born, I am certain that he would not preach the slimming process at the present time. Nowhere in the county of Durham would he preach the slimming process, nor would he recommend anything for the purpose of the slimming process. As a matter of fact, in Durham County we have had no less than 42,000 men before the public assistance committees subjected to the means test. The poverty of our people in the North of England is worse to-day than it has ever been. He went to one of our colliery villages and said, "Surely this is the bedrock of poverty." It is immensely worse to-day through low wages and lack of work. The unemployed miners in Durham do not want any slimming process. Those who have to go to the public assistance committees do not want a slimming process. Their condition is as bad as it can be. We want something of a different complexion and something that will make things better and not worse.

I could have understood the right hon. Gentleman arguing that this 10 per cent. revenue tariff would give him the power to negotiate. I could have understood him saying to Russia, "Last year we bought 29,000,000 cwts. of wheat from you and half a million cwts. of butter, and you only bought from this country 26,000 tons of coal. We want either that you should buy more from us or that we should buy less from you." I could have understood him saying to Denmark, "Last year we bought 2,500,000 cwts. of butter and 7,500,000 cwts. of bacon from you and you only bought 1,500,000 tons of coal, giving the great bulk of your contracts to Poland." One is rather alarmed at the proposal to give a preference to Canada. The Empire Free Trade question leaves one cold. I could have understood him saying to Canada, "This country last year bought 27,000,000 cwts. of wheat from you and you bought less than 1,000,000 tons of coal from us, while you bought 16,000,000 tons from America." The right hon. Gentleman would be justified in saying even to Canada, "So long as you buy 16,000,000 tons of coal from America and less than 1,000,000 from this country we will not have any talk of Empire Free Trade go far as that is concerned."

I could have understood him proposing a 10 per cent. revenue tariff for the purpose of protecting infant industries, but the Government are paying no attention whatever to the claims of infant industries. There is one growing up now which would revolutionise the coal trade and employ every miner in the country who is unemployed now, but there is no proposal to protect the industry of extracting fuel oil from coal. This time last year we spent £26,000,000 on foreign oil, in 1930 we spent £42,000,000 and in 1929 £38,000,000. In three years we have spent over £100,000,000 on foreign oil and there is no need to buy a single gallon. It can all be extracted from coal. The Government, however, is indifferent to the industry and takes no steps to help it.

The right hon. Gentleman told us these tariff proposals would bring in some £30,000,000 a year. What is it proposed to do with that money? The Chancellor of the Exchequer said last week: The purposes 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."—[OFFICIAL REPORT, 4th February, 1932; col. 288, Vol. 261.] Is it proposed to use the money for restoring the cuts that were made last year, or abolishing the means test? We have been told pretty well to-day by several speakers, and it has been prophesied in the Press—and, with this Government especially, the Press on these matters is generally pretty accurate —that the intention is to reduce the Income Tax by 6d. If the Government propose to use this money to benefit the rich, I am afraid they are raising an issue which will take some settlement. If the working classes have to submit to these deprivations and the Government use this revenue to relieve the rich, it will help to rally the working classes, and we shall hear them say something in regard to it. A Conservative official leaflet says the money required for the wheat quota will be found by a tax on manufactured goods. The Government should hesitate before even letting it be thought that they are raising money from the tariff in order to enrich the wealthy and the agricultural landlord. The direct taxpayer and the farmer may have cause to complain but the condition of the great bulk of our people in the distressed mining areas calls for attention before anything else. I read these words in the "Sunday Express," which seemed to me to be most appropriate to the present occasion: Why is it the tenderest feet must tread the roughest road? Why is it that the weakest back must carry the heaviest load? While the feet that are surest and firmest have the smoothest path to go, And the back that is straightest and strongest has never a burden to know? The object of the Government seems to me to be to continue the policy of laying the load upon the weakest back. They will simply rally the working classes, who will insist that it should be laid on the strongest.

The Chancellor gave a second reason last week. He said the object of the tariff was to put a brake upon imports. The President of the Board of Trade to-day said it was like putting a brake on a new motor car. But, if a motorist puts his brakes on too quickly, there is a liability to skid, and if you put a brake on imports there is the danger of skidding exports. We are connected with an industry which simply lives upon exports. The condition of our people is determined by the amount of exports. Trade, after all, depends upon friendly relations between buyer and seller. Ever since this Government came into office we have seen the annoyance caused to foreign countries, and the coal industry is the one that is called upon to suffer most. The Minister of Mines stated at Question Time to-day that the Ministry had arranged for a deputation of coalowners to discuss with the French Government the embargo upon English coal. It seems to me that this is a matter where the Ministry of Mines should use their influence and do everything they possibly can to influence the French Government on this question of buying English coal. France is our best customer for coal.

7.30 p.m.

We hear a good deal about Empire Free Trade, but, except for Southern Ireland, no other place in the Empire matters in the slightest to us, because no other place buys our coal. So we are concerned when a customer like France gets annoyed and upset and imposes an embargo. Last year France only bought 10,500,000 tons of coal against 13,000,000 tons two years ago. If the new embargo which France is to put upon coal continues, it will simply mean that a deadly blow will be struck at the coal industry of this country. What applies to France applies with regard to other countries. France is our best customer for the purchase of coal. Italy is the second best customer, and there is a danger that Italy may also be annoyed. Germany, which is the third best customer for buying coal in European markets, is annoyed. I read only on Friday that it was reported that Hamburg shippers were being restricted to 140,000 tons of coal per month as against 300,000 tons. These proposals have a real and important bearing upon the mining industry, because our people will suffer in two ways. They will suffer, first of all, through loss of trade, and on the other hand through the increased cost of living. Therefore, a big industry like the coal industry cannot too strongly condemn the Government in adopting those tariff proposals. Just as I disagree with the tariff proposals of the Government, so I also disagree with the proposals made by the Home Secretary last Thursday. The Home Secretary stated that what was needed was not tariff proposals, but an industrial commission. We have had too many industrial commissions, one after another, and we do not want any more industrial commissions.

I believe that the only solution is to socialise industry; to apply to the industries of this country the principles of Socialism. The hon. and gallant Member for Bournemouth spoke about the poverty there has been under Free Trade, but we have to admit that under Free Trade private enterprise has been fairly tried and has been an absolute failure. The hon. Member for Stockton-on-Tees (Mr. Macmillan), speaking on one day last week, stated that half the trouble from which we had suffered had been due to the haphazard way in which our economic life had developed between 1846 and the present time. That is what we complain about. We complain that there has not been any organisation in connection with industry, and that the main purpose has been to get as much profit as possible out of industry without due consideration of the interests of the workers and the community. The President of the Board of Trade this afternoon said that capital was flowing in and out of the country. It is simply that which makes us suggest that the time has come when capital ought to be controlled. Capital ought not to have the freedom simply to go in and out of the country for the purpose of picking up the largest interest and the greatest dividends. Capital in connection with industry ought to be controlled. We believe that the only remedy is to socialise industry.

The DEPUTY-CHAIRMAN (Captain Bourne)

The hon. Member is now getting far from the Resolution before the Committee.

Mr. BATEY

I will not carry the matter any further, Captain Bourne, except to say that the Government policy is a challenge to the working classes. It is going to be a struggle between the rich and poor. The last General Election did something more than merely put a National Government into power. It seems to have put the vested interests in control of the country. It is a challenge to the working class to organise, and these proposals will, in my opinion, help the Labour movement more than anything else can do. The right hon. Gentleman the Member for Spark-brook (Mr. Amery), when speaking last week, quoted Disraeli in favour of Protection. I will take a few of the same words and try and quote Disraeli against Protection. 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."—[OFFICIAL REPORT, 4th February, 1932; col. 306. Vol. 261.] That awakening of bitterness has come. The political cycle will not stop. It will go on turning, as it has turned in the past, putting Governments into office and then turning them out of office. [An HON. MEMBER: "It put you out!"] The political cycle will continue, and just in the same way as it has put this Government in power it will throw this Government out. That will be Labour's chance, and I hope that Labour will be ready when that time comes.

Mr. JAMES COOKE

In rising to address the House for the first time, I confidently claim its indulgence and con- sideration. During this Debate there seems to have been very general recognition—and that recognition has been shared by bankers and economists—that high tariff walls throughout the world has been one important factor in the world's economic difficulties. At the same time, there has been an equally strong conviction among a large section of this House, shared by the bulk of the electors of the country, that we must change our fiscal system, partly as an act of self-preservation, and partly for the purpose of increasing our markets and trade with our only potential markets. A great Free Trade market in a Protectionist world, such as the British home market, has only acted as a clog to the opportunities that there may have been towards increasing an international trade or freedom of trade generally. I think that to get rid of that clog is one of the important factors in the policy put forward at the present time. There is also a strong recognition that, whatever we may think of these tariffs in themselves, they cannot be considered a cure for all our ills, whatever the effect may be upon the balance of trade, upon our managing to reduce tariffs in other countries, and upon our bargaining power.

Moreover, the test of their success or failure will definitely be the result upon employment and the industry of the country. This increase of output which we anticipate must be dealt with by finding markets of some kind, as has been recognised by many speakers to-day, it is going to be one of our difficulties to find markets. We expect a great increase in the production of our own present industries. We also, I think with confidence, expect that we shall have British factories to employ British labour put up in this country by foreigners which will again increase the output for which we shall want to find a market.

Looking round for markets is not going to be very easy. If one looks at and examines the trade balances of various foreign countries to-day, he will find that in all cases where there is a favourable trade balance it has become considerably less favourable, and that where there is an adverse trade balance it has become more adverse. In the words which have been used many times, everybody in the world is wishful to become a seller and none a buyer. With these difficulties, the opportunity of finding a market for the increase of production over and above the requirements of the home market, which we must not forget, will not be easy. We have to recognise that Britain as an island cannot survive the present world condition. As an Empire it can thrive. The Empire cannot survive merely upon sentiment, although several speakers to-day have not recognised the strength of sentiment that will be behind the arrangements for improving Empire trade. That sentiment is still, in the Colonies and in the Empire as a whole, very strong indeed. We cannot survive on sentiment alone. Material and advantageous arrangements of an economic nature between all parts of the Empire will, I am convinced, provide an answer to the question of our markets. For this purpose Imperial preference and tariffs are an essential preliminary. There are few people to-day who do not recognise that our hope for the future of this country is to be found in the increase and development of our Imperial trade. Without a. tariff, it is quite impossible. A tariff is an essential preliminary. The splendid gesture which has been made by these proposals to the Dominions and the Colonies has been well received and recognised, and, in my opinion, all goes very well for the success of our policy.

There are in relation to trade certain factors which seem to give us encouragement. When we went off the Gold Standard, as has been mentioned to-day, the Scandinavian countries decided, owing to the value of their trade with us, to follow sterling rather than gold. I have little doubt that opportunities will be given for improving, by bargaining, our trade with the signatories of the Convention. I have no doubt that similar opportunities will occur for South American countries who are everywhere finding our markets so valuable. Many of the Dominions are off gold, and those Dominions are following sterling because of the great value of their trade. I am convinced that the fact that so many countries to-day are following sterling instead of gold, owing to the value of their trade, and in order to make that trade more simple, will increase the advantages which we shall get from these tariffs when we come to the Ottawa Conference. The conference will be a business conference. There is no question about it. The aim which we must have at the conference is to widen, as far as we possibly can, by agreement, the area of free and unhampered trade within the Empire. That is the greatest opportunity which this country possesses. The British Isles are too small to support a Protectionist country within its own boundaries, and on the other hand the Empire is too sparsely populated to supply a sufficient market for a great many types of industrial production.

During a recent visit which I paid to many parts of the Empire I was struck by two facts. One was the very legitimate demand that was being made for those countries to become more industrially self-supporting. It was a very natural thing. It is looked upon by many opponents of these tariff proposals as a detriment to agreements which we may hope to make at Ottawa. But I was also struck by another important fact, namely, the very definite recognition in all parts that the essential need of those Dominions is a considerable and increasing market for their agricultural and pastoral products. In a. country like Australia 35 per cent, of the population produces 65 per cent. of the wealth of the country, almost the whole of the exports which are so urgently required for the meeting of the interest payments for the development loans of to-day and tomorrow which are so essential to that country. The whole of the people of the country, including the industrialists, recognise that the agricultural and pastural interests must be fostered. It is on this assumption that I am satisfied that when we go to the Ottawa Conference the Dominions will act in a great spirit of co-operation, a spirit that will be enormously helped by the gesture that has been made to them. We have an opportunity at that conference, through the operation of these tariffs, of producing a business consolidation in the Empire, and I am satisfied that the signpost to prosperity for this country for its industries and its workers points quite definitely in the direction of our Empire.

Mr. HOLFORD KNIGHT

The House will desire me to offer to the hon. Member its congratulations on the speech which he has just delivered. We shall look forward to his contributions in future Debates with much interest, because he has described to us the reflections which have crossed his mind as a result of his visit to the Dominions. We await with confidence the great gathering at Ottawa, where many of the matters of great concern affecting the Mother Country and the Dominions will be discussed. It is particularly useful in. this debate to have the advantage of personal testimony of that character, and I desire to thank the hon. Member for his contribution.

For some of us this discussion stirs up long memories. I had the happy fortune of being in one of the galleries of this House in May, 1903, when the late Mr. Joseph Chamberlain laid his proposals before this assembly for the establishment of tariff reform. In the subsequent campaign which took place for several years, until 1906, I took some part with several Members of the present administration. I listened with great interest to the speech of the Chancellor of the Exchequer in opening this discussion and, with the greatest possible respect, I desire to make a comment on it. This discussion threatens to turn into a revival of old controversies between Free Trade and Tariff Reform. It began with the contribution of the Chancellor of the Exchequer. I beg leave to say, and there are hon. Members who will corroborate the statement, that the case which the right hon. Gentleman presented was not the case which his father presented to this assembly, and it was not directed to the same purpose. While we can understand the fervour of the hon. and gallant Member for Bournemouth (Sir H. Croft) in regard to the direction which this question has taken, it is not the same case with which the late Mr. Joseph Chamberlain was concerned. His proposals never contemplated such an economic situation as that with which we are confronted and his proposals were never directed to the cure of such a situation, because no such a situation had occurred. He was mainly concerned with setting up an Imperial zollverein and in protecting our industries from increasing foreign competition.

Incited by the remarks of the Chancellor of the Exchequer, the Home Secretary followed on the other side of the old controversy and restated in a brilliant form the numerous arguments which the late Mr. Asquith set forth on many occasions in this House and throughout the country. Therefore, under the example of these two promiment Members of the Cabinet the discussion has tended to become a revival of the old controversy. That old controversy is not in issue today. That controversy was directed to an entirely different situation. What we have to confront is an economic position which has never occurred before in the history of this country. The importance of recognising that fact is that it throws a penetrating light on the position which we now face under the direction of His Majesty's advisers, because it was just that unexampled economic situation which created the crisis that brought about the change of Government. Whatever view we may form about that crisis, there can be no dispute that it arose out of an amazing economic situation the central fact of which was the unexampled disparity between our imports and our exports. Since we live in the main on our exports the livelihood of every section of industry was involved, and it was vitally necessary that a plan should be adopted to cure that disparity.

