HC Deb 12 July 1932 vol 268 cc1133-66
The PRIME MINISTER (Mr. Ramsay MacDonald)

Perhaps I ought to begin by offering an apology to my right hon. Friend the Member for Epping (Mr. Churchill) for not having been present when he started the Debate yesterday. He had given me no notice of his intention or I can assure him I should have been in my place. I should like, in as short a time as possible—and I hope I shall not make too great a draft upon the time and patience of the House—to report the proceedings, at any rate in their main features, of the Conference at Lausanne. Let me begin right away with the claim that I make for the importance of the Conference. I make this claim, that the Conference and its results can lead to a settlement of this question of Reparations, which lies somewhere about the root of every economic trouble that has overtaken the world since the War, which has falsified national Budgets, has placed in the centre of Europe a country whose financial position is a menace to the whole world, and has done much to throw every national economy out of gear. While Reparations last there can be no complete industrial recovery. We went to Lausanne to deal with that question, and I make no apology to the House that we put it first and foremost in our programme. The rest are now under way. Why? Because we have offered a solution of the Reparations problem. It was big enough of itself, as every one of my very admirable colleagues who sat with me through those days and nights knows and, if hon. Members doubt that, I ask them to exercise their imagination just a.Little and make up their minds what would have happened if we had come back from Lausanne without an agreement. Ever since Reparations were imposed upon Germany there have been plans arid schemes and inquiries and con- ferences one following the other. I think I myself have taken part in two major and two minor ones, and the last before Lausanne was just as bad as the first. There were still those economic follies of Reparations staring us in the face. We could reduce them and we could manipulate them, but we could not clear them out. As the result of Lausanne I think we have heard the last of them.

When the world began to move in the darkening shadows of the financial and economic eclipse, in which we are, unfortunately, at the moment, German credit or lack of credit occupied a greater and greater proportion of the menace to the general stability of the world. It was not Germany only. I have read a good deal in some of the newspapers of this country that "this is Germany," "this is Europe." What antediluvian journalists and journalistic proprietors we still have in our midst. Germany— something apart—some sort of roving island isolated in the universe; German credit, German trade, German policy, as though they were not organically united with our own. Until the position of Germany as a factor, as an element in world trade, as a factor in the unfortunate position, not of Germany itself nor of Continental Europe, but German condition as a factor in British condition, is understood and settled, there is no recovery for us. In the same way, there is no recovery for Germany itself. There is no one, Chancellor of the Exchequer, President of the Board of Trade, or Prime Minister, who could sit in these seats through these years without turning an eye ever increasing in its anxiety to the signs and portents of Germany. The last Government phase was the Seven Powers Conference which sat in London and over which I presided and from which emerged the Basle Committee Report. The Basle Committee reported on 23rd December, 1931, and I hope that I shall not weary the House if I remind it of the terms of the conclusions of the Basle Committee. When Governments come to examine "— and these were not politicians— the whole group of questions allied to the subject of the present report"— that is the financial state of Germany, the credit position of Germany— they will have to take account of many matters relevant to these complex problems which can only be solved in conformity with economic realities. In this connection, certain considerations seem to us of great importance. The first is that transfers from one country to another on a scale so large as to upset the balance of payments, can only accentuate the present chaos. It should also be borne in mind that the release of a debtor country from a burden of payments which it is unable to bear may merely have the effect of transferring that burden to a creditor country which in its character as a debtor, it, in its turn, may be unable to bear. Again, the adjustment of all inter-Governmental debts (Reparations and other War Debts) to the existing troubled situation of the world—and this adjustment should take place without delay if new disasters are to be avoided—is the only lasting step capable of re-establishing the confidence which is the very condition of economic stability and real peace. Finally, although the German Government is energetically defending the stability of its currency, steps are necessary to secure that these measures shall have a permanent effect. That is the report. That report was made on the 23rd December, 1931. The issue of the call to the Lausanne Conference was made on 13th February, 1932, and it met on the 1st June, 1932. Someone said in the innocence of his heart yesterday that we ought to have gone on awaiting election after election. I have waited for elections until my patience is ended. The gap between these two dates is no credit to anybody. Why is it there? Because we sat supinely in our seats and elsewhere? Not at all! There was an election. Every time that we got to the point of treatment some election came along. There were two German elections. We could do nothing. There was a French election, and not only an election, but there was a month when there was no Government in office and we could do nothing. And now one of the great contributions which the right hon. Gentleman made to the problem which we have had to solve, or have tried to solve, was, "You may be misunderstood in America. There is an election on and we ought to wait until March next year" before we come to any decision to alter the state of things which has been described so pathetically and eloquently by the Basle Committee; to go on and on, month after month without any certainty, any security or any hope or promise of help. Not at all! I never knew before that there were so many elections in the world as l have known since my colleagues and myself sat down to see how we were to get the nations together to face and to solve this problem and remove this menace. It seemed that an ill fate destined that every country in the world was going to have an election between the issue of the Basle report and the meeting of the Lausanne Conference, and then we had to leave out the United States.

We certainly did not enter the negotiations with a light heart. We knew that there were difficulties. We knew, moreover, that there were questions not merely of substance. There were questions which are much more troublesome than questions of substance; there were questions of mental states. There were memories; there were mental attitudes; there were expectations, and we had to face them all. May I make clear an initial difficulty? Germany paid Reparations and Reparations only. France, ourselves, and others paid War Debts and also received War Debts—not the same transaction as Germany had. America received debts. Each of the three groups quite properly refused to treat its contractual obligations so as to mix itself up with the position of any of the others. Mr. Chancellor von papen stoutly declined throughout to admit to me that War Debts were any affair of his. He did not care about War Debts. He had nothing to do with them. He had nothing to do with them; he would 4.0 p.m. not take them into account. If I said, "Now you really must give a sixpence," he said, "No; I do not know what the sixpence is wanted for. I have no interest in it, and, on principle, I refuse absolutely to recognise that Reparations and War Debts should be mixed up together." And Washington has told Europe that it could not consider War Debts from the point of view of those of its debtors who were recipients of Reparations.

How could the three parties be brought together? That was the first problem with which we had to deal. Fortunately, the gist of American speeches and other expressions of American public opinion amounted to this: Let Europe decide the settlement which it believes practicable for itself, taking all the circumstances into account. Let it publish to the world what its views are, and we shall consider reasonably what is the part which America in equity can play. Of course, we might have gone to America first, but who was to have gone to America? The centre was Germany. The centre was the European situation. No doubt Great Britain had an interest of its own. No doubt Great Britain had some business it could do with America itself. But we were out for Europe, not as a combination against America. It is very difficult even to form sentences upon this subject which will not be misunderstood on the other side of the Atlantic. No American will have any sort of misunderstanding about this: that the mere putting of Great Britain upon its financial feet is not enough to put Great Britain upon its industrial feet. Our payments may be reduced; they may be excused; they may be abolished. But that is not all we want.

The right hon. Gentleman said yesterday, no doubt quite truly—I leave it on his authority; he knew, as he was in office a large part of the time—that we may have paid to America hardly. But supposing that had been rectified that would not have solved the problems we are now facing—the problem of trade, the problem of markets and the problem of International exchange; and if we are going to deal with this question of Reparations in such a way as a surgeon deals with a wound, or some trouble or other, when he makes a clean cut of the whole thing and takes it out, leaving his patient to get thoroughly well, this was not the time to nibble, to cut here and to cut there, and scrape here and scrape there. The hour for that has gone past, and if any Government is going to lead Europe in recovery, it must cut deep at the root of the disease. That is what we did at Lausanne, before we went to America. But on that point, quite obviously, before any European nation went to America, whether it was France, Italy or ourselves, before any of them were in a position to make any representations, even individual ones, they had to examine their own household. That household had never been examined. President Hoover granted a moratorium to all of us, and, after some negotiations, it was decided that the sum withheld, together with interest and sinking fund, should be added to the annual payments due by Germany under the Young Plan and by its debtors to America. Trade has declined, national income has diminished, the moratorium was running to an end. The Basle Committee exposed by words and figures a state of things which was leading not only to the financial but the social collapse of Europe. Private as well as public credit was involved in the German situation. We had to take the world as we found it. A good deal has been written and talked about a "Gentlemen's Agreement." The right hon. Gentleman the Member for Epping went the length of saying that he had never heard of such a thing before.


My right hon. Friend has read abridged extracts from my speech. I said, speaking of semisecret diplomacy, that that was a new term of art.


I am not talking about that part of the right hon. Gentleman's speech which I read last night before I went to bed. He said that, but he also said that this was a new thing.


I said until yesterday, when I read the "Times," that I had no idea of this Gentlemen's Agreement.


It is my right hon. Friend's innocence which always surprises me. He goes through life either as a rampageous individual who knows everything, roaring like the bull of Bashan or cooing like a sucking dove, when that is the proper part to take. But whether he is roaring or cooing, it is his innocence which always strikes me. Would he be surprised if I told him that on Friday morning at Lausanne, from the chair of the Conference shortly after the final plenary opened, in the presence of all the Press, I announced that. I did not call it a "Gentlemen's Agreement," because it had no label; but, in reply to a question put to me by the German Chancellor, who said, "If this plan should fail, will the Chairman guarantee that a conference will follow—a conference of the Powers, especially of the six calling Powers?" I said, "Certainly that will happen." But for that, what would the position have been? We should have been back to the Young Plan. All the provisional machinery that has been created would have fallen to bits. The foundation would have gone. The Conference was not going on. The continuing of the moratorium depends on the continuing of the Conference, and as soon as the Conference fails, then that fell away, and with that falling away we should be back, not by our will, but by the ordinary operations of nature's law, to the place where we were a minute before I read that announcement of the continuing moratorium to those assembled at the opening of the Plenary Conference.