I want to say a few words as to the relationship of tariffs proposed by the present Government to the issue which was presented to the country at the last election. I confess that when I heard the proposals of the Chancellor of the Exchequer my first impression was that they went beyond the commission which this administration received from the country, but on re-reading with great care the statement of the purposes which he has in mind in putting forward his proposals I have come to the conclusion that those purposes were clearly within the commission. [Interruption.] I am aware that what I am saying must contradict the week-end harangues of the hon. Member for Shettleston (Mr. McGovern), but I am concerned with stating the facts. In order to assist him in the corning weekend I would recall to him and to the House the description which the Chancellor of the Exchequer gave of the purpose of his proposals, so that we can test whether they come within the commission that was given to the Government by the country. First of all, we desire to correct the balance of payments by diminishing our imports and stimulating our exports. That, clearly, was a large part of the case which the Government presented to the country. Then we desire to fortify the finances of the country by raising fresh revenue by methods which will put no undue burden on any section of the community. That clearly is an inference from the first condition. We wish to effect an insurance against the rise in the cost of living which might easily follow upon an unchecked depreciation of our currency. That, obviously, is one of the principal purposes for which the Government was elected. 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 he diminished. There, again, is a description of purposes which find acceptance on the Labour benches opposite, as was shown by the speech of the hon. Member for Spennymoor (Mr. Batey). 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. There, again, is an aim that is supported by every party in this House. 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 he used to discriminate against us in foreign markets. That also is a. direction of policy which was put before the country and on which the sense of the country was taken, and it is obviously part of any scheme which any responsible Government in this emergency would put forward. 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 future may he disposed to give, to us."—[OFFICIAL REPORT, 4th February, 1932; col. 287, Vol. 261.] That completes the summary which the right hon. Gentleman put forward as the purpose of his proposals, and that is an exact account of the commission which the Government received from the country. In regard to the best means of carrying out their commission varieties of views have been expressed. I am getting old in years now.

Mr. McGOVERN

In ideas.

Mr. KNIGHT

Not, I hope, in ideas. Of course, the hon. Member opposite thinks that everybody's ideas are old in comparison with his own. I confess that I do not feel at all impressed by the contributions of the hon. Member to this House. The House knows the sort of instruction which the hon. Member provides at Glasgow. While the hon. Member desires by interruption to absorb as much time of the House as he can, I do not propose to allow him to absorb any more of my time, except to say that I am not at all impressed by his contributions, and I am quite certain that he is not impressed by mine; but I am not here for the purpose of creating any impression on the hon. Member.

While there are varieties of methods which have been advocated for effecting the purposes in view, I desire to say, and it should be said by one of the Labour supporters of the Prime Minister, that the Government's proposals are exactly on the lines of the proposals that were laid before the country. The old controversy between Free Trade and Tariff Reform is not in issue, for that controversy was directed to an economic situation which has passed away. The present Government consists of free traders and tariff reformers who have put their ideas into the common pool and formulated proposals adjusted to the existing needs of the situation. That is the job which they are attempting to perform. For myself I have no compunction in accepting these proposals, because believe they are directed to an emergency. In no sense are they intended to form the foundation of a system of tariff reform. They are economic proposals adjusted to the present situation which, unfortunately, is likely to continue for some time. All men and women of good will desire to see the difficulties remedied as speedily as possible. In that sense, I am prepared to support these proposals.

8.0 p.m.

What is the alternative? The country in an unmistakable way returned this Government. Its support was drawn from every party in the State. Of course, it is customary for hon. Members opposite to say that the Labour rank and file made no contribution to the support which this Government received. In my case the Labour poll declined by 50 per cent. It was transferred to me, as the old Labour member for the constituency, because I felt it my duty to support the National Government. The Government sits there with the support of an enormous mass of electors drawn from all sections of the community, and the great mass of the people are looking to it to perform its task. I say with the greatest possible respect that the composition of the present Government is not essential to the performance of that task. It has a distinguished composition, but it will be tested by the ability it brings to its work. There are hundreds of supporters of the Government who were returned with exactly the same commission that I received, with Liberal, Labour and Conservative support, and it is our duty to see that that commission is carried out, if not by the present administration then by another. The job must be done, and if it is not performed by this Government it is not to the Labour benches to which the country will look. The experience of their actions in office was such that the country is not likely to call upon them.

My own fear is that the condition of the ordinary men and women of the country, not merely the working classes but the professional classes, who by hand and brain have to earn their livelihood, is such, their anxieties are so intense, that if they fail to get a remedy from the present Government they may turn in desperation in the most extreme direction for assistance. [Interruption.] I can assure the hon. Member for Shettleston that they will not call him to responsible office in this House. I was not referring to him, but to the most extreme leaders of economic thought in this country. I am satisfied that we shall escape that and the misery which has followed in other lands where such resort has been made. Our salvation depends on retaining and maintaining in office, whatever its personal complexion may be, an administration which can carry out the commission which the country with such unexampled power placed in the hands of the present administration. It is because these proposals carry out a considerable part of that commission that I propose to vote for them.

Mr. WALLHEAD

With all due deference to the hon. and learned Member for South Nottingham (Mr. Knight) it is a farce to call this a National Government. It is backed by the whole of the Conservative party and by the whole of the Liberal party, with the exception of a small minority, but it is not backed by the Labour party. Therefore, to call it a National Government is somewhat in the nature of a farce. As a matter of fact, what we are getting now is a conservative policy, for the Conservative party could not conceivably have done more than has been done by this so-called National Government. We get the Conservative point of view in the Bill and the Liberal point of view put by the Home Secretary, but the Socialist point of view is not put at all. This National Government is singularly deficient in that aspect of the case. It will not be denied that there is a Socialist case to be put.

I am not going to say that the Conservative party have no right to be jubilant at the success of the election. I took very little part in it. My part was confined chiefly to reading, and my reading of the election convinced me that it was a particularly bad type of election and was won by a series of the worst misrepresentations that could possibly be conceived. The Prime Minister's neurotic speeches about the descent of the £ to the level of the German mark, marks him down as either a knave or fool. If he knew that what he was saying was wrong he was a knave, and if he did not know that what he was saying was wrong he was a fool. Then we had the late Chancellor of the Exchequer talking about the £ going down and down like the German mark. It was a very bad business and millions of people were simply jockeyed into supporting the National Government through a fear of what might happen.

The first thing for which the National Government was primarily formed—to keep us on the Gold Standard—they failed to do, and having gone off the Gold Standard every promise they made with respect to it has been falsified by events. At the same time they take credit for any improvement that has taken place as being due to the tact that we are not on the Gold Standard but on sterling, and that we are maintaining ourselves with wonderful efficiency. Those people who say that the proposals of the Government are not Protection are confining themselves to the idea of the general 10 per cent. tariff and forgetting all the other resolutions and proposals, A re- markable commission is to be set up with more powers even than the House of Commons. It is going to have power, on the top of the 10 per cent. tariff, to impose duties up to 100 per cent. That is Protection. [An HON. MEMBER: "On selected trades"] They can select ad libitum, there is no restriction on the number of trades to which it may be applied. To say that we are not entering upon a phase of protection is beside the mark and stretching the imagination rather unduly.

Mr. KNIGHT

Is the hon. Member referring to me?

Mr. WALLHEAD

I am not referring particularly to the hon. and learned Member. I couple him with other hon. Members who have spoken. The right hon. Gentleman the President of the Board of Trade missed that point in his remarks; he was careful not to touch upon it. I can understand the jubilation of Conservatives at their victory. I can understand the jubilation of the right hon. Member for Sparkbrook (Mr. Amery) on Thursday last. He is one of the original knights of the Holy Grail. He began his search in 1903. Now that he has discovered the Holy Grail, I hope it will turn out all that his fancy supposed. I have my doubts. I am opposing these resolutions as a Socialist. I am, not a pedantic Free Trader, nor am I a Tariff Reformer. In my opinion neither of these answer the questions which modern society and modern economics are placing before the world to-day.

From an abstract point of view, Free Trade is far preferable to Protection and, generally speaking, is a sound proposition. If I were a Free Trader I should not want a better defence of Free Trade or a better attack on these proposals than that made by the Home Secretary on Thursday night. He smashed them completely. At any rate, no one has attempted an answer, but if any of the ancients or any of the bright young things on the other side of the House will attempt an effective answer, I am quite prepared to listen and to say whether or no they have answered the case of the Home Secretary. It was not answered by the President of the Board of Trade this afternoon.

Take almost any question that you like. Take stock prices, a very fair indication of what is happening in any particular country. As between September, 1929, and September, 1930, industrial shares in this country fell as from 100 to 83. In the United States in the same period they fell as from 100 to 63, in Germany to 77, in France to 75, in Belgium to 60, in Holland to 63, in Italy to 68 and in Sweden to 78. In every protected country the shares fell further than they fell here under Free Trade. Take the fall in the case of imports or exports, and compare the first 10 months of 1930 with the same period for 1929. Imports into Britain fell by £131,000,000, or 13 per cent.; into the United States by £218,000,000, or 25 per cent. Exports from this country fell in the same period by £139,000,000, or 20 per cent.; and in the United States they fell by £220,000,000, or 29 per cent. Every figure is an argument in favour of the system which is under attack to-night. Take the question of production in the third quarter, September, 1929, compared with September, 1930. Production is estimated to have fallen in the United States by 25 per cent., in Germany by 21 per cent., in Canada by 16 per cent., and in Great Britain by 10 per cent. So that from the point of view of production again the Free Trader has the argument in his favour.

Take the question of unemployment. Heaven knows, it is bad enough here. In Germany the official figures have risen from 2,036,000 in November, 1929, to 3,683,000 in November, 1930, and they are higher still now; they are between 4,000,000 and 5,000,000. In Australia, with high Protection, the trade unionists unemployed from 1922 to 1929 averaged 10 per cent. By the end of 1930 the figure was 25 per cent., and I believe that now it is higher still, In America one in four is unemployed, of available working units. All those 10,000,000 people unemployed, starvation in the streets, malnutrition wherever you go. Protection does not save the people anywhere from the kind of thing that we get here. We get unemployment everywhere, we get poverty, misery and destitution as in Free Trade England. We have the same kind of thing in Germany, in France, Italy and in every country in the world.

I listened to the experts talking with a great deal of prescience as to what is to happen in the very near future. I have been a Member of this House now for almost 10 years, and I have listened to representatives of Government after Government predicting what was going to happen. When I first entered the House there was a Tory Administration. They told us that things were then on the turn and that we had only to do certain things. We were told that we must begin to deflate. We began rather early; we deflated. But things got worse. Then came the Labour Government. It was in for a very short time. Things got no better. We were followed by another Conservative Government, and again things got worse. But we were told that trade was going to revive.

I remember the right hon. Member for Tamworth (Sir A. Steel-Maitland) as Minister of Labour introducing an Unemployment Insurance Bill, in which he estimated that the unemployed figure would soon be below the 1,000,000 point. He said it would be equal to not more than 6 per cent., and he framed his legislation on that assumption. I spoke from the Opposition Benches and argued with the right hon. Gentleman that his 6 per cent. might easily rise to 12 per cent., and that in that case all his schemes were useless and would become insolvent inside 12 months. People laughed at me. They asked who was I, a mere back bencher, that I should talk to the Minister, and predict that he might be wrong when he had all the experts behind him. The point was that the experts were wrong and that that did prove to be the best period of trade we have had from then till now. We are still in the trough, and according to the figures published to-day we are likely to be in the trough for a long time yet.

The coming of the National Government has not prevented the increase in unemployment. But things will be a great deal better in the very near future, we are told. Prophesying is not a very profitable occupation. We are told that this tariff will alter things. There is not a Conservative in the House who does not believe almost that the Tariff Bill is the first key of a set that will open Eldorado. We are to move into the brightness of a new day; unemployment will rapidly become a thing of the past; poverty will be no more; we shall wipe out destitution. One can only judge a tree by its fruit. We are told that one reason why that is to happen is that this is to be a scientific tariff. We are told that it is different from all the others, that all the others have a, dud kind of tariff, but that this is a scientific tariff.

With all due deference to the Chancellor of the Exchequer and his administrative qualities and abilities, I suggest that he cannot teach the experts of the United States anything about tariffs and that what they do not know in Berlin about tariffs is not knowledge. He can teach them nothing. They have been applying scientific tariffs now for two generations and they are worse than we are as the outcome of it all. [An HON. MEMBER: "They have done very well."] And we did not do badly. We have been talking about oversea investments. I remember that in the latter part of 1914 the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) told an astonished world that our oversea investments at that time had reached the colossal sum of £6,000,000,000. He said that our national wealth was £13,000,000,000 and that our foreign investments were at that time equal to about half the national wealth with all the factories, houses, ships and land which we possessed. So that we had not done badly, and, in spite of the War and all our difficulties, we boast now that our oversea investments are still in the neighbourhood of £4,000,000,000 or £5,000,000,000. So that we are still doing fairly well. I do not know that any other country has the same amount of foreign investments. As a matter of fact I think that those foreign investments to a large extent represent the sheer exploitation of the working class of this country. They are the representation of the amount of robbery which has taken place. The people have been kept poorer in order that these vast sums, these colossal investments, might be piled up.

But we are told that the method to be applied in connection with these proposals is the scientific method. Well, there is nothing new to be learned about tariffs. We know all that can be known. The only thing that is fresh, as far as I can see, on the scientific side, is the setting up of the Commission. In that way it is said the temptations attaching to Parliamentary control are to be removed. This suggestion, I believe, emanated originally from the Federation of British Industries which makes me suspect it tremendously. They suggested it in a memorandum called "Industry and the Nation," in March, 1931, and then the present Lord President of the Council took notice of it and in a speech in Hull on 17th July, 1931, he said: I have made up my mind to this, that in no circumstances am I going to be responsible for any Government of which I may be the head, making this country a profiteer's paradise or making the British legislature a crook's corner. To know the dangers in time is the right way to guard against them. We shall, so far as we can, make the tariff knave-proof and it can be done. It will be interesting to know how it is going to be done. Other commissions have been set up. Other countries have had commissions and committees which have made suggestions to governments but they could never stop crookdom and knavery. It is well known that the lobbies of every Protectionist legislature in the world are, as it were, the inner rooms and the sanctuaries of all the crooks who may be in those particular countries. You will get the same kind of thing here. The President of the Board of Trade has already referred to what has been going on up to now, but you will realise later what you are in for, in connection with this question. After all, the Commission will recommend the tariff, but it has to be imposed here, and it is here that the pressure will be exercised.

8.30 p.m.

I suggest that whatever virtue these proposals may have had in the time of Mr. Joseph Chamberlain, conditions have changed since then. We are living now in 1932, not 1903. We are not dealing with the competition of various countries on the Continent, as far as competition for trade is concerned. We are dealing now with a set of conditions which no tariff can touch. We are dealing now with a power of production, of which Mr. Joseph Chamberlain never dreamt. Mention has been made already of what has taken place in some countries regarding such articles as wheat, cotton, rubber and tea. The latest asinine proposal which I have seen is one mentioned in the "Manchester Guardian a few weeks ago. It appears that in the United States there is an over-production of milk. There is too much milk in a country where children by the million are under-nourished and men and women are starving, and what is the proposal. It is to slaughter every tenth cow. The milk trade must be made to pay. That is the kind of thing we have to deal with and tariffs cannot touch it.

Tariffs cannot touch the problem of the production of the machine. They cannot touch the question of the disappearance of our markets. The prediction of Karl Marx of over 70 years ago is coming true. He said that the time would come when the goods which we then produced in abundance and which we sold to foreign countries would be produced by our customers themselves; that they in turn would produce a surplus and that we should then not be contending for markets, but contending as to where our surpluses should go. We have gone back to the old worn-out theory of mercantilism. We are all becoming sellers but are never buyers. We are all getting off buying goods and striving to sell, and we are striving to sell in markets which are largely disappearing because the customers in those markets are becoming producers for themselves.

I often listen to talk about solving unemployment by means of our export trade. Why, with all our export trade practically only one in five of our people are engaged in production for export. If we were to find work, through increased exports, for the unemployed of this country, we should have to find a market for another £350,000,000 worth of goods. The difficulty is that while we are trying to find an export market in order to absorb our unemployed, Germany, America, Italy, Japan, India—all are doing the same. There are countries to-day highly developed containing at least 20,000,000 unemployed men and millions of pounds worth of unemployed machinery, seeking export markets to absorb their unemployed. If it takes £350,000,000 worth to provide a market for the labour of less than 2,000,000 people, it stands to reason that you have got to the position where there is required an export market in the world equal to something like £3,000,000,000 worth per annum. You have only to think about it to discover that it is grotesque to imagine it for a moment.

Capitalism has reached the supreme contradiction. It is faced with the fact that it has so advanced productive power, backed by science, that it cannot now consume the goods that it creates. It can only be done by increasing the consuming power of the great mass of the people, not of the 45,000,000 in this country, but of people all over the world. Hon. Members gibe at the one country in the world that I believe is making headway. The one country in the world where the standard of the people is steadily going up is Russia.

Duchess of ATHOLL

Can the hon. Member say in what respect the standard of living in Russia is going up?

Mr. WALLHEAD

When I read statements such as that by the Bishop of Stepney about rats sitting round the cradles of babies in the East End, the Noble Lady's talk about conditions in Russia leaves me icy cold.

Duchess of ATHOLL

The hon. Member made an entirely unsubstantiated statement.

Mr. WALLHEAD

What I want to know is what these proposals will do for the people in my constituency.

Duchess of ATHOLL

Can the hon. Member tell us if the people of Russia are eating as much wheat bread to-day as they were before the Revolution?

Mr. WALLHEAD

I have paid two visits to Russia, at intervals of five years, and the Noble Lady has not been there at all. I know what I saw, and I travelled a good deal and went great distances. I went right down to Armenia, and I can understand and observe, and although I cannot speak Russian, and did not pretend to do so, I can believe the evidence of my own eyes. I repeat the statement that the standard of the people in Russia is improving, and that is what you are afraid of, because you cannot keep it dark for ever, no matter what you may do with your Press. At any rate, here the standard of the people is not improving; it is getting steadily worse. These proposals can do nothing at all for the people in my division or in the county of Glamorgan. You cannot help the people of Cardiff. These proposals will do nothing whatever but damage so far as the great mass of the coal mining industry that depends upon the export trade is concerned. In South Wales you bring to them no hope. You will raise their cost of living, say what you will, and you will lower, I suppose, their standard still further by depressing the conditions under which they will draw unemployment pay, and that is about the most that you can do to make their conditions worse.

I shall vote against these proposals with every chance that I have and with a very good heart. I am quite convinced that they will not do what it is claimed they will do, but I am also convinced that we shall have a dose of them, and then probably the people will learn that they have to turn to something else. My hon. Friend the Member for Bridgeton (Mr. Maxton) the other night was making an appeal that democratic government should be given a fair chance. Well, you may filch away the powers of Members of this House, but in the end the working class will begin to realise that, so far as this House is concerned, a banker's balance is of far more power and more effective than prayers in cathedrals, and when they realise that, they will probably decide that nothing will serve their purpose but an entire modification and change of the system, that Free Trade has failed them, and that Protection will do the same.

Mr. PEAT

It is a very great privilege to address this House at any time, and I hope that in the course of my remarks I shall not abuse that privilege. It was also a great privilege to someone like myself to be in this House last Thursday to hear that magnificent statement of the Chancellor of the Exchequer and to hear the statement of the Home Secretary. I must confess that when I listened to the latter I felt that perhaps the right hon. Gentleman was a political Rip Van Winkle, who had gone to sleep in the heyday of Cobden, when industry was in the first flush of its early youth in this country, and who had awakened in 1932, surrounded by factories that are not working, by millions of his fellow countrymen out of a job, and by the most difficult conditions of world trade that have ever faced the nation. He made a very quick retort to the hon. Member for Shettleston (Mr. McGovern) when there was some question as to whether the Home Secretary was asleep, and I should like to quote what he said slightly against him, and say that some of us in this House wish that he was still asleep.

There is no doubt that in the age in which we are living things are very different. Many reasons can be given for the difference. It has been said that machinery is the cause of all -our troubles. An hon. Member suggested that very seriously, and I do not know whether he had in mind a return 10 the conditions of 100 years ago and that we should go about smashing the machines, or whether he had Samuel Butler in mind and would have every man thrown into gaol who was found in possession of a watch. I agree that the machine age is one of very great difficulty, but it can be faced in the way which the Chancellor of the Exchequer suggested. It is a question of mass production, and mass production means mass markets. As a prominent steel maker said the other day, mass production without mass markets is a delusion and a snare. Unless we get these markets, we cannot operate our machines on a mass production basis properly. It costs many thousands of pounds to put in one of our new mass production machines, and, unless you can operate it to its capacity overheads will kill the cost of production and you may just as well do it by manual labour as it was done before.

As far as I can see, the efforts we are to make to put a reasonable and certain volume of production on our machinery is one of the most important things we can do in this great machine era. We have the tariff proposals, which are bold and welcome. The hon. Member for Spennymoor (Mr. Batey) mentioned that 42,000 men in the county of Durham had been before the public assistance committee on the means test, and he exhorted Members of the Government to bear them in mind. He said that a rise in the cost of living would strike these men very heavily. I represent a constituency in Durham, and my sympathies are entirely with these people, who have static incomes. Their incomes are not resilient to a change in industrial conditions, and I have every sympathy with them, and agree with the hon. Member. That brings me to the revenue duty and the tax on foodstuffs and raw materials. All of us feel that a revenue duty of itself is a bad thing, but that in present circumstances the Chancellor of the Exchequer has made out a perfectly good case for its imposition. He has completely met my fears in regard to a rise in the cost of living, which would strike those people who cannot in fairness be struck any more. The right hon. Gentleman stated categorically in this House: There is one point to which, as in duty bound, we have throughout devoted our particular and serious attetion, namely, the avoidance of anything that might entail a serious rise in the cost of living … We have satisfied ourselves that there is no danger of anything of the kind in our proposals."—[OFFICIAL REPORT, 4th February, 1932; col. 295, Vol. 261.] I am prepared to accept that statement and to accept the necessity for this revenue tariff. The part of the proposals made by the Chancellor of the Exchequer that most concerns me as a servant of industry is that part which deals with the superstructure, that is, the tariffs which will be built up after careful examination on a scientific basis. The hon. Member for Merthyr (Mr. Wallhead) scorns a scientific tariff, and apparently has no belief that such a thing is possible. I have every belief that it is possible, and I am sure that when it is applied it will be a success. Last Session the Government were busy dealing with abnormal importations and horticultural products. Certain pressure was brought to bear on them in regard to the iron and steel industry. I in a humble way thought that they were deterred from taking action by the threatened disadvantages, which were more exaggerated than real, and which I am sure would be smoothed out in the ordinary course of use when the machinery, which must come with these tariffs, was put into operation. I felt at the time that the President of the Board of Trade had perhaps forgotten the old saying that— He that observeth the wind shall not sow; and he that regardeth the clouds shall not reap. There will always be difficulties. We are now taking an enormous move forward and the difficulties are there, but do not let us be deterred; let us go forward and try and save these great basic industries, which are the lifeblood of our country, even if sacrifices have to be made elsewhere. Let us in all circumstances save our basic industries, because they mean everything to us. The county of Durham I was told will suffer under this Bill because of the coal. I live in the county, and I know how much of that coal goes into the coke which is made in the coke ovens and goes into the blast furnaces if we only have our steel industry operating as it should operate.

The principle of a tariff has been accepted, and therefore I will not bore the Committee by going over the old ground. I will not attempt to follow some hon. Members and go over, not only the ground of a tariff, but of everything that comes into our view, national, international and otherwise. I am not going into the question of the Gold Standard, of the accumulation of gold in two countries, and the consequent rise in the price of gold and the depression in the price of commodities. These are things with which we must deal; they are most important, and I agree that they are probably more important than the tariff issue. I still think, however, that the tariff issue is one with which we have to grapple immediately, and that it will bring a great measure of relief.

With regard to the iron and steel industry, I want to stress that time is of the very essence of that great industry. We struggled for some protection under the Abnormal Importations Act, but the Government did not see their way to help us for many reasons, one of which probably was that they considered iron and steel a raw material. Our worst fears were more than realised when we saw the figures of steel importations. In November, 379,000 tons of steel came into the country as compared with 275,000 tons in October and 220,000 tons in September. There was, indeed, abnormal importation, and every ton of that steel had some effect on unemployment. Dumping is one of the great curses from which we are suffering in the iron and steel industry. Two thousand tons of joists cut to dead lengths were sold to a colliery in Northumberland at a delivered price, free on trucks Blyth, of £3 17s. 6d. a ton. The rate of exchange means that you can reduce that price to the producer by £1, which makes the price £2 17s. 6d. delivered at Blyth. From that we can deduct the carriage and freight of at least 17s. 6d. That gives you a price f.o.b. Antwerp of £2. Is there any Member in the House who would say, if he speaks honestly, that he would like a ton of joists to be imported into this country at at least £2 a ton below the cost of production, and so put a perfectly good steel maker out of employment. It is a proposition which is bad in essence and must be regarded as such by every party in the House.

I do not wish to go through all the present quotations f.o.b. Antwerp—joists £3 18s., that also covering angles and bars, and plates £4 17s. In each case one can deduct, roughly, £1, which gives the figures of £2 18s. and £3 17s. respectively f.o.b. Antwerp. Our friends in Germany admit that they are losing between 50s. and 70s. a ton. Our friends in France admit that they are losing 5s. to 10s. a ton at their most efficient works, and we have information which goes to prove that, in fact, they are losing on an average nearly 40s. a ton. I submit that this is a condition of affairs which cannot for one moment be allowed to continue. We must take immediate action to stop this country from becoming the dumping ground for the rest of Europe. We do not take any particular joy in having to put a steelmaker out of a job in Germany just for the sake of putting one in work in Great Britain, but if one of them has to be out of a job I submit that, as far as we are concerned, it should be the German and not the British.

During last Session the President of the Board of Trade, in a magnificent speech in this House, drew attention to the fact that the consumers of steel represented employment for 1,852,000 men, whereas the steel industry employed only 188,000 men. Objection was raised to those figures, and we thought they were misleading because in the case of the steel makers they did not include subsidiary industries which live on steel, like the coal industry. Their inclusion would, no doubt, have swollen the figures of employment provided by the steel industry to somewhere round about 300,000. We accepted the challenge of the President of the Board of Trade, and during the Recess went to see our consumers of steel. We met them across the table, and we discussed the position with them, and I think it is due to the Committee that I should report the position of affairs as regards the consumers of steel.

In the tinplate industry, which has been continuously under discussion, we found that 26 firms were in favour of a [...]d that they controlled 336 mills; hat five firms, controlling 26 mills, were indefinite; and that 11 firms, controlling 83 mills, were against a tariff. That is, 336 mills as against 83. In the sheet trade we found that 80 per cent. of the manufacturers are in favour of a tariff on steel. As to the re-rollers, I have here a series of resolutions which were passed and submitted to the President of the Board of Trade, I will not read each resolution, because I do not wish to take up time, but they were from the following re-rollers associations: The Midland Cold Rolling (Steel) Association; the Midland Steel Bar Re-Rollers Association; the British Steel Bar Manufacturers' Association; the Bright Drawn Bar Association; The Midland Re-Rollers Association; and many others. I have just been in consultation with the re-rollers on the North-East coast. We sat down at a table, as is our custom, and we said, "We want to help you out of this difficulty. We are going to have tariffs, and we want to arrange prices with you. We want to help you to keep your trade, because unless you have your trade we cannot have oars." We are in a fair way to arranging terms with all those people, and in the case of the re-rollers associations which I have mentioned resolutions have already been sent to the President of the Board of Trade in favour of Protection for the iron and steel industry.

9.0 p.m.

I come to the motor manufacturing trades. A letter was written to the Board of Trade from the motor industry, signed by the director of the Society of Motor Manufacturers and Traders, in which he says that the motor manufacturers are in rather a peculiar position; probably they are the largest consumers of British steel manufactured to-day. Not only would they offer no opposition to a reasonable measure of Protection in favour of the classes of steel capable of production in this country, but, in principle, they would be the first to welcome action by the Government on those lines. We have the same thing, in principle, from the electrical industry. I do not wish to detain the Committee while I read out their letter, and hon. Members must take it from me that their letter is almost more favourable to the steel trade than the one to which I have just referred. Next there is the case of the bridge and constructional engineers. I am sorry to be so technical; it is an advantage as far as I am concerned, but, probably, a disadvantage to hon. Members who have to listen to me. Bridge and constructional engineers are among the most important consumers of steel. I myself sent a petition round to all those who, I knew, were buying British steel and had any regard for the steel industry and for national economy, and I received that petition back signed by 87 of the largest bridge and constructional engineers. They keenly support tariffs for steel, and they represent a consumption of 575,000 tons of the main heavy steel products per annum, and are responsible for the employment of 35,000.

We have also communicated with the shipbuilders as an industry. They have taken advantage of the rebate scheme which is available to any user so long as he uses British steel. They have taken advantage of the fund that we put at their disposal to help them in the export market or to help them in competition with foreign shipbuilders, and in four or five months that fund has had an expenditure of £125,000. That sum has been scraped together by the steelmakers—it has not come from one or two steelmakers but from 'all steelmakers. The Midland steelmakers, who never hope to have anything to do with the building of a ship, have subscribed to this fund to help one of our great consuming industries in order to keep the market for steel. The shipbuilding industry have met us, and we have discussed the matter with them. There are difficulties, because no shipbuilding industry in any country can ever hope to have an easy row to hoe; but we have promised that we will sit down with a committee and agree to any terms they like to offer so long as that committee is a representative one. We will help them in prices and help them to get their markets back.

I do not want to be too long, but I would like to refer also to international arrangements, because I know them to be very dear to the heart of the Government. They would like to impose such tariffs as will lead inevitably to international trade arrangements, and bring Free Trade much nearer than it is to-day.

The Tariff Truce was one way of going about it, but a reasonable measure of Protection is a much surer method of getting Free Trade and international arrangements. My family has been interested in a professional capacity for many years in international steel associations. I am not at, liberty to give the Committee the names of all the products which are controlled internationally, but they are quite important, and those arrangements have functioned for some time. We are only waiting. If we can only get some bargaining power we can bring off the greatest thing of all, that is an international steel association. Unofficial talks have already taken place with firms on the Continent, but they have offered us terms which we do not think are quite satisfactory. They have asked us to produce our statistics of production, but we have not been able to arrive at any reasonable arrangement. If the Government will give us this bargaining power, I will guarantee that we shall be able to arrange international steel cartels which will really function. I think that the case for steel is now complete. I have not been over the old ground on this subject, but I think I have dealt with the case of the consumer and the international position. The case is now complete. Everybody in the industry is in favour of what we are asking for.