In order to prevent that coming about, we super-imposed another agreement, that if this thing we had been building up by compromise, by elaboration, by patient talking over things and understanding things, could not be worked except, as we always said, in a world framework—if that would not work, then, instead of allowing Germany to fall back on the suspended Young Plan, we said that, in the meantime, we shall take up the matter again, and see whether some other method is not available. If hon. Members care to make verbal points, I do not mind. There is a risk that it will fail. I know there is a risk⁁we all know it. But those of us who have been through it, and those of us who have exchanged views with people whose views are worth exchanging are convinced that it will not fall through. I may be wrong. I can give no guarantee, but I can assure you of this, that if there is any chance of pulling it out, His Majesty's Government will be there doing the pulling. We shall do everything we can to make it a success.

Very well, this matter about the Gentlemen's Agreement of which my right hon. Friend spoke, really I cannot exactly follow the criticisms of my right hon. Friend. It was announced in public. The substance of it was announced in public on Friday. I think I said "morning;" I am sorry. The final plenary started at nine o'clock in the evening, adjourned till 10, and shortly afterwards it was announced in the conference. What would have been the position of ourselves if we had not had the agreement. I was not quite sure what my right hon. Friend meant by certain remarks he made yesterday. Perhaps I shall draw him now. If he had been in my position, or that of the Chancellor of the Exchequer when the Italian representatives and the French representatives came and said to us, "Well, you will get your agreement on condition that here and now you will excuse us all our debts," what would he have answered? I venture to say that if he had been Chancellor of the Exchequer—I am not quite sure what he would have done as a Member below the Gangway, but if he had been Chancellor of the Exchequer, he would have answered precisely what the Chancellor of the Exchequer and myself answered, "You have got to wait and see. You know perfectly well, from the relations you have had with us now, that everything we can do of a sympathetic and friendly character will be done. You know perfectly well that in the future, as in the past, the British Government is not out for making any profits out of anything it receives in the shape of Reparations or War Debts—not a brass farthing of profit. That rule will hold." The Chancellor of the Exchequer, being a very hard-headed and cautious man, and I being a very ordinary Scotsman, we were not going to give away any money unless we knew what conditions we were under. I am sorry that my right hon. Friend has not some Scottish blood in his veins.


Does my right hon. Friend mean that in the late Conservative Government we ought to have endeavoured to exact more from Europe than what we were required to pay to America?


Not at all, because a Scotsman is always honest and honourable. I am perfectly conscious and I do not care who knows it, either at home or abroad, that in dealing with this matter of America we are touching very tender spots, and I want to say quite clearly that no one has the right to blame America for taking up the attitude she has done. If we had all got together our work would have been greatly simplified, but America felt that she had to be consistent to her position throughout, and I for one, although America has never uttered a pledge, so far as I know, nor in any way indicated how she is prepared to meet us, believe that there is no nation in the world more ready to lend a hand in straightening out the entanglements and troubles with which we are surrounded than is America and her people. In view of the grievous results likely to follow upon any representations made either here or in America that at Lausanne Europe has combined to present something in the nature of an ultimatum to the United States, I want to make it absolutely clear that all that Lausanne did was to straighten out the internal difficulties of Europe, which in all conscience were many and difficult, and agree to proposals which the nations there represented believe are both essential and possible.

When we settled down to the very complicated business in front of us it was perfectly evident that if we were going to settle anything in six months somebody would have to devise certain tests up to which every scheme and proposal would have to come. I tried my hand at it. There were four tests laid down, and. by applying those tests to the various schemes a great many were slaughtered straight away. The first was that, whatever was done, no payment could be expected or asked now from Germany. The second was that the arrangement, whatever it was, that was made was one that could be made final. But supposing there was an interval; you cannot say; you do not go to these Conferences with your minds made up and your cheque in your pocket; you go to these Conferences to work your way through, just as a man goes into a crowd to work his way through to the other side. It was clear, therefore, that, supposing there was to be an interregnum between the condition of reparations and the condition of no reparations, the interregnum must be in the nature of no reparations rather than in the nature of reparations. In other words, it must be a settlement which can be made final with very small adjustments. We did not want and we would not have agreed to merely another stage in the scaling down of these reparations, followed by big transfers of money.