The hon. Member for Pontypool (Mr. T. Griffiths) said in regard to the steel trade that the royalty owners are at the bottom of our trouble, and that the cost of royalties in a ton of finished steel is 15s. I have taken out the national averages for royalties and perhaps the hon. Member for Pontypool will be surprised to know that they do not amount to more than 4s. per ton. I know that what the hon. Member wants is some form of protection for the labour which he represents. I am aware that he has to attack the royalty owners as a matter of habit: he cannot possibly attack the shareholders —they have had no dividends for many years. He suggests that public utility companies shall take over the steel trade, but what could a public utility company do that a well-organised steel company cannot do? The case for the protection of steel must be decided on facts and facts alone. We have heard a good deal about Free Trade and Protection, but I believe that facts can be[...] to prove that what we are asking for is good, and can be proved by the production of business and statistical facts. We feel that we have definitely proved the necessity and the advantages of taxing imported steel, and time is the essence of the contract.

Major BEAUMONT THOMAS

The issue at the last election was a perfectly clear one not only to Members of this House but also to the whole country. The proposals introduced by the Chancellor of the Exchequer last Thursday were not only welcomed by a large majority of the Members of this House, but also by a large majority of the population outside. There is just one point in regard to these proposals which I desire to make, and I do so all the more seriously when I think of those devastated areas, particularly in South Wales, in which many hon. Members opposite and on this side of the House are particularly interested. Those devastated areas are capable of producing all the necessary supplies of iron and steel provided they are given the opportunity to do so.

We realise that there must be a short transitional period between what I will call the basic tariff of 10 per cent. and a scientific tariff. It is clear that a 10 per cent. tariff is not going to do any good to the iron and steel industry, and therefore we hope that the scientific tariff will be pressed forward as quickly as possible. I read very carefully the speech of the hon. Member for Pontypool, and I could not understand whether he was in favour of a tariff or not. I notice that he is not in the House this evening, but I shall be interested to see which way the hon. Member votes in the Division Lobby. The position of the hon. Member for Pontypool is that he is apparently prepared to give protection to the iron and steel industry provided that he gets in return his pet hobby and theory of nationalisation. If the principle of protection for the iron and steel industry is a right one, then it is right to adopt that principle whatever form of ownership or management it may be subject to.

I would like to make one or two remarks with regard to the speech of the Home Secretary. The right hon. Gentleman has a certain right to speak upon this subject, because, in the past, he has been one of the most active Members on the question. For my part, I look upon the right hon. Gentleman in the capacity in which he has acted in the past, as being one of those most responsible for the position in which the country finds itself to-day. We expected from the right hon. Gentleman some alternative proposals, but what was the alternative which he put forward? In his speech, the Home Secretary said: 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."—[OFFICIAL REPORT, 4th 14'ebruary, 1932; col. 331, Vol. 261.] May I point out that we have been doing nothing but forming schemes and having conferences for years past, with the result that at the end of every conference we have demanded some form of protection, behind which we could reorganise our industry. If what I have read is the only alternative which the Home Secretary can suggest, then I say that he has no right to put it forward in this House. I promised to speak for only five minutes, and I have done so. All I have to say, in conclusion, is that we welcome these proposals in South Wales, and I hope those who represent the workers in South Wales—who can only obtain work as a result of these proposals—will vote in the right Lobby to-night.

Mr. HOLDSWORTH

In rising to address the House of Commons for the first time, I ask for its indulgence. For four months I have been in the position of the prophet Ezekiel when lie said: And I sat where they sat, and remained silent. For four months I have been surrounded by men demanding tariffs, and I think it is time that some of us on this bench ventured to put our position quite clearly. I want to state the reasons for my opposition to these proposals. The mandate asked for during the election, and given, was a mandate giving power to deal with an emergency, and the free hand which the Prime Minister claimed applies to the emergency and to nothing else. The Government proposals are a gross breach of faith. We were told by every leader of every party that Free Trade versus Protection was not an issue at the last election. The electors were assured that a full, impartial inquiry would be made. The inquiry has been made, but not by the Cabinet. The inquiry has been made by Lord Beaverbrook, and the result satisfies his demands. The Chancellor of the Exchequer, in his speech last Thursday, referred to intelligent anticipation. Was it anticipation, or was it fulfilment of demands from outside the Cabinet? I have every desire to be honourable in carrying out all the pledges that I gave at the election, and I will read the pledge, word for word, that I gave. It was this: To consider any proposal likely to be adequate, whether it is to deal with currency, or with the expansion of exports, or with the restriction of imports, in order to put right the balance of trade. What we ask for is an impartial inquiry. Then I went on to say that, if food taxes were introduced by a National Government, I would oppose them. I voted for the Abnormal Importations (Customs Duties) Bill, and a number of gibes and sneers have been thrown at Members on these benches for taking that action. I do not hold myself responsible for the action of any other Member, but I will explain my own. I do not regret that vote. The Measure did restrict imports of goods which in many cases were produced under conditions with which we could not compete. I know, and admit quite frankly, that it has given an impetus to the wool textile trade, with which I am connected, and which was in danger of going out of existence. It may possibly have been necessary to extend the duration of that Measure, in the circumstances in which we find ourselves, but it was limited to restricting imports; it had nothing whatever to do with revenue, and was a temporary Measure. It would be interesting to me to know how many Conservative Members of the House gave a pledge to oppose any taxation upon food. I am certain that, if they were to face the electors in the industrial constituencies of the North, they would have little chance of success if they suggested taxes on food.

I want, with the permission of the Committee, to examine the proposals of the Government. The first duty suggested is unquestionably, and is acknow- ledged by everyone to be, a revenue tariff. The right hon. Gentleman the Member for Sparkbrook (Mr. Amery), speaking the other day, said that the first duty had little effect in restricting imports; but it will have a serious effect in restricting exports. I would like to ask another question: Did any Conservative Member of this House suggest a duty on raw materials? Personally, I am delighted that wool is to come in free. I happen to represent one of the constituencies of Bradford. But, I would ask, why exempt wool and cotton and not exempt every other raw material? I think the, fact that wool and cotton are to be exempted shows plainly that the Government know that the taxation of raw materials must inevitably hurt industry. Will the fact of making our raw materials dearer help to solve the trade balance?

The greatest objection that I have to this first duty is the burden that it will impose upon the poor. I have always known that there are two ways of lowering wages, one holiest and one dishonest. The inevitable result of this first duty will be to increase the cost of living, and, consequently, it will mean a reduction of wages and purchasing power. The strangest thing of all is that, living in a time when Providence has endowed Nature with bounteous gifts, the whole trend of political and economic methods to-day seems to be to deprive men of those gifts. Whatever might be said as to whether the electors were deluded or not at the last election, no one can challenge the statement that they were loyal to the demands of the National Government, and the reward of that loyalty is to reduce their standard of living, in addition to all the reductions in wages which have been made since. I would point out that many of the population of this country are living an a public assistance scale, and I sometimes ask myself if many Members of this House know what it means to put a shilling on poor people's cost of living. These duties will cause further hardship.

As regards the second duty, I am rather amused by the way in which we have been told that this is to be a low tariff —that we are to be a low-tariff country. Anyone looking at this second duty knows that any duty can be imposed which the Tariff Commission may suggest, and which the House of Commons confirms; and, so far as my four months' experience in the House goes, it seems to me that the only reason why a duty will not be accepted, or will be sent back for reconsideration, will be that it is too low. Every conceivable demand has been made for tariffs, ranging from flowers, which may be used at a wedding or a funeral, to gravestones, which finally will stifle the pious aspiration of Free Traders and equally the vapourings of Protectionists.

The third duty put into two words, means economic warfare. It pursues peace by the weapon of a threat. No negotiation, but returns shot for shot. It is a remarkable introduction to a Disarmament Conference. It is the policy of the mailed fist, the law of the jungle, Moses' law of an eye for an eye or a tooth for a tooth. As to the question of Dominion Preference, I have received a letter from the Bradford Chamber of Commerce on the subject of the wheat quota. They write that they regret that: The Government has not taken the opportunity of negotiating for reciprocity by way of a reduction of duty or an increase of the British Preference on textiles imported from Great Britain by those Dominions expected to benefit under the scheme. I would remind the Committee that this applies with equal force to these present duties. The textile trade has been badly hit during the last few years by the persistent increase in tariffs by the Dominions. Further, I think I am correct in stating that Canada was the first country to impose a duty to set off our depreciated currency and that South Africa followed suit. There is no hon. Member, to whichever party he may belong, but desires to foster good relations with our Dominions, but it must not be done at the expense of our consumers.

A good deal has been said during the course of this Debate about the balance of trade. No one will quarrel if I quote from the figures which were given by the Chancellor last Thursday as to invisible exports. They amounted to £296,000,000 last year. In 1929 they were £482,000,000, a difference of £186,000,000 in the invisible exports, or £73,000,000 more than the total adverse balance. The adverse balance is caused by constricted world trade, and has little or no relation to our system of free imports. Will shipping, banking, insurance or returns from foreign investments, be stimulated by further restricting world trade? The world is suffering from extreme economic and political nationalism. The world, whatever we may think, is one economic unit. The interdependence of nations is not merely an ideal which we Liberals cherish; it is the only permanent solution to the world's problems, and the final prosperity of each and every country depends upon the recognition of this great truth.

The problems facing this and every country are international in character, such as War debts and reparations, disarmament, the free interchange of goods between one country and another, the reorganisation of the financial machinery of exchange and currency so as to enable the nations of the world to take advantage of the improved methods of production. These are the problems for which we seek a solution. Economic nationalism in the form of tariffs will never solve our problems. I have been told that it is possible to block out one-half of the range of vision by putting a halfpenny in front of the eye. It is the full range of vision that this nation needs. Our belief is in international Free Trade. These duties bolt and bar the door which would make that possible. They set up a permanent tariff; there has never been a challenge about that. The difference between those who believe in tariffs and those who believe in international Free Trade is one of ultimate aim. They are walling in the Empire, while we desire world-wide freedom, believing that only by this can England remain prosperous and our people be enabled to live in prosperity and security.

9.30 p.m.

Mr. LYONS

In rising to address this Committee, before the Division which may be historic, I desire to ask for that indulgence which is always given to those who address the House of Commons for the first time. I have the honour to be here representing an important constituency in a city in the centre of England which has very diverse industries. I believe that in going into the Lobby to-night to make what, I believe, will be a great alteration in the fiscal system, I shall be interpreting what was really a national mandate given to me in the last General Election. I have sat here and listened to a number of hon. Members trying to criticise these Measures as something for which there was no mandate. Everyone of us here must remember that one of the essentials put forward by the Prime Minister when he came to the country was to ask for a mandate to adjust, in whatever way the National Government thought best, the adverse balance of trade. It had been said, and has been said since the election, that we are living on our capital. We are in the middle of a gradual process, and it is essential to adjust the balance of trade in order to promote our industries. I wonder if any of the hon. Members who have criticised the attitude of the Government in checking imports would care to go to my constituency of East Leicester to see what the effect has been, where various factories to-day see a new hope, and a new realisation that they are standing in fair competition and not in unfair competition with other countries. Would those hon. Members go, not to the capitalists, but to the men and women who are working in those factories, and say: "Let us take away those duties, and expose you to the competition of the world." It is all very well to raise theories and to condemn proposals in the House of Commons, but I have listened in vain for a single alternative to be put forward. Are we to go on in the same old way, let the balance of trade get worse and worse and take no step to promote the prosperity that we have at heart?

I have never concealed the political party to which I belong. I have not the slightest doubt that, at the last election, men and women, erstwhile supporters of other parties, came to us because they believed that we were determined, through the agency of the National Government, to look on this matter from a national and not a party angle. This matter has been looked at from that angle by the Government, and there is no doubt that it has the backing and the good will of the whole country. Because it believes that something must be done which can only be in the way of a scientific check upon imports, this Measure was introduced. It would be idle to say. "Well, other countries are bad, and we should do nothing." I have had the advantage of visits to America. The thing you are told in America is that they have absorbed a great quantity of other countries' populations and that they have had an era of prosperity the like of which has never been enjoyed in any civilised country in the world. They say: "We have a taxation which is very very low, and we have a large country characterised by all kinds of climatic differences."

These are the facts which in themselves make conditions of America very different from the conditions which we experience in this country. We have a great mass of unemployment. We have a duty to those men and women who, through no fault of their own, are unemployed, and we believe that an essential step towards promoting our industry is to do something to protect our markets. I hope the Committee as a whole will look at the matter not merely as one of victory for one side or the other in what has been a long-drawn-out political battle but as something which is essentially to be considered in regard to the present needs of the community. A previous speaker has said that we are not living in the days of Mr. Joseph Chamberlain. We are living in times when we have to adapt ourselves and arm ourselves to meet present dangers.

It is idle to say you are going to increase the cost of living. In every instance, whether of a tariff or a duty or a safeguard, you have seen no increase at all in the cost of living, and you have seen no deleterious effects of any sort or kind of those engaged in the industry or of the people of the country as a whole. You have seen in every instance an increase in trade and a greater stability in employment in the industry. The time has come the Government say and I hope they will be supported by a great and momentous majority when they say it, when you have to put an end to the system which has operated for so long, when you have to meet the economic conditions of the day and look at it, as we shall look at it, not as a question of political principle, but from the new angle of economic expediency. There is no alternative of any kind suggested by Members of either part of the Opposition who seek to criticise these proposals.

Reference has been made to a speech by the Leader of the Conservative party at Hull in reference to the erection of a Tariff Commission. It is the belief of those of us who see in these proposals a new era for British industry, and a new hope for millions of men and women, that you can have a Tariff Commission having an impartiality and a judicial fairness which will compare favourably with the judicial bench, and, although we have had the jeers of certain Members opposite who are bankrupt of any ideas of promoting trade, and who showed themselves for two years incapable of governing the country or submitting any single idea for the welfare of those whom they misrepresented for so long, we believe that in that Commission you can have a new outlook for British trade, you can give a new protection to industry, and you can have security that there shall be no profiteering by any industry that seeks to receive some measure of protection or safeguard.

We believe that Free Trade throughout the world would indeed be a good thing, and when the country embarks upon protective measures to arm itself against oppression from any source in the world, we shall be taking the first step towards bringing about the complete removal of trade barriers. We believe, too, that, by the adoption of this protection for British trade, we can bring about with our Dominions a lasting economic unity which will make it secure from any kind of unfair competition and any kind of disruption and disorder whencesoever it may come. We believe we are about to enter upon a new phase of existence, and it is towards that new phase that we are going, I hope with a great majority, into the Division Lobby. It has been suggested that Russia offered us an example. The only criticism one has to make is that there is an omission in this Bill, which one hopes in course of time will be remedied, and that we shall prohibit absolutely the entry into this country of goods made in Russia or elsewhere by slave or prison labour. We do not allow prison labour to go into open competition with men and women who are protected by the strongest trade union law the world has ever known, and we intend to keep that object in view and to refuse to allow unfettered competition from the slave population of Russia or anywhere else.

Mr. ANEURIN BEVAN

I think I shall he conveying the opinion of the whole House when I congratulate the hon. Member upon the eloquence and lucidity of his speech. I am almost encouraged to pay him the tribute of replying to the snore provocative parts of it, but that would be a violation of the traditions of this House, and I shall refrain from doing so. The Measure which the Committee is discussing should be examined first of all upon the ground as to whether or not the Government have been justified in inrtoducing it at all having regard to the nature of the last election. A good many speeches have been made from the Government Benches and elsewhere pointing out that the Government were not entitled to bring this Measure in at this stage because no agreement has been reached. I believe it will be necessary for us, before we allow it to go through, to make up our minds as to what actually are the limits of the mandate of the National Government. I think every member of the Liberal party, Samuelite, Simonite, and any other "ites" who may be there, and all Conservatives, will admit that they were returned to support the National Government. They were not sent here for the purpose of making up their minds as to what they wanted to do. They were sent here to support the mind of the National Government, and whatever the National Government decided to do Members on that side of the House had agreed beforehand to support. Most Members supporting the Government have completely abrogated their freedom of mil criticism and their right to vote against the Government by saying, "We pledge ourselves to support whatever Measure the National Government think to be in the interests of the nation in this emergency."