The third test was this, that whatever imposition was to be put on Germany, it must not be of a character to damage her credit and to keep the German community a festering financial and commercial sore in the middle of Europe. You might say that you could put on her thousands of billions of francs. You could put up a committee to look into the subject, and that committee could report that Germany's capacity to pay was equal to even more than that, but that would not get you out of the difficulty, because you would then have to assess the capacity of the world economic system to absorb it. If in the attempt of the world economic system to absorb it there were residues, there was stuff left over, and that stuff, in the shape of gold, was rushed into the vaults of the banks, then Germany might have been capable of paying, but the world economic system was not capable of absorbing it, and the unemployment was going to continue and bad trade was going to last. Therefore, whatever figures were settled, they had to come up to the test that, first of all, they were not to break down Germany's international credit, and, secondly, that they were not to be so big, so ponderous, so bulky that the world economic system had to throw out some of them as being useless for its purpose and as being illusory for the roundabout volume of international exchange upon which people work, feed, clothe and house themselves.

I have already dealt with the fourth test, and that was that the transfer system as we know it should be stopped. I need not go through all the stages of the proceedings—hon. Members have the White Paper in front of them—the discussion day by day and week by week, but I should like to say that we were a good long time at Lausanne and that there has never been a Conference that went over such ground arid had such numerous points of agreement in the time occupied. The position of the British Government was a very simple one. We said "cancellation all round," which would have obliterated a great many of the consequential difficulties of adopting any other scheme. But it could not be done. Cancellation all round meant cancellation of reparations, cancellation of War debts and so on. Finally, we got them to agree to one capital payment, and be done with it. That is the characteristic of the scheme. Three milliards of reichmarks are to be paid into the Bank for International Settlements by the German Government and to be kept in trusteeship.

Then we had to face this position. When are those marks to be released, or when are those bonds to be put on the market? Obviously, if you have a moratorium say for one, two or three years, it might be that Germany would not have recovered itself. Supposing that you had a moratorium for five years, which was a period mentioned sometimes. It might be that at the moment of putting the bond on the market, German credit was just going up but had not been stabilised enough to bear the weight. Then you would be away back where you are now. That, obviously, was no good. It would have looked well on paper, but it would not have worn well. Therefore, we had to devise a method by which the bonds were in the hands of the Bank. They were taken away altogether from the politicians, with no general election questions coming up again, and no party bids between elections about it. The first thing that had to be done was to see that the money was taken completely away out of the hands of the politicians, and put into the hands of the Bank for International Settlements.

The second thing was that a certain moratorium should be given, because we had to give the creditors of Germany some sort of security that within a few months or a year or two they should not find that the security would completely disappear. In the end, after much argument, we settled on three years—three years complete moratorium. Supposing at the end of the three years Germany's credit is not restored. Quite obviously, at any rate so far as we are concerned, we would never agree to that money coming on to the market then. That is the sort of thing from which we are suffering so much. Therefore, we devised a means by which not the German Government, not anybody with any relations with that Government, not the French, not the British, nor the Allied combinations, but a pure banking authority, the Bank for International Settlements, with representatives of all the big international banks upon it, should decide themselves when the bonds were to be put upon the market. The bonds should be put upon the market only when German public credit had reached a certain point. Until German public credit reached that point no bonds could be put upon the market.

4.30 p.m.

The idea is that the bonds should not be put upon the market until there is a regular indication that that is the opportune moment. Any hon. Member of this House if he was investing his own money would,wait for certain indications and then and then only would he invest his money. The Bank for International Settlements will watch for the same sort of indication after the three years moratorium has elapsed, and then and then only will the bonds be put upon the market. I think we have hit upon a very ingenious way of meeting the necessities of both aspects of the case. On page 6 of the White Paper hon. Members will find, in Article 1, a draft of the scheme, and I will not take up any more time in explaining it to the House. The great point of Article I is this, and I state it very clearly, that it puts an end to reparations. That is a great achievement. If hon. Members when they go to their constituencies would take the opportunity of looking at the connection indicated in the Basle Report between reparations and industrial activity they will be able to show that by the ending of reparations we have, although we have sacrificed some money on paper, given industry a chance to recover. I saw in the papers yesterday references to this question somewhat in this form—they pile up a lot of figures of reparations that Germany should pay, reparations that they had paid and have not paid, and they say that that amounts to so and so. Then they look at the recommendations that we make and our agreement and they say that that amounts to so much, and delighted patriots say: "Look what the Government have lost for us." I cannot imagine anything more futile either in abstract mathematics or in applied business. These figures are not our net balances. We have never received reparations when we did not pay more away for it than we got. Take the general effect.. The shrinkage of the exports of the four chief trading nations during two years is 10 times as great as the maximum annuities under the Young Plan and is 14 times as great as the annuities due last year. It is not even a penny wise and pound foolish policy. It is the tenth-of-a-penny wise and a £4 foolish policy. That is the sort of argument which those critics who are trying to persuade the people that we have sacrificed the national interest are putting forward. The most foolish man in creation is he who sums up the figures of reparations from Germany and thinks they are net profit or income to this nation. These payments raise far greater issues than their own amount. They threaten the whole of our modern industrial civilisation.

Hon. Members who are following this will see if they consult the White Paper that there are arrangements for carrying on the inquiries that are being made for the purpose of coming to conclusions. Again I wish hon. Members could all go and hear a debate by Central European and Eastern European experts on the financial and trading conditions of Middle and Eastern Europe. My hon. Friends who were with me had great enlightenment from that, and when hon. Members say that it has gone on week after week it is most miraculous if it is done in that time. It requires not human skill and ingenuity but something more akin to divine knowledge and power to drive these problems through to a conclusion. But the work is set up and is going on; the work of the Conference beyond Reparations is still proceeding. On page 15 hon. Members will see that preparations are being made for the second phase of this Conference, and I can assure them that there will be no delay. It is going to be done; and done quickly. This agenda will be pursued. The idea is that the League of Nations should call it. It is practically impossible for any Government in Europe, with the tremendous amount of work which Ministers have on their shoulders, to add to that work the calling of a further Conference like this. We pay money to the League of Nations, we pay our subscriptions to help to keep the staff, and this is precisely the sort of thing that they can prepare for us. The Conference will not necessarily be held in Geneva. I do not know whether it is proper for me to say any more, but I will say this, that I am not in favour of it being held in Geneva. But the Conference will be held, this work will be gone through. The preparatory committee will consider certain things upon which we want more advice. The great trouble is that with so many first-class business men I never could get the same replies from any two. It would be a great blessing if the right hon. Member for Hillhead (Sir R. Horne) would set about solving that problem so that the next deputation of business men which comes to see me on these things will all speak with the same voice, give me the same counsel and tell me to do the same things.


In order to make it quite clear, may I ask whether the. Conference about which the right hon. Gentleman is now speaking is not the Conference about the affairs of Central Europe? It is the world Conference on the money problem, to which the United States have expressed their willingness to come. Is that so?


Yes, that is so. The White Paper is a little complicated. The appendices after Article (1) deal with Central Europe, and non-German Reparations; and Appendix No. 5 deals with the Conference of which I am speaking, the conference to which the right hon. Member refers.

One may go to the Continent, to a conference or bring Continental representatives here on money business, but, believe me, behind it all there is the political factor. You cannot get away from it. It may not come out in speeches that are being taken down in shorthand, delivered in front of a green table. It may not come out in formal committees in one's own private sitting room at an hotel, but it comes out in early walks in the morning, and in the half hours spent in general confidential talk up in the hills. If Europe is going to solve its economic and financial problems it must also solve its political problems, and these political problems depend on the state of political mentality.

We have still to dissipate the surviving atmosphere of war. Germany must be brought back into ordinary national relationship. Germany is going to be dealt with as a nation which is consulted, whose views are heard and accepted in the same way as another nation's views are accepted when they are wise and rejected when they are unwise. I am glad to say that Lausanne brought us nearer to France, France nearer to Germany, and France and Germany nearer to us. I had almost hoped that I need not refer to America, but I do hope that those whose voices carry across the Atlantic with clearness will not use phrases which will make it difficult to bring about an understanding. I was thinking of Europe alone. There are still delicate relations. My right hon. Friend who had such a burden to bear at Geneva, the Foreign Secretary, has found them cropping up at Geneva. I found them again and again cropping up at Lausanne. We must strive to get them removed by mutual assistance by getting the great nations of Europe more and more to apply the spirit of the Covenant of the League of Nations, to come together in a great council of those who help and of those who wish to help. We shall certainly continue to co-operate and use our good offices for peace. The work has only begun. Lausanne has opened new ways, it may be very broad ways, and I ask for the work of any colleagues and myself the hearty approval of this House.


My hon. and learned Friend the Member for East Bristol (Sir S. Cripps) said yesterday that so far as we are concerned we should at all times give whatever support in our power to work the Government might undertake which in our judgment was for the good not only of the nation but of the world. It is not at all out of place that on this question a Member of the House who has had no part in any of the past negotiations, and who has taken no part in any diplomatic work of any sort or kind, should put forward the point of view of hon. Members on these benches in regard to the present position of German Reparations. The first thing I want to put on record is that the statesmen who took part in the Peace Conference and who have taken part in all the conferences which have succeeded the original Peace Conference, may take this flattering unction to their souls, that on each occasion that they came back to this House they were received with great admiration.