The Prime Minister, the Lord President of the Council, the Lord Privy Seal, and the right hon. Gentleman the Member for Darwen (Sir H. Samuel) all made appeals to the country like this "Please do not give us any specific instructions. Please do not agree or disagree on any particular matter. You merely agree that the Government—not the House of Commons, but the Government—shall examine this problem and shall bring forward any proposals they think to be in the national interest." That was the free hand asked for, and the supporters of the National Government, with one or two insignificant exceptions, agreed beforehand to accept the doctor's mandate and to support them in that way. It would seem to me that the Government are only entitled to bring before the House of Commons proposals commanding the united support of all the elements making up the Government, because any party forming the Government has a right to press its own special proposals within the Cabinet. No one has disagreed there. No one has said that the parties themselves have not the right to make their party contributions to the counsels of the Cabinet, but it is inconsistent with the nature of the last election and with the character of this Parliament that any party should press its proposals upon the Cabinet in such a manner as to destroy the unity of the National Government. If it becomes clear in the course of the Cabinet discussions that general agreement cannot be found upon any particular proposal, it is the essence of logic of a National Government to say that that proposal should not be proceeded with, and that the Government should confine themselves to matters of agreement. If, therefore, such fundamental differences arise that agreement cannot be found, the only proper and decent thing for the National Government, to do, as Parliament has not had a mandate for a party Government, is to dissolve the House of Commons and go to the country.

The CHAIRMAN

Is the hon. Gentleman thinking of the speech which he did not deliver last night?

Mr. BEVAN

I was not proposing to follow up the matter any further, but I would direct your attention to the fact that the hon. and gallant Member for Bournemouth (Sir H. Croft) spoke for almost 40 minutes in the same strain, and was not pulled up. I merely suggested that in the circumstances of the case now before the Committee the Government have not a mandate to proceed with the Measure. I am not arguing the question of collective Cabinet responsibility, but the right of the Government to bring this Measure before the House. I am arguing that, not having been able to find unanimity in the Government, they are actually pressing through a Measure for which the country has given them no mandate at all. The National Government was formed in consequence of two considerations. The Liberal party were practically extinct, and thought that their only chance of keeping in the political limelight was to ally themselves with the Conservatives. The Conservatives desired to dope the country so that it could not examine tariffs critically, and they knew that if they surrounded the skeleton of tariffs with the Union Jack the country would not see the real character of the proposals.

What happened at the last election was that two parties, one in order to preserve themselves, and the other to obscure the real nature of the issue, went to the country for a national mandate as a national Government, and I am suggesting, with all the earnestness at my command, that if democracy is going to be treated in that way, if patriotic feelings are to be exploited for party ends, then ultimately Nemesis will overtake the Government and democracy. It has been made clear that the main political problem, as between the parties forming the Government, is, who shall, first of all, be accused of slaying the National Government I We shall see manoeuvrings for the next few months in which the Conservatives will say, "No, it is the Samuelites," and the Samuelites will say, "No, it is the Tories." And both of them will be engaged all the while in avoiding the accusation that they themselves are responsible for slaying the National Government. It is the only explanation which can be advanced. The right hon. Gentleman the Member for Darwen still remains in the Government although he has already delivered it a most fatal blow.

As I have dealt with the question as to whether the Government have a mandate for this proposal, perhaps I may be allowed to look at the proposal itself and the reasons for bringing it forward. [An HON. MEMBER: "Hear, hear!"] Well, it has not been done yet. The right hon. Gentleman the President of the Board of Trade has two types of speech at his command. I have heard both of them in this House. One type of speech is always a masterpiece of lucidity, nothing at all is obscure, all the relative facts are produced properly classified and marshalled, and the whole House is usually carried with him to his conclusions. The other type of speech is much different in character; it is always glittering, witty, amusing, but it always obscures the relevant facts. We had the last type of speech to-day; it was very clever, but rather waspish. The right hon. Gentleman stated that he supported these proposals because they were necessary—I do not want to misrepresent him, and wish he were here—in order that the ordinary disturbance which occurs when a country goes off the Gold Standard should be made up by putting restrictions upon imports. I understand that he said that an unpegged sterling would best bring about a balance of trade. But for a long time the effects of going off the Gold Standard will not be seen and we might use all our liquid balances abroad, and sterling go down and down before it was affected by restricting the importation of goods.

Many economists said that Great Britain, having gone off the Gold Standard, the cost of imports would rise and the standard of living in the country would fall, and that that in itself would check imports, and exports would receive a corresponding stimulus. Everyone must admit, whether he be a tariffist or a Free Trader, that the movement of unpegged sterling would in itself have accomplished these results. The President of the Board of Trade pointed out that it would take some time for those factors to operate, and in the meantime it was necessary for the Government to take some steps to check the fall. The President of the Board of Trade, in the course of his speech to-day, has not dealt with the matter of the 10 per cent. The 10 per cent., although it is an evil thing in itself, is comparatively unimportant. The 10 per cent. can be taken off at any time. I understand that the 10 per cent, tariff, which it is now suggested should be put on, has two purposes, (a) to check imports and (b) to raise revenue. To the extent that the 10 per cent. raises revenue, then the British consumer will find the taxation, and to the extent that. it checks imports, the tariffist argues that additional employment will be given in this country. The argument advanced for the 10 per cent. by the President of the Board of Trade is that it will strengthen sterling iv temporarily restricting imports, although he went on to say, of course—and I was astonished to hear him say it—that it would not have the effect of raising prices at all. If the 10 per cent. will not raise prices, then all imported goods will have to be reduced by 10 per cent., obviously. In that case the goods come in in the same volume, and the tariffist has no case. To the extent that they are kept out, then the English consumer of these goods will have to pay the additional revenue.

The tariffists cannot have it both ways. The hon. and gallant Member for Bournemouth cannot have the foreigner paying the whole of the tax unless the same volume of goods comes in all the time. Therefore, it must be clear that the President of the Board of Trade is wrong, as be knows he is wrong, when he says that the effect of the 10 per cent. will not be to increase the price level, although it is true that it will not raise the price level over the whole range of goods to the extent of 10 per cent. The right hon. Member for Darwen was correct when he said that the rise will be something between seven and eight per cent. The President of the Board of Trade does not seem to me to have produced arguments sufficient to justify the long-distance policy of the Government.

The last part of the Government's proposals are the most serious. It is said that the tariff commission that is to be set up is of the same character as the advisory committee which the Home Secretary desires. The right hon. Gentleman's complaint against the Home Secretary was that he wanted an advisory committee consisting of four or five experts, all of whom would disagree, and that the advisory committee which the Home Secretary desired was the same thing as a tariff commission, under a different name. If the tariff commission is going to be a committee of the same kind that is desired by the Home Secretary, what reason is there for jubilation on the part of the tariffists? The President of the Board of Trade in arguing that the tariff commission is to have the right to consider what are raw materials and the right of choosing the consumers case, has answered the Chancellor of the Exchequer. If that commission is not going to be a packed one, then it is going to be a tribunal. We assume that it will be a judicial committee. How can the Government say that they are putting a scientific tariff policy through the House when every piece of legislation will be governed beforehand by the recommendations of a statutory tribunal? What right have they to prejudge the conclusions of the tribunal? They will not be able to act except upon the recommendations of the tribunal. If the tribunal refuses to recommend a tariff, how can the Government argue that in the present proposals they are putting a scientific tariff through.

10.0 p.m.

It seems to me that the President at the Board of Trade has secured a real defence against any permanent extension of the tariff principle. My complaint against the proposals is not that they comprise an ambitious tariff policy, but that it is very difficult to discern in them a scientific tariff policy. If the Government believe that tariffs are necessary and that a scientific reorientation of our trade ought to be brought about, why do they not bring a plan before the House at the earliest possible moment and let us examine it? The plan is not here. All that is here is a 10 per cent. tariff, for the purpose of raising the standard of living, and a tribunal upon whose conclusions the Government are going to depend. The Government have provided the machinery for pushing the whole thing again into a siding. I shall be very much surprised, probably disappointed, if from this tribunal there conies a series of proposals to impose high taxes upon imports. The whole intention is to put the matter off in the hope that anno domini will come to the rescue of the Government. That is characteristic. We always get commissions but we never get plans.

We are not opposing the Government's proposals because they are tariffs. We are much more strongly protectionist than the Tories. We believe in protecting the standards of labour. We believe in restricting the movement of labour, in raising the standards of unemployment insurance in order to arrest the mobility of labour, and we believe in controlling the direction of commerce. We also believe in a protection that I have not heard from the Government side. We believe in controlling the direction of finance. Other hon. Members on the Government side believe in free trade in finance. How does it make it possible to have scientific safeguards and to have a reorientation of trade if we allow our financial authorities to move their liquid resources where they like? I cannot see it. We have been told that we must get our trade organised as soon as possible within the British Empire. The President of the Board of Trade told us that it was not possible artificially to stimulate exports. The Parliamentary Secretary to the Board of Trade made a statement—[Interruption.] I am attempting to hurry to bring my speech to a close. I have sat here since four o'clock.

Mr. HANNON

We have been here, too.

Mr. BEVAN

I will bring my remarks to a conclusion as quickly as I can. It is impossible, as far as I can see in the present circumstances, scientifically to control the movement of goods unless you scientifically control the movement of liquid capital. We on this side are full-hogger Protectionists. We believe not only in the protection of labour but in the protection of capital, and are profoundly satisfied that no plan that this House can produce of a Free Trade or Tariff Reform nature will solve our problems unless credit becomes amenable to the same restrictions which the House is imposing on goods.

Mr. HANNON

I hope the time will soon come when there will be some restriction on the length of speeches. For over 29 years I have devoted myself to the subject which we are discussing this evening. I joined the movement inaugurated by that illustrious statesman Mr. Joseph Chamberlain in 1903, and I am proud that after a long period of time we are at last coming into the promised land. I had hoped, during the discussion of these Resolutions, to be able to say something which might be a substantial contribution to the Debate, but in deference to the wishes of the Chair I must limit my observations to five minutes. The last few days of the House of Commons have been some of the proudest moments of my life. I fought my first election in 1910 on this issue, and I now sit for a great constituency in a great city that has always been loyal to this high principle. The House of Commons to-day is about to adopt these Resolutions. We are entering upon a new era of hope and prosperity, and all the twistings and wrigglings of hon. Members opposite, who landed our country in its present unfortunate condition, present no arguments against the passage of proposals which make for the welfare of our industries and commerce and also for Imperial unity.

I wish I had time to enlarge upon the outlook which the introduction of this great measure of relief affords for the industrial life of this nation. We who have fought for years to get our own market for our own people feel that at last, through the statesmanship of the National Government and in spite of the obstruction of the Home Secretary, we are about to carry through a scheme which is in the best interests of the nation. One of the most interesting features of the situation is the new relation which has been established between our colonial empire and this country. When we realise that our colonial empire carries on a volume of trade with this country greater than India we shall understand the importance of developing this new policy in order to bring the colonial empire into closer contact with the mother country in trade and commerce. As a humble backbencher I desire to say how gratified I am, after all these years of fighting on thousands of platforms up and down the country to achieve this great objective in our national life, that I am able to vote in the Lobby to-night in support of proposals inaugurated by one great Birmingham statesman, and introduced into this House by another. Never have I been so thrilled with pride as I am to-night at being in the House on an occasion so momentous to the destinies of this country and our Empire.

Sir STAFFORD CRIPPS

May I, first of all, congratulate two hon. Members on the speeches they have made to-night. Owing to the sequence of three maiden speeches the opportunity was lost and I am sure the Committee would like to take the opportunity of congratulating the hon. Member for Darlington (Mr. Peat) and the hon. Member for Bradford South (Mr. Holdsworth), on their contributions to the Debate. The hon. Member for Darlington is the distinguished son of a distinguished father, and made his contribution as regards the steel problem. The hon. Member for Bradford imported a little lively internationalism into the Debate which had become saturated with economic nationalism. The hon. Mem- ber for Moseley (Mr. Hannon) reminded me of a very fitting ending; a blessing given by a Bishop as a measure is passing through its final stages.

Let me come back to the speech of the President of the Board of Trade. The right hon. Gentleman produced a completely new justification for the Measure now before the House. It was introduced by the Chancellor of the Exchequer firstly, and mainly, as a Measure which would correct the balance of payments. But the President of the Board of Trade said quite frankly, as he had to say after the damaging attack of the Home Secretary, that it was a far more complicated matter than the mere figures put forward by the Chancellor of the Exchequer; that they were interlocked with capital payments and payments of short-term money in and out of the country and that really after all the real point of the whole Measure was first to maintain the pound sterling at its present rate of exchange and, secondly, to raise extra revenue.

The case he put forward and the justification he made are quite different from anything given before. The key of the argument which he addressed to the Committee was the remark which fell from him that he hoped the pound sterling would soon be back on the Gold Standard.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

My right hon. Friend did not say that.

Sir S. CRIPPS

I noticed most particularly the phrase, and I took it down at the time.

Mr. CHAMBERLAIN

The hon. Member quoted my right hon. Friend as saying that he hoped we should soon be back on the Gold Standard.

Sir S. CRIPPS

I am sorry if I used the word "soon." His aim and policy was that we should go back on the Gold Standard. I did not intend to say "soon." The President of the Board of Trade stated that in the old days prior to the time when we went off the Gold Standard the exchange righted the balance of trade. As far as I understand the process the balance of trade in those days was righted by the export or import of gold, and it was by the means of sending out of this country or receiving in this country that metal that the balance was struck. The right hon. Gentleman went on to say that this system was now quite upset since gold had ceased to function. There I agree with him. Since we went off the Gold Standard the system by which you can right your balance of trade by the export or import of gold has obviously ceased to function, and in the welter that has ensued—a welter of economic nationalism run mad, according to the President of the Board of Trade—in order to cure matters the right hon. Gentleman intends to join the lunatics. I agree that the natural adjustment of which he spoke by means of gold no longer operates, but I do not agree that now that we are off the Gold Standard we have no automatic means of balancing our trade.

I believe it is a commonplace in the writings of all economists and in the sayings of sound business men that now since we have gone off the Gold Standard, the exchange operates as a natural adjustment of the trade of the country; gold no longer being available as the balancing factor, goods and services must be used instead. We are therefore obliged, if we desire to import, to balance our imports by either exporting goods or services. The difference between the two policies which may be adopted in such circumstances is the difference between the desire to fix exchange by means of tariffs or to have a fluctuating exchange to balance trade, and no tariffs. The difference between those two policies, as I see it, is a very real and a very important one, and it is because the Government have decided on the first, that is, to fix the exchange and gradually to bring it back, as they can, to the Gold Standard, that they have found themselves obliged to embark on a tariff policy.

The policy of the fixed exchange and tariffs definitely cannot help the export trade of the country. The President of the Board of Trade himself stated that he did not suggest that there was anything very much that could be done by means of a tariff to help the export trade, although the Chancellor of the Exchequer had put forward as one of the seven points which the Government were aiming at by their policy, the desire to correct the balance of payments, diminishing imports and stimulating our exports. No one has yet ventured to suggest to the House in any detail—and perhaps the Lord President of the Council will do it when he replies—how the tariffs which are proposed are going to stimulate the exports of this country. The effect of fixing the exchange and imposing a, tariff must necessarily increase the burden on the worker. It will definitely put down the standard of life. On the other hand, it will definitely relieve the rentier and the banker class and give them a greater share of the benefits.

It is, in fact, a form of deflation, as one hon. Member said not very long ago, in a somewhat roundabout and not very obvious way, whereas deflation by the mere cut in wages is quickly observed by the worker. If, on the other hand, one adopts the process of the fluctuating exchange, allowing the exchange to fluctuate and form an automatic balance for the payments in and out of the country, you do get a definite assistance for exports. That has been shown by the figures since this country has gone off the Gold Standard. Not only that, but it helps the country in its external and internal payments, and, most important of all, it spreads the burden, whatever it may be, evenly over all classes of the population; it does not give the rentier class any advantage over and above any other class.

I want for one moment to see exactly what it is that has brought about the adverse balance of payment. The adverse balance has obviously arisen chiefly owing to two items in the balance sheet—first of all, the check on our exports, and, secondly, the diminution of invisible exports in this country. Those are the two main and apparent items which have brought about the adverse balance. As regards the first, it is due firstly to the inefficient organisation of the export trade and that, as far as we can see, cannot be cured by tariffs. Secondly, it is due to political difficulties in some of our best markets such as India, China, and other places of that type. Thirdly, it is due to the high tariffs which have been erected in different countries in the world. As regards the diminution of our invisible exports, that has been brought about by two causes. There is first the world depression which has so impoverished other countries that they have been unable to pay us the debts which they owe. There is also the fact that those services for which as a rule we receive a large part of what is credited to invisible exports have, owing to the general depression in trade, fallen off enormously in their earning power. The only way in which that matter can be cured and in which this country can receive more for its invisible exports, is not by erecting tariffs, which can do nothing except to make the position worse, but by doing what was suggested and recommended in the Macmillan Report, that is to say, by arriving at international agreement among the Governments and the central banks to increase credit and raise the price level. It is quite idle, in our submission, to attempt to cure this difficulty and the ills in the balance of payments by bringing in a Measure which is going to restrict imports into this country. You are attempting to deal with the problem on the wrong side of the balance sheet. If it is necessary in any way to deal with the restriction of imports and encouragement of exports, it can only be done through the exchange and not by trying to stabilise the exchange by putting on tariffs.

I ask the Committee next to consider what has never been put forward by any spokesman on behalf of the Government, though it has been mentioned by some Government. spokesmen. That is the contra account. We have been told of the vast benefits which will flow from the imposition of tariffs. Let us consider what is on the other side of the account. That is where we shall suffer by the imposition of tariffs. The first and most obvious case is that of coal. Coal, undoubtedly, would be more expensive to raise in this country. We are going to have tariffs on steel and a vast number of other objects all of which are used in the coal mines. But it is not only the case that coal will be more expensive to raise. We have already experienced restriction in our coal market. If that restriction is to be intensified, we shall certainly lose something on that part of the contra account.

Then we come to shipping. Undoubtedly if we are going to stop import- ing into this country we are bound to have reduced freights. The ships which come to this country will carry less cargo because that, apparently, is the design —[HON. MEMBERS: "We can send it out!"] We can send it out when we have markets, but we have not the markets. There is then the question of the re-export trade. I notice this morning in an inspired paper which no doubt got its information direct from the Cabinet, namely, the "Daily Herald,"a statement that the Cabinet—I am not suggesting against the Chancellor of the Exchequer any leakage—have decided to institute a system of free ports. That is a matter of vital importance as the President of the Board of Trade knows to the whole re-export trade of this country, and unless that is done we shall certainly lose a large portion of the re-export trade to several ports in the North of Europe. Some of it, as he knows, has already gone, and unless steps are taken to preserve what is left the tariffs will have a very serious effect in that way.

Let us turn to shipbuilding. How is a tariff to assist the great shipbuilding industry? Shipbuilding is an industry, as I understand it, which has taken some steps to reorganise itself. It has taken what we consider the proper steps as regards an industry, not to ask for Protection, because it probably could not get it, as a tariff on ships would not help very much, but it has tried to reorganise itself; and is that industry going to be assisted by a tax on its raw materials now, or is that too to be put on the debit side of the tariffs account?

Then we come to what is, of course, the largest debit item of all, and that is the rise in the greatest raw material of all industries—food. You will get a rise which will necessitate either a cutting down of the real wage or a rise in wages, and I venture to suggest to the Committee that before very long there will be a movement among the working classes of this country to have rises in wages. No doubt we shall hear that that is an undesirable thing and that industry cannot afford it, but that has got to be put —[An HON. MEMBER: "It is a good thing!"]—if it is desirable, as the hon. Member suggests, and I agree with him, on the debit side as against the tariffs, so far as any particular industry is concerned.

Next we have the rise in the cost of raw materials. Since I have been sitting here, since nine o'clock, I have had a telegram from one of the great industries of this country begging that I should take all possible steps to see that no tax is put upon oil seeds, because, if so, the entire oil cake industry of Britain will be ruined. Already they say that the competition from Holland is very close to them, and especially in foreign markets, and that if this tax is put upon their raw material, they will go under. The right hon. Gentleman, of course, had thought of that, but that is on the debit side again, and when one adds to all those items the very important item of the increased competition which we are going to create by excluding imports from this country, it becomes, to say the least of it, very doubtful whether, on the mere question of balance of payments, we are going to benefit by entering upon this policy.

Let me just put the position for a moment as regards Germany and assume that we are going to exclude some £5,000,000 of goods a month from this country which would be coming in from Germany. There are only three alternatives to the Germans. They have either to cut their imports further, in which case they will naturally cut the imports from this country, or else they have to sell those £5,000,000 of goods in some other market, possibly China, India, or Africa, where they will meet and undercut our goods. The third alternative is that they do not sell the goods at all, and then they do not pay the City of London the money and the interest which they owe. How the right hon. Gentleman will get out of that dilemma I do not know, but that inevitably has got to happen, and it is one of the things which has to be put on the debit side of the balance sheet, but when the right hon. Gentleman puts the case before the House, he shows them all one side of the balance sheet, all the profit, but the debit side is kept, no doubt, locked up in the big red box which he had with him when he came down to the House.

10.30 p.m.

I ask the Committee to remember that they are entering upon what has been called a great experiment. I think it was the right hon. and gallant Gentleman the Financial Secretary who so termed it, but I would point out that it is a great experiment on the food of the working classes and on the raw materials of the manufacturers, and however much the poor consumer may be made to suffer for the benefit of the producer, surely it will appeal to hon. Members opposite that this great experiment is going to interfere with all their raw materials. The Financial Secretary to the Treasury, I thought, was a little unkind to his chief, because, after that epic fight which took place in the early hours of Thursday, which one might term the fight between the Darling of Darwen and the Birmingham Bantam, the right hon. and gallant Gentleman described it as being the dusty, fusty remains of the 19th century problem. I agree with him so far as the orthodox arguments which have been put forward on Free Trade and Tariff Reform are concerned. Then he said this: The great questions of the 20th century —reorganisation, politically, socially and economically, which this country will have to go through."—[OFFICIAL REPORT, 4th February, 1932; col. 392, Vol. 261.] That is exactly what we have been saying for days and for years. This is mere child's play compared with what is really required if this country is to be put upon its feet. It is no good the Financial Secretary playing with the remains of his Fabian past when he knows that behind him the serried ranks of Tories have dug their toes in and are not likely to follow him into that great social, economic and industrial reorganisation through which he says the country has to go. One finds instead the Tory party having a regular "beano" in the House, welcoming at last the fruit of 30 years of labour. [HON. MEMBERS: "Hear, hear!] I had hoped that that cheer would come, because one appreciates now that this is the culmination of a party's hopes. They are the same old arguments and the same old hopes that we have known for the last 30 years, and for anyone to suggest that this is a policy created by a National party is to suggest something which has been proved abundantly in the past two or three days to be wholly and entirely inaccurate. No fresh thought has been given to it at all. It is merely the old policy hashed up again. If I may say so with great respect, the policy of the Home Secretary is also the old policy hashed up again.

So far as we are concerned, we do not care for either point of view. We do not wish to join in the fusty, dusty arguments of the nineteenth century. One of the curious points about the speech of the Chancellor of the Exchequer was that, although he told us the points that the Cabinet desired to cover by their policy and told us the policy, he never connected the two in any way whatever. He merely assumed, as he was entitled to do, that any good Protectionist would jump the hedge between, and good Protectionists have duly done so, but the only piece of evidence which was offered to the House by anybody was offered by the Parliamentary Secretary to the Board of Trade in his heroic peroration on the Abnormal Importations Duties. He implored the free trader to look facts in the face. He said that an ounce of fact was worth a ton of theory and that only if we could look at it with a scientific spirit he was sure that the House would be convinced by the result of the Abnormal Importations Act. He was so foolish as to quote in justification of the great Protectionist orders the reduction in unemployment. Let me read his words: The next assertion in the Amendment He was referring to an Amendment on a previous occasion— was that we should check the rising standard of the people. We have checked it so effectively that in one month during which the Orders have been in operation 82,000 more men and women have been employed than were employed previously."—[OFFICIAL REPORT, 3rd February, 1932, col. 196, Vol. 261.]

An HON. MEMBER

In the protected industries.

Sir S. CRIPPS

No, not in the protected industries, because the hon. Member, like myself, has not got the figures for the protected industries. The position, as the Committee will appreciate, is this: that there was an increase in the number of persons in employment in this country which started, curiously enough, almost the very day we went off the Gold Standard. It steadily climbed up till it reached its peak in December—as a result, no doubt, of going off the Gold Standard. In this month, when all these Orders have been in full operation, the tragic result of them is a decrease of 155,000 persons in employment since November. The hon. Member shakes his head, but I have quoted the figures from the Ministry of Labour. I suggest that that is rather slender evidence upon which to ask us to enter upon a fiscal experiment for all time, and to say that the evidence is worth more than a ton of theory. But that is the only evidence we have had. After all, nearly the whole world is suffering from Protection, and had anyone thought it worth while in order to support his case he might have gone to many other countries to show how prosperous they are, and how they have balanced their payments by means of applying these Protectionist theories.

But the truth is that a good Protectionist requires no argument. He is like a good anti-Russian, he will always believe anything he is told. So, on this occasion, the Chancellor of the Exchequer and his colleagues know that it is unnecessary for them to put any reasoned arguments before the House. They rely merely upon the Party behind them in order to give them support. The whole proposition as regards curing the balance of payments is nothing but a blind. It is not necessary, and I am sure that the right hon. Gentleman knows it is not necessary, to have tariffs for that purpose. I think that good Tory paper, the "Statist," gives the key to the whole policy in its article on tariffs this week when it says— The real case for tariffs is to give some assistance to the direct taxpayer. I think we have realised by now that that is the real case for tariffs. The President of the Board of Trade said quite fairly this afternoon that the direct taxpayer was grossly over-taxed at, the present time—[HON. MEMBERS: "Hear, hear!"] I am again glad to get confirmation—and that he hoped this Measure would be able to supply money which could be used to relieve them. It is that aspect of this policy which we deplore more than any other. Although it may be said that the taxpayers have behaved magnificently, and that some of them have gone to the extent of borrowing money from their banks—a terrible thing to do—I am afraid I have been guilty of it myself at different times—there is another class of the population to be considered. There are the workers, the Civil Servants, the teachers, the police and others who have had compulsory cuts put upon them on the strength of—what? On the understanding that the direct taxpayer also paid the amount which he is at present paying, and not on the understanding — that the first financial measure of the National Government would be to take a load of some £30,000,000 off the direct taxpayers and put it on to them. Let me say one word as regards tariffs to be used as a weapon. None of the speakers on behalf of the Government have mentioned the fact that at the present moment we are operating in foreign countries under what is known as the most-favoured-nation clause. It was stated by the Balfour Committee that: Taking it all round there is no doubt that British trade is treated at least as favourably in foreign markets as that of any other exporting country. I suggest to the House that to exchange that policy, which has in the past given us a position in which we are as favourably treated as any other nation in the markets of the world, to exchange that for a weapon by which we can discriminate against other countries, and thereby throw overboard the whole of the most-favoured-nation treaties, is an extremely dangerous thing to do. I suggest to the House that it is not only very doubtful, but almost certain that the treatment we get from other countries, once we try to start a tariff war, will not be so good as the treatment we have had in the past under Free Trade. [An HON. MEMBER: "Wait and see."] An hon. Member says, "Wait and see." I feel rather like the President of the Board of Trade; I prefer- to be on the safe side, and I believe that we are on the safe side here [Ivterruption.] I am delighted that the House has been able to appreciate my joke. This policy of discrimination, I suggest, to the President of the Board of Trade, is a mere sop to the extreme economic nationalist. It is not put there in fact with the object of operating, because I cannot believe that anybody with business acumen would willingly throw overboard the whole of our trade treaties for the very doubtful benefit of having a. weapon to hang over the head of foreign countries. Certainly, as far as we are concerned, we deplore this attitude which is a challenge to a tariff economic war.

There is one passage in the speech of the Chancellor of the Exchequer upon which I cannot help commenting, because it has struck me as the very height of humour. The right hon. Gentleman told us that the consumer would be properly protected. The machinery for the protection of the consumer is this: 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.''—[OFFICIAL REPORT, 4th February, 1932; cols. 290–1, Vol. 261.] I do not think that the Treasury has ever appealed to anybody in this country as a. typical body to protect consumers' rights, for it has always been looked upon as a body keen on collecting taxation, and, if it finds a tax imposed upon goods coming into this country, I suggest that the Treasury is not likely to have so soft a heart for the consumer as to say: "Take away the tax; we will deny ourselves all the receipts from it in the future, because we believe that the poor consumer"—as we might say of the taxpayer—"is badly treated." It is too good to be true, and, anyway, so far as we are concerned, we are not content that the Treasury should be left as the sole protection for the consumer in this scheme by which tariffs are to be erected. [Interruption.] I am sorry that I am rather later than the hour at which I promised to sit down, but I started 20 minutes later than I was expected to start. I am not going to delay the Committee unduly.

The unfortunate thing, as far as we see it, about the way in which this case has been presented, is that it will lead the public to believe that this tariff policy is a cure-all for the ills of the country. There will no doubt, in some trades, be a temporary improvement, and that temporary improvement may well be apparent long before the more slowly developing adverse effects which are bound to follow. In that period, no doubt, the country will feel that it is deriving some benefit from these tariffs, and no doubt, if world conditions improve, all the Protectionists in the country will raise a whoop of delight and say, "Look what our tariffs have done."[Interruption.] I am glad to note the agreement from the other side.

The trouble that really is at the base of all our difficulties is that the world as a whole is progressing downwards away from prosperity to a gradual contraction of trade and credit and to starvation; and no country, whatever its fiscal system, has been saved from that suffering and decline. Everyone agrees, including all the right hon. Gentlemen who have spoken on both sides from the Government bench, that the real difficulty is over-production and under-consumption, and that it is largely caused by trade barriers and currency and exchange difficulties. What is the Government doing to help? It is erecting more trade barriers, it is going to encourage increase of production, and it is going to encourage decrease in consumption. That seems to us to be a, ridiculous road to follow if you are going to try to get the world back, or even this country back, into a proper state.