This is not the first occasion on which the question of German Reparations has been dealt with. At the beginning, when reparations were first imposed, there was only a tiny group of men in this House, though they represented a large body of opinion outside, who took the view expressed by the right hon. Member for Epping (Mr. Churchill) yesterday, and the right hon. Gentleman the Prime Minister to-day, that you did more harm to yourself by receiving reparations, if that were possible, than you did to those from whom you received them. That is now an acknowledged fact. The despised Labour party, whom we represent to-day, and who on every conceivable occasion in this House are held up to ridicule and obloquy—[HON. MEMBERS: "No!"] Hon. Members will allow me to express my opinion on the matter. When these reparations were imposed the Labour party fought the question in the 1918 election, and were as heavily defeated by a Coalition Government as they were last October. It is a great measure of satisfaction to us that at long last everyone in the State has arrived at the con- clusion that this wicked, pernicious business ought never to have been transacted at the time of the Peace Treaty. These reparations were imposed in sheer defiance of the pledged word of all the statesmen who took part in the Peace Treaty negotiations previously.

Viscountess ASTOR

Why go back to the past?


The Noble Lady asked, "Why go back to the past? "Because unless we learn the lessons of the past we shall never get out of our mistakes. The lesson of the past is that these Reparations were imposed in defiance of the 14 points laid down by President Wilson, and for 12 years the nations have reaped the harvest of the repudiation of the pledged word of all the Governments engaged on the Allied side. Of that there is no question. I repeat that k, is a matter of great satisfaction to the small group of men here, and to the people whom we represent, who fought this dastardly business from the beginning. We have never ceased to fight it to this day. Because that is the case, we are delighted that at last an agreement has been reached, which we hope and believe that the great people in the United States will help the signatories to implement. I cannot believe that any Government, or any President elected next November in the United States, will do other than act in a most generous and open-hearted manner in order to get this business settled once for all. Our friends in America must remember that they were parties to these Reparations. They assisted in imposing them. As it is now admitted by everyone that it was a colossal blunder, the least we can expect is that they will help us to put it right.

In regard to the business with which the Prime Minister has dealt, someone will have to pay a very great deal of money all through Europe arid the United States, but there is something that is worth much more than mere gold in this matter. If at the end of three years the German people are accounted unable to pay, or if at the end of any period they are accounted unable to pay, I am sure that it will be better for Europe and the world that there should be no more haggling about the business, but that the whole of the Governments should come together and find out how best the cancellation can be brought into being. The declaration on page 5 of the White Paper expresses the intention of helping to create a new order permitting the establishment and development of confidence between the nations in a mutual spirit of reconciliation, collaboration and justice. I say on behalf of my friends here that, most sincerely as we congratulate all the statesmen who have brought this agreement to the present point, we think there never will be a real clearing up of the relationships between Central Europe and France until the political issues of the Peace Treaty are dealt with, and especially until we face up to that most terrible accusation that lies against the German nation, that they alone were responsible for the War. There were many iniquitous things said during the War, but all these years have passed and the stories of the statesmen have been told. We have had biographies and histories and now there is no one who will say that there is any proof whatever that the German people are worse than any other people in the world. Every nation sinned over that business, and all of us ought to be ready to see the cancellation of that terrible accusation. Another paragraph of the declaration states: These further successes will be more readily won if the nations will rally to this new effort in the cause of real peace, which can only be complete if it is applied both in the economic and in the political sphere, and rejects all possibility of resort to arms or to violence. There have been many declarations of that character, and I hope that this time the men who have signed that declaration really mean to carry it out. I am not calling in question their bona fides when they signed, but with the events that are happening away down in Asia just now I cannot help saying that I hope this will have more effect than apparently the Kellogg Pact or the Pacific Agreement with regard to China has had.

We who sit here attach as much importance to the Resolution that is found on page 15, dealing with the world financial and economic conference. We are convinced that it is not merely War Debts and Reparations that are the cause of the world economic distress. They are a part of it and a good part of it, and must be cleared away, but we are also quite certain that economic nationalism, as against internationalism, is something which is bound to bring failure not only to individual nations, but to the whole of the world. We think that the world must now be treated as one unit. When I asked the right hon. Gentleman the Dominions Secretary whether at Ottawa the delegates were going to consider the world situation, I had in my mind this conference, which we had only heard about but which it is now agreed shad be held. I hope that nothing will be clone or said at Ottawa to prejudice in any way the proceedings of this later Conference, because unless we can: get real co-operation in Europe and in the world, as well as in the British Commonwealth, I do not see much chance of world recovery for mankind.

We feel that this business will probably take a long time and will impose a good many sacrifices on other nations as well as ourselves. We think that that is all quite worth while if in the end there is real agreement to come to economic arrangements for the exchange of goods and commodities on a basis of cooperation and not competition. I must be forgiven for stressing that, because just as this House and the country refused to listen to us in 1918 at the close of the War, so to-day it seems to us that many people are trying to argue as if it was still possible for one nation to live to itself at the expense of other nations. We do not believe that. We do not believe that the thing called civilisation can be saved along any such lines. So we stand to-day, supporting, so far as this agreement becomes practicable, the Government with all the strength that we have. But we support them more whole-heartedly, if that is possible, in their proposal to seek a solution of all the world economic problems at a later conference, where not only ourselves but the nations of the world will be represented. That is all I want to say about Lausanne.

I want now to say a few words about the Loan Conversion scheme, which I hope that the Chancellor of the Exchequer or someone on his behalf may be able to deal with. According to Press notices the joy with which that proposal was hailed at the beginning is now rather tempered down, for two or three reasons. In the first place I would ask whether it is not possible for the Government to make an appeal to bankers, stockbrokers and others to forgo some portion, if not all, of the commission involved in this matter, and also the £1 per £100 that is offered as a kind of bonus. There are many thousands of people to 5.0 p.m. whom 30s. in every £100 off their income means a severe reduction in their standard of life. There are small people, living on relatively tiny incomes, derived from this loan, who will be affected in that way. We are asking these people to make this sacrifice. I am asking them, hon. Members opposite are asking them—because we are all supporting this proposal. Why should we not appeal to the great banking houses and the solicitors and others to forgo making any money out of the business? It will cost a little to carry through these transactions, but it seems to us that there ought not to be such a sum as £20,000,000 made in profits out of those transactions. Someone, however, has made that estimate. We think that if the Government were to make an appeal in this matter there would be some measure of response.

I should like to tell the Prime Minister and the Chancellor of the Exchequer that, if they make inquiries, they will find that in connection with the big Goschen conversion scheme many of these people refused to make money in this way. I know that such profits are made as a matter of business, but the banks have made considerable sums while everybody else has been losing money in the last few years, and I think that solicitors and others could quite easily help to meet the country's need by refusing at least to take the £1 bonus and by reducing their other charges to a minimum. I think it a great pity that the Government did not in some way deal with the Stock Exchange so as to prevent the wholesale gambling which appeared to be going on two or three days after the conversion announcement. Many millions of pounds profit must have been made out of other Government stocks and stocks of various descriptions. These are days when people such as those who live in my neighbourhood watch the newspapers very carefully and they are not satisfied to think that those who have a relatively small amount in this Five Per Cent. War Loan should be asked to accept a reduction, while at the same time a considerable amount of profit-making should be going on in connection with this business.

I do not suppose that anything can be done just now but in regard to this ques- tion of what I call usury, for want of a worse name, some steps ought to be taken when the Government come to deal, as they will have to deal, with the rest of the internal indebtedness of this country. They ought to take care that the same thing does not happen again. There is no reason why anybody should be permitted to make money at all out of these transactions. If I am told that it is inevitable under present conditions, all I can say is that present conditions ought to be changed and it ought to be made quite impossible. As that remark appears to cause some amusement to the right hon. Gentleman the Member for Epping may I add that mere writing on a piece of paper does not create wealth. It may transfer wealth, but there is no creation of wealth, and every penny that has been gambled for and won in the City of London over this transaction has had to come out of the labour of men and women. [Laughter.] I repeat that it has to come out of the labour of men and women somewhere or other.


The right hon. Gentleman is surely not referring to the labours of literary men?

Viscountess ASTOR

What about brains?


The literary men and the Noble Lady and myself would not live for a single day unless some man somewhere did dirty, miserable work. Like the right hon. Gentleman I have made money by writing articles and so on but my life, and the life of the right hon. Gentleman, depend upon the men and women who dig and delve and toil in order to give us the means of living. [Interruption.] Well, we can have it out some other time, but I hope the right hon. Gentleman will not mind it if I say that neither he nor I could keep up our health and strength by eating books or by eating shares and dividends or by eating bank notes. They have to be translated into commodities and the only people who translate them into commodities are not people like the right hon. Gentleman or the Noble Lady or myself but the people whom we pat on the back. We tell them what fine people they are—

Viscountess ASTOR

Can I ask the right hon. Gentleman a question?


The Noble Lady can ask me anything she likes.

Viscountess ASTOR

Does not the night hon. Gentleman find it more difficult to think than just to move with his body?