We want to see trade stimulated. We want to see our export trades, not restricted by having tariffs put on their raw materials and on food, but developed by organisation and co-operation. We do not want to see those trades which should be exporting merely trying to devote their energies to developing an internal market in this country, because that will give no assistance to the balance of payments. It is private enterprise that has produced this chaos. Unregulated competition has led to the overproduction, and the mal-distribution of profits has led to the under-consumption.

We believe that tariffs will only accentuate both of these factors which are at present apparent in the world situation, and will do nothing to reduce the chaos in the trade either of this country or of the world. It is no good expecting industry to reorganise itself. It has had an opportunity for years now, and it has failed. Until the Government takes control, as sooner or later it will, of the industry and finance of this country, and Governments do so in other countries, and bring about a measure of international co-operation—[Interruption]. Hon. Members opposite will learn one day that he laughs best who laughs last, and I venture to predict that a large number of hon. Members will live to see the day when the peoples of the world will have enough sense to realise that co-operation and not competition is the sole basis for world prosperity.

The LORD PRESIDENT of the COUNCIL (Mr. Baldwin)

The hon. and learned Gentleman who has just spoken has every right to be as pleased with what he said as we were to listen to him. It was only three short months ago that he told the House that the Government had an unexampled majority, and yet had no policy. He has discovered that we have a policy, and he ought to be very pleased. What ought to give him a greater satisfaction, a satisfaction that, I fear, must always be denied to him, is this: He says that neither Free Trade nor Protection is of the slightest use, and that the only thing that is of use is a policy that could neither be explained nor understood, that has no chance of being put into practice, but that can be put forward with eloquence and with apparent conviction against any proposal that anybody brings forth. I assume that he will vote against us in the Lobby tonight, as he would against any party that proposed to continue Free Trade—a very happy independent position on which I congratulate him.

I am sure that in a Debate of this kind and upon this subject, there is no one who does not regret the absence of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). Without him it is a sad affair, but it was some compensation to us to hear his son, although when he got up I said to myself, "The hands are indeed the hands of Esau, but the voice is the voice of Jacob"—or was it David? The speech interested the whole House, and if he will forgive my saying so, it was an admirable Parliamentary performance. Of course, as must be the case in a speech of that kind reviewing the whole position, the arguments were not unfamiliar to those of us who have been in this contest for many years, and it would be possible to use against those arguments, arguments equally familiar, which have been used sometimes with, and sometimes without, effect for many years.

It has been a Debate remarkable for most interesting speeches, and for the help that has been given to us by some of the new hon. Members who have made their maiden effort to-day; also for the interesting and most eloquent tribute to what capital has done for this country which was made by the hon. Member for Merthyr (Mr. Wallhead). I listened with great pleasure to him, whatever the object of those observations may have been.

I do not propose to detain the Committee at any undue length, or to repeat many of the arguments that are only too familiar. There was one question put by the hon. and learned Member who has just addressed the Committee, a question that has been put a thousand times and answered ten thousand times, so I may as well answer it once more. It is: "How do you expect tariffs to help exports?" There are three ways in which we believe they may be helped. We believe a tariff may be used to help to lower tariffs in other countries. We believe you will obtain cheaper production by running full time. We believe that, as the result of the Ottawa Conference, we shall enlarge the markets of the Kingdom, on which our export trade depends. With regard to the question he asked me about free ports, which he said he had read in the "Daily Herald," I can only say that he will be able to see what the proposals are in the Bill, which will be available on Friday if we get the Report stage of the Resolutions to-morrow, and he will then be able to see whether it is, as a matter of fact, a figment of the free Press or an intelligent piece of anticipation.

There are one or two points on which I feel I ought to make one or two observations. Much has been said during the Debate about a tariff war, as though we have not been living in a tariff war for generations. It is no less a war, if you must use these militant expressions, if you are being shelled without being able to reply, and, although academically it may seem of little importance to manufacturers who find their works being stopped by the importation of dumped goods, who know well enough what a tariff war is, we shall be able for the first time—I am going to use the word "retaliate," but I still hope and believe it will be less by retaliation, if we are going to secure success in the long run by what we are doing to-night, than by inducing other countries to meet us by a modification of their tariffs and by reciprocity. Much of the Debate also has run on the difference between the permanent and the temporary nature of a tariff. There is no such thing as permanence in politics. Whatever one Parliament does it is in the power of another Parliament to confirm, to increase, to diminish or to abolish. A tariff, perhaps more than anything else, will be justified by its success or otherwise, but many of my hon. Friends, some very near to me, seem to make a great distinction between what is permanent and what is temporary. I do not myself quite understand that attitude. After all, it is treating a tariff as if it was not quite a respectable person. They are perfectly willing to enter into a temporary liaison, or, may I say, to take a tariff under their protection. But when it comes to making an honest woman of her, "Oh, dear no. You are not good enough for our family."

11.0 p.m.

The truth has been put by more than one speaker, and it was put by the hon. and gallant Gentleman the Member for Pembrokeshire (Major Lloyd George) perfectly fairly. This great tariff experiment is going to be tried. The country—here I differ from what was said from the opposite bench—has decided that the experiment shall be made. It will be decided by an overwhelming majority to-night that that experiment shall be made. One of two things will happen. By the time the next election comes, the experiment will or will not have succeeded. If it succeeds in a couple of years, the whole tariff issue will be dead as a question of strife between any parties in this country, and we may look for fresh orientations in politics; and that is what I believe will happen. In the meantime, is it too much to hope that when Parliament has come to a decision—and a decision by an overwhelming majority—we should all try, for the sake of the country, to make this scheme a success, and not hamper it?

I should like to make one observation in reply to what my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft) said. There are two points upon which I wish to touch. I think he was quite right in what he said about the Tariff Commission. Whatever that Commission does, I agree with him that it should be done without delay for the sake of removing doubt and uncertainty. Everyone, whether he be a Free Trader or Protectionist, or in any of the half-way or border houses in between, will agree on that point, and I hope that that may be done. The other thing he said was this. He would have liked to have seen a tariff—33⅓ per cent. I think was the figure he mentioned—put on at once when we came into power. I am no less anxious for the success of this policy than my hon. and gallant Friend. Months ago, before the crisis, that was the kind of scheme that was in my mind and those of my colleagues who were working with me, but I say in this House to-night with conviction, that the proposals of the Government are not the result of compromise. I am far happier, in the present financial position of the country and the present position of the pound, that we dealt with this question as we are doing rather than in the way which he suggested. In the present position of the world, one has every desire to see the policy succeed, and to believe in its ultimate success as the trade of the world improves.

I believe that we shall have to feel our way. The risks are great on all sides, and I believe that this elastic method which we have put forward will meet the case and do the work, and give the fairest trial to what all of us in the party to which I have the honour to belong believe, and in which we have faith. I said yesterday that the arrangement that was under discussion last night on which we voted depended for success on the spirit in which it was worked, and that similarly the success of tariffs in this country depends largely on the spirit in which they are worked by the industrialists of this country. If there be an idea —which I do not believe for a moment—of which they are accused by our political opponents, that they can use tariffs merely as a shelter for inefficiency, a shelter for idleness, a shelter from which they can profiteer, then the whole experiment can be condemned. If, on the other hand, they decide that it should be regarded as giving them shelter in these most difficult times, shelter until they can improve their own competence, in which they can mend their own plant, in which they can go ahead, they will then equip themselves and the country so that when the world gradually becomes more settled, once more we may be able to move forward into that place which is ours by heredity and by right, the place of leadership of the industrial world.

I would say one word about certain industries which have suffered during these years perhaps more than most. I will not say that it is necessary for them to make themselves efficient, because the charge of inefficiency is flung about far too lightly, but there are industries whose efficiency is crippled by the losses that they have had, who have not the capital resources and whose outlook is not such as will attract capital resources to them. Those are the industries that can benefit themselves and the country under the shelter of a tariff, can carry out schemes of reorganisation that can attract capital, and can lay down new plants. All these things are impossible for them in the present circumstances. I look to them to carry out these schemes, to take the right advantage of the help that it will be possible to obtain from the State, and to become once more, instead of half-derelict industries, hives of a prosperous population.

We have, again, arising out of the legislation which we propose, the prospect at last of having discussions, indeed, discussions have begun already with the representatives of our Dominions with a view to bringing about the economic unity which has been the dream of so many of us for so long. We all know, all who have studied it know, that the question is full of difficulties. We do not underrate the difficulties that have been thrown in our faces by those who are opposed to us. We know there are difficulties and we are going to face them and we are going to overcome them. We believe that we shall lay the foundations of a policy that perhaps for a generation to come may help to alter the currents of world trade, bring prosperity to the Dominions and to ourselves and, more important still, bind more closely and more loyally together, if possible, all the component and outlying parts of the British Empire.

Behind all these things there lies that question of which I have so often spoken in this House and which was brought out by the late Solicitor-General at the end of his speech—the employment of our people. That is a subject which must have been in the mind or at the back of the mind of everyone engaged in public life who has a head and a heart, ever since the War. If it were not that I believe that the policy we are pursuing is the policy that is best for the purpose of helping the employment of our people, it would never have received my support and advocacy as it has done. The result of the last election was due to many causes. The hon. Member for Bridgeton (Mr. Maxton), speaking a few days ago, said it was a wave of fear which ran through the country. That is one explanation, and there may have been something in it; a fear that this country might have the same experience as Germany. The most potent weapon in Germany to-day is the feeling of fear in every rank and in every class lest they should be plunged once again into the same ghastly conditions as when the currency broke some 10 years ago. No disaster comparable to that can happen to a civilised country. Let us assume that a fear of some calamity of that kind played its part in the last election. I have said before that there is an S.O.S. from the people to find them work. Each Government since the War has been judged ultimately by that test and in the eyes of the people they have all been found wanting. They have pinned their faith to Tories, to Liberals, and to Labour, and in spite of all their efforts, not one of them has succeeded in solving the question. Many people were giving up hope that any political party could solve the question for them, and they said we will try this combination which is appealing for a mandate with representatives of all parties. It is a most tremendous responsibility. Heaven alone knows whether we can succeed, but we believe that, we are on the right path. We shall render our account at the end of this Parliament, and we shall be judged as to whether we have been able to find work for our people. We believe, contrary to hon. Members opposite, that on the lines upon which we are proceeding—it may not be at once—we shall lay the foundation for better times and find a solution to the debt and reparations question, which is fundamental also. We shall not cease from that struggle. We shall go on with it in Parliament and out. To-night sets the seal on the first chapter in that struggle. I beg the Committee to give us a majority which will encourage us to proceed with our task.

Question put, 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 be charged on the following goods, that is to say,— (a) goods for the time being chargeable with any other duty of customs (not

being a duty chargeable by or under any Act of the present Session for giving effect to this and any other Resolution), but not including composite goods except as may be provided by the Act aforesaid; or

(b) goods of any class or description which may be exempted by the Act aforesaid from the duty charged by this Resolution."

The Committee divided: Ayes, 452; Noes, 76.

Division No. 51.]	AYES.	[11.13 p.m.
Acland-Troyte, Lieut.-Colonel	Caporn, Arthur Cecil	Elliot, Major Rt. Hon. Walter E.
Adams, Samuel Vyvyan T. (Leeds, W.)	Carver, Major William H.	Ellis, Robert Geoffrey
Agnew, Lieut.-Com. P. G.	Cassels, James Dale	Elliston, Captain George Sampson
Albery, Irving James	Castlereagh, Viscount	Elmley, Viscount
Alexander, Sir William	Castle Stewart, Earl	Emmott, Charles E. G. C.
Allen, Sir J. Sandeman (Liverp'l, W.)	Cautley, Sir Henry S.	Emrys-Evans, P. V.
Allen, Lt.-Col. J. Sandeman (B'k'nh'd.)	Cayzer, Sir Charles (Chester, City)	Entwistle, Cyril Fullard
Allen, William (Stoke-on-Trent)	Cazalet, Thelma (Islington, E.)	Erskine, Lord (Weston-super-Mare)
Amery, Rt. Hon. Leopoid C. M. S.	Cecil, Rt. Hon. Lord Hugh	Erskine-Bolst, Capt. C. C. (Blackpool)
Anstruther-Gray, W. J.	Chalmers, John Rutherford	Essenhigh, Reginald Clare
Applin, Lieut.-Col. Reginald V. K.	Chamberlain, Rt. Hon. Sir J.A. (Birm., W)	Evans, Capt. Arthur (Cardiff, S.)
Apsley, Lord	Chamberlain, Rt. Hn. N. (Edgbaston)	Everard, W. Lindsay
Aske, Sir Robert William	Chapman, Sir Samuel (Edinburgh, S.)	Falle, Sir Bertram G.
Astbury, Lieut.-Con Frederick wolfe	Chorlton, Alan Ernest Leofric	Fermoy, Lord
Astor, Maj. Hn. John J. (Kent, Dover)	Chotzner, Alfred James	Fielden, Edward Brocklehurst
Astor, Viscountess (Plymouth, Sutton)	Christie, James Archibald	Fleming, Edward Lascelles
Atholl, Duchess of	Clarke, Frank	Flint, Abraham John
Atkinson, Cyril	Clarry, Reginald George	Ford, Sir Patrick J.
Bailey, Eric Alfred George	Clayton Dr. George C.	Fraser, Captain Ian
Baldwin, Rt. Hon. Stanley	Clydesdale, Marquess of	Fremantle, Lieut.-Colonel Francis E.
Baldwin-Webb, Colonel J.	Cobb, Sir Cyril	Fuller, Captain A. E. G.
Balfour, George (Hampstead)	Colfox, Major William Philip	Ganzoni, Sir John
Balfour, Capt. Harold (I. of Thanet)	Collins, Sir Godfrey	Gault, Lieut.-Col. A. Hamilton
Balniel, Lord	Colman, N. C. D.	Gibson, Charles Granville
Banks, Sir Reginald Mitchell	Colville, Major David John	Gillett, Sir George Masterman
Barclay-Harvey, C. M.	Conant, R. J. E.	Gilmour, Lt.-Col. Rt. Hon. Sir John
Barrie, Sir Charles Coupar	Cook, Thomas A.	Glossop, C. W. H.
Bateman, A. L.	Cooke, James D.	Gluckstein, Louis Halle
Beaumont, M. W. (Bucks., Aylesbury)	Cooper, A. Duff	Glyn, Major Ralph G. C.
Beaumont, Hon. R.E.B, (Portsm'th, C.)	Copeland, Ida	Goff, Sir Park
Benn, Sir Arthur Shirley	Courthope, Colonel Sir George L.	Goldie, Noel B.
Betterton, Rt. Hon. Sir Henry B.	Craddock, Sir Reginald Henry	Goodman, Colonel Albert W.
Bevan, Stuart James (Holborn)	Craven-Ellis, William	Gower, Sir Robert
Birchall, Major Sir John Dearman	Croft, Brigadier-General Sir H.	Graham, Fergus (Cumberland, N.)
Bird, Ernest Roy (Yorks., Skipton)	Crooke, J. Smedley	Grattan-Doyle, Sir Nicholas
Bird, Sir Robert B. (Wolverh'pton W.)	Crookshank, Col. C. de Windt (Bootle)	Greaves-Lord, Sir Walter
Blaker, Sir Reginald	Crookshank, Capt. H. C. (Gainsb'ro)	Greene, William P. C.
Blindell, James	Croom-Johnson, R. P.	Gretton, Colonel Rt. Hon. John
Boothby, Robert John Graham	Cross, R. H.	Grimston, R. V.
Borodale, Viscount	Crossley, A. C.	Gritten, W. G. Howard
Boulton, W. W.	Cruddas, Lieut.-Colonel Bernard	Guinness, Thomas L. E. B.
Bowater, Col. Sir T. Vansittart	Dalkeith, Earl of	Gunston, Captain D. W.
Bower, Lieut.-Com. Robert Tatton	Davies, Edward C. (Montgomery)	Guy, J. C. Morrison
Bowyer, Capt, Sir George E. W.	Davies, Maj. Geo. F. (Somerset, Yeovil)	Hacking, Rt. Hon. Douglas H.
Boyce, H. Leslie	Davison, Sir William Henry	Hales, Harold K.
Bracken, Brendan	Dawson, Sir Philip	Hall, Lieut.-Col. Sir F. (Dulwich)
Braithwaite, Maj. A. N. (Yorks, E.	Denman, Hon. R. D.	Hall, Capt. W. D'Arcy (Brecon)
Braithwaite, J. G. (Hillsborough)	Denville, Alfred	Hamilton, Sir George (Ilford)
Briscoe, Capt. Richard George	Despencer-Robertson, Major J. A. F.	Hammersley, Samuel S.
Broadbent, Colonel John	Dickie, John P.	Hanbury, Cecil
Brocklebank, C. E. R.	Dixon, Rt. Hon. Herbert	Hanley, Dennis A.
Brown, Col. D. C. (N'th'l'd., Hexham)	Donner, P. W.	Hannon, Patrick Joseph Henry
Brown, Ernest (Leith)	Doran, Edward	Harbord, Arthur
Brown, Brig.-Gen. H. C. (Berks., Newb'y)	Dower, Captain A. V. G.	Hartland, George A.
Browne, Captain A. C.	Drewe, Cedric	Harvey, George (Lambeth, Kenningt'n)
Buchan, John	Duckworth, George A. V.	Harvey, Major S. E. (Devon, Totnes)
Buchan-Hepburn, P. G. T.	Dugdale, Captain Thomas Lionel	Haslam, Henry (Lindsay, H'ncastle)
Bullock, Captain Malcolm	Duggan, Hubert John	Haslam, Sir John (Bolton)
Burghley, Lord	Duncan, James A. L. (Kensington, N.)	Headlam, Lieut.-Col. Cuthbert M.
Burgin, Dr. Edward Leslie	Dunglass, Lord	Heneage, Lieut.-Colonel Arthur P.
Burnett, John George	Eady, George H.	Hepworth, Joseph
Burton, Colonel Henry Walter	Eales, John Frederick	Hillman, Dr. George B.
Cadogan, Hon. Edward	Eastwood, John Francis	Hills, Major Rt. Hon. John Walter
Caine, G. R. Hall.	Eden, Robert Anthony	Hoare, Lt.-Col. Rt. Hon, Sir S. J. G.
Campbell, Edward Taswell (Bromley)	Edge, Sir William	Hope, Capt. Arthur O. J. (Aston)
Campbell, Rear-Adml. G. (Burnley)	Edmondson, Major A. J.	Hope, Sydney (Chester, Stalybridge)
Campbell-Johnston, Malcolm	Ednam, Viscount	Hore-Belisha, Leslie
Hornby, Frank	Mitchell, Sir W. Lane (Streatham)	Shaw, Captain William T. (Forfar)
Horne, Rt. Hon. Sir Robert S.	Mitcheson, G. G.	Shepperson, Sir Ernest W.
Horobin, Ian M.	Molson, A. Hugh Elsdale	Simmonds, Oliver Edwin
Horsbrugh, Florence	Monsell, Rt. Hon. Sir B. Eyres	Sinclair, Cal. T. (Queen's Unv., Belfast)
Howard, Tom Forrest	Moore, Lt.-Col. Thomas C. R. (Ayr)	Skelton, Archibald Noel
Howitt, Dr. Alfred B.	Moore-Brabazon, Lieut.-Col, J. T. C.	Smiles, Lieut.-Col. Sir Walter D.
Hudson, Capt. A. U. M. (Hackney, N.)	Moreing, Adrian C.	Smith, Sir Jonah W. (Barrow-in-F.)
Hudson, Robert Spear (Southport)	Morris, John Patrick (Salford, N.)	Smith, Louis W. (Sheffield, Hallam)
Hume, Sir George Hopwood	Morris, Owen Temple (Cardiff, E.)	Smith, R. W. (Aberd'n & Klnc'dlne, C.)
Hunter, Dr. Joseph (Dumfries)	Morris-Jones, Dr. J. H. (Denbigh)	Smith-Carington, Neville W.
Hunter, Capt. M. J. (Brigg)	Morrison, William Shephard	Smithers, Waldron
Hurd, Percy A.	Moss, Captain H. J.	Somerset, Thomas
Hurst, Sir Gerald B.	Muirhead, Major A. J.	Somerveil, Donald Bradley
Hutchison, W. D. (Essex, Romford)	Munro, Patrick	Somerville, Annesley A. (Windsor)
Inskip, Rt. Hon. Sir Thomas W. H.	Nail, Sir Joseph	Somerville, D. G. (Willesden, East)
Iveagh, Countess of	Nation, Brigadier-General J. J. H.	Soper, Richard
Jackson, Sir Henry (Wandsworth, C.)	Newton, Sir Douglas George C.	Sotheron-Estcourt, Captain T. E.
Jackson, J. C. (Heywood & Radcliffe)	Nicholson, Godfrey (Morpeth)	Southby, Commander Archibald R. J.
James, Wing-Com. A. W. H.	Nicholson, O. W. (Westminster)	Spears, Brigadier-General Edward L.
Jamieson, Douglas	Nicholson Rt. Hn. W. G. (Petersf'ld)	Spencer, Captain Richard A.
Jesson, Major Thomas E.	Normand, Wilfrid Guild	Spender-Clay, Rt. Hon. Herbert H.
Joel, Dudley J. Barnato	North, Captain Edward T.	Stanley, Lord (Lancaster, Fylde)
Johnston, J. W (Clackmannan)	Nunn, William	Stanley, Hon. O. F. G. (Westmorland)
Jones, Lewis (Swansea, West)	O'Connor, Terence James	Steel-Maitland, Rt. Hon. Sir Arthur
Ker, J. Campbell	O' Donovan, Dr. William James	Stevenson, James
Kerr, Hamilton W.	Oman, Sir Charles William C.	Stewart, William J.
Kimball, Lawrence	O'Neill, Rt. Hon. Sir Hugh	Stones, James
Kirkpatrick, William M.	Ormiston, Thomas	Storey, Samuel
Knatchbull, Captain Hon. M. H. R.	Ormsby-Gore, Rt. Hon. William G. A.	Stourton, Hon. John J.
Knebworth, Viscount	Palmer, Francis Noel	Strauss, Edward A.
Knight, Holford	Patrick, Colin M.	Strickland, Captain W. F.
Knox, Sir Alfred	Pearson, William G.	Stuart, Hon. J. (Moray and Nairn)
Lamb, Sir Joseph Quinton	Peat, Charles U.	Stuart, Lord C. Crichton.
Lambert, Rt. Hon. George	Penny, Sir George	Sueter, Rear-Admiral Murray F.
Latham, Sir Herbert Paul	Perkins, Walter R. D.	Sugden, Sir Wilfrid Hart
Law, Sir Alfred	Peters, Dr. Sidney John	Summersby, Charles H.
Law, Richard K. (Hull, S. W.)	Petherick, M.	Sutcliffe, Harold
Leckle, J. A.	Peto, Geoffrey K. (W'verh'pt'n, Bliston)	Tate, Mavis Constance
Leech, Dr. J. W.	Pike, Cecil F.	Taylor, Vice-Admiral E.A. (P'dd'gt'n, S.)
Lees-Jones, John	Potter, John	Templeton, William P.
Leighton, Major B. E. P.	Powell, Lieut.-Col. Evelyn G. H.	Thom, Lieut.-Colonel John Gibb
Lennox-Boyd, A. T.	Pownall, Sir Assheton	Thomas, Rt. Hon. J. H. (Derby)
Levy, Thomas	Procter, Major Henry Adam	Thomas, James P. L. (Hereford)
Liddall, Walter S.	Purbrick, R.	Thomas, Major L. B. (King's Norton)
Lindsay, Noel Ker	Pybus, Percy John	Thompson, Luke
Lister, Rt. Hon. Sir Philip Cunliffe.	Raikes, Henry V. A. M.	Thomson, Sir Frederick Charles
Little, Graham-, Sir Ernest	Ramsay, Capt. A. H. M. (Midlothian)	Thorp, Linton Theodore
Llewellin, Major John J.	Ramsay, T. B. W. (Western Isles)	Titchfield, Major the Marquess of
Lloyd, Geoffrey	Ramsbotham, Herwald	Todd, Capt. A. J. K. (B'wick-on-T.)
Locker- Lampson, Rt. Hn. G.(Wd. Gr'n)	Ramsden, E.	Touche, Gordon Cosmo
Lockwood, John C. (Hackney, C.)	Rankin, Robert	Train, John
Loder, Captain J. de Vere	Ratcliffe, Arthur	Tryon, Rt. Hon. George Clement
Lumley, Captain Lawrence R.	Reed, Arthur C. (Exeter)	Turton, Robert Hugh
Lymington, Viscount	Reid, David D. (County Down)	Vaughan-Morgan, Sir Kenyon
Lyons, Abraham Montagu	Reid, James S. C. (Stirling)	Wallace, Captain D. E. (Hornsey)
Mabane, William	Reid, William Allan (Derby)	Wallace, John (Dunfermline)
MacAndrew, Maj. C. G. (Partick)	Remer, John R.	Ward, Lt.-Col. Sir A. L. (Hull)
MacAndrew, Capt. J. O. (Ayr)	Rentoul, Sir Gervals S.	Ward, Irene Mary Bewick (Wallsend)
McConnell, Sir Joseph	Renwick, Major Gustav A.	Ward, Sarah Adelaide (Cannock)
McCorquodale, M. S.	Reynolds, Col. Sir James Philip	Warrender, Sir Victor A. G.
MacDonald, Malcolm (Bassetlaw)	Rhys, Hon. Charles Arthur U.	Waterhouse, Captain Charles
Macdonald, Sir Murdoch (Inverness)	Roberts, Sir Samuel (Ecclesall)	Watt, Captain George Steven H.
Macdonald, Capt. P. D. (I. of W.)	Robinson, John Roland	Wayland, Sir William A.
McEwen, J. H. F.	Rodd, Rt. Hon. Sir James Rennell	Wedderburn, Henry James Scrymgeour
McKie, John Hamilton	Ropner, Colonel L.	Wells, Sydney Richard
McLean, Major Alan	Rosbotham, S. T.	Weymouth, Viscount
McLean, Dr. W. H. (Tradeston)	Ross, Ronald D.	Whiteside, Borras Noel H.
Macmillan, Maurice Harold	Rose Taylor, Walter (Woodbridge)	Williams, Charles (Devon, Torquay)
Macpherson, Rt. Hon. James I.	Ruggles-Brise, Colonel E. A.	Wills, Wilfrid D.
Magnay, Thomas	Runciman, Rt. Hon. Walter	Wilson, Clyde T. (West Toxteth)
Maitland, Adam	Runge, Norah Cecil	Wilson, G. H. A. (Cambridge U.)
Makins, Brigadier-General Ernest	Russell, Albert (Kirkcaldy)	Windsor-Clive, Lieut.-Colonel George
Manningham-Buller, Lt.-Col. Sir M.	Russell, Alexander West (Tynemouth)	Winterton, Rt. Hon. Earl
Marjoribanks, Edward	Russell, Hamer Field (Sheffield, B'tside)	Wise, Alfred R.
Marsden, Commander Arthur	Russell, Richard John (Eddisbury)	Withers, Sir John James
Martin, Thomas B.	Rutherford, Sir John Hugo	Wolmer, Rt. Hon. Viscount
Mason, Col. Glyn K. (Croydon, N.)	Salmon, Major Isidore	Womersley, Walter James
Mayhew, Lieut.-Colonel John	Salt, Edward W.	Wood, Rt. Hon. Sir H. Kingsley
Meller, Richard James	Samuel, Sir Arthur Michael (F'nham)	Worthington, Dr. John V.
Merriman, Sir F. Boyd	Sandeman, Sir A. N. Stewart	Wragg, Herbert
Millar, Sir James Duncan	Sassoon, Rt. Hon. Sir Philip A. G. D.	Young, Rt. Hon. Sir Hilton (S'v'noaks)
Mills, Sir Frederick	Savery, Samuel Servington
Milne, Charles	Scone, Lord	TELLERS FOR THE AYES.—
Milne, John Sydney Wardlaw.	Selley, Harry R.	Captain Margesson and Mr. Shakespeare.
Mitchell, Harold P. (Br'tf'd & Chlsw'k)	Shaw, Helen B. (Lanark, Bothwell)

NOES.
Adams, D. M. (Poplar, South)	Hall, George H. (Merthyr Tydvil)	Mander, Geoffrey le M.
Attlee, Clement Richard	Hamilton, Sir R. W. (Orkney & Zetl'nd)	Mason, David M. (Edinburgh, E.)
Batey, Joseph	Harris, Sir Percy	Maxton, James
Bernays, Robert	Hicks, Ernest George	Nathan, Major H. L.
Bevan, Aneurin (Ebbw Vale)	Hirst, George Henry	Owen, Major Goronwy
Briant, Frank	Holdsworth, Herbert	Parkinson, John Allen
Buchanan, George	Hopkinson, Austin	Pickering, Ernest H.
Cape, Thomas	Janner, Barnett	Price, Gabriel
Cocks, Frederick Seymour	Jenkins, Sir William	Rea, Walter Russell
Cripps, Sir Stafford	Johnstone, Harcourt (S. Shields)	Roberts, Aled (Wrexham)
Curry, A. C.	Jones, Henry Haydn (Merioneth)	Rothschild, James A. de
Daggar, George	Jones, J. J. (West Ham, Silvertown)	Salter, Dr. Alfred
Davles, Rhys John (Westhoughton)	Jones, Morgan (Caerphilly)	Samuel, Rt. Hon. Sir H. (Darwen)
Devlin, Joseph	Kirkwood, David	Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Edwards, Charles	Lansbury, Rt. Hon. George	Thorne, William James
Evans, Capt. Ernest (Welsh Univ.)	Lawson, John James	Tinker, John Joseph
Evans, R. T. (Carmarthen)	Leonard, William	Watts-Morgan, Lieut.-Col. David
Foot, Dingle (Dundee)	Logan, David Gilbert	Wedgwood, Rt. Hon. Josiah
Foot, Isaac (Cornwall, Bodmin)	Lunn, William	White, Henry Graham
George, Major G. Lloyd (Pembroke)	Macdonald, Gordon (Ince)	Williams, David (Swansea, East)
George, Megan A. Lloyd (Anglesea)	McEntee, Valentine L.	Williams, Dr. John H. (Llanelly)
Grenfell, David Rees (Glamorgan)	McGovern, John	Williams, Thomas (York, Don Valley)
Griffith, F. Kingsley (Middlesbro', W.)	Mc Keag, William	Wood, Sir Murdoch McKenzie (Banff)
Griffiths, T. (Monmouth, Pontypool)	Maclean, Rt. Hon. Sir D. (Corn'll N.)	Young, Ernest J. (Middlesbrough, E.)
Grundy, Thomas W.	Maclean, Neil (Glasgow, Govan)
Hall, F. (York, W.R., Normanton)	Mallalleu, Edward Lancelot	TELLERS FOR THE NOES.—
		Mr. Groves and Mr. Duncan Graham.