That of course is meant as a joke.

Viscountess ASTOR



I take it as a joke. The Noble Lady must know that if she were to think from now until she is as old as I am she would not get a mouthful of food or a drop of anything else merely by doing so. You can go on thinking for ever but you will not get these things merely by thinking. However there is something more important than that which I wish to say to the House. This is almost the last day of the Session and although many hon. Members wish to discuss Lausanne we desire to raise a question which is very akin to Lausanne and that. is the question of disarmament. We think that people in America will look with more favour on Europe if it is a disarmed Europe, than if we go on spending the millions which we are spending on armaments. Before proceeding further with that question, I am reminded of one other question which I wish to put to the Chancellor of the Exchequer. The Noble Lady and the right hon. Gentleman the Member for Epping put it out of my mind for the time being. Can the Chancellor of the Exchequer or someone on his behalf to-night, give us a statement in regard to the reports appearing in the Press to-day as to a decision arrived at by the International Bank in reference to the Gold Standard. Is there any proposal about this country being put back on to the Gold Standard immediately, or while Parliament is not in Session?

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I have no hesitation in, saying at once that the resolution passed by the Bank for International Settlements does not represent any new departure on the part of this Government. There is no intention on the part of this Government to return to the Gold Standard either now while Parliament is sitting, or in the immediate future.


I ask the question because Mr. Montagu Norman is a very powerful person, and we understood that he was partly responsible for the resolu- tion which has caused a good many people a great deal of disquietude. There are varying opinions on this matter, and there is a very large body of opinion which thinks that it would be disastrous to go back to the Gold Standard, especially in view of the fact that you are to discuss currency problems at Ottawa. We think it would have been better if that resolution could have been held up so far as Great Britain is concerned until after the right hon. Gentleman had had an opportunity' of dealing with it.


The resolution as I understand it was the view of the Bank for International Settlements of what the ultimate solution of the currency problem ought to be. I did not read it to have any bearing upon any immediate action to be taken by this or any other Government.


The Government are not committed to it?




I am glad to hear that Mr. Montagu Norman was only speaking for himself and Sir Otto Niemeyer in supporting this resolution, and I think I can leave the matter there. Returning to the question of disarmament, I want to put some points to the Foreign Secretary to which I hope he will reply. The Conference has been sitting for many months, but this is not the first Conference that we have had. They have been going on ever since the Peace Treaty was signed, and we always appear to get into a sort of deadlock. Various proposals are made and then counterproposals are made. The President of the United States made what we thought was a very clear-cut proposition that there should be a reduction of one-third. Then we had the statement which was read by the Lord President of the Council here and was also read at Geneva. President Hoover, as we understand it, proposes the abolition of tanks. We propose the limitation of tanks to those of a weight of 20 tons. It is said that they cannot be regarded as offensive weapons. In that ease I do not know what they can be regarded as, because I should think that anything that can blow you into smithereens and move about in the way that tanks can do is to be regarded as a pretty dangerous weapon.

On the question of naval armaments the British Government reject the Hoover plan of an all-round reduction of one-third in the existing number of battleships and offer a reduction in tonnage but not of number in future replacements. I would like to know why. This applies to cruisers and also to aircraft carriers. With regard to destroyers the Hoover plan proposes a one-fourth reduction in the present numbers and, from the statement read by the Lord President of the Council, it would appear that the British Government are willing to reduce tonnage by one-third on the condition that other countries agree to the abolition of submarines Does the right hon. Gentleman really think that other countries will agree to refrain from building big submarines if we continue to build big capital ships? Does anyone think it a reasonable proposition to say "Because of our situation we must have big battleships but you other countries ought not to want great submarines to chase those battleships"? I am sure that it is the question of monster battleships which is at stake here.

When one remembers the great promises held out to us after the Prime Minister had met President Hoover originally, the promises which were held out to us in the Hall at the end of the corridor there, I think it is rather terrible to find at this time of day that Great Britain is standing out in this manner. The Hoover proposal—and this I think is probably the worst feature of the situation—included the total prohibition of bombing planes. We, on the contrary, say that there shall be bombing only in certain areas. Why cannot we go as far as America in this matter? Why should not we say that we do not want any aerial warfare at all and that we do not want any bombing from the skies, either of ships or soldiers or civilians? My view is that we cannot possibly limit this business in the manner you are suggesting, and if you did it would not work at all. Then we want also to say that we are rather disgusted that our own Government have not gone further in regard to chemical and bacteriological warfare. The Hoover proposals and our own are the same. They got a sort of gentlemen's statement about this, but as far as we understand it there is no agreement that we should give up the manufacture of these things. If the right hon. Gentleman tells me that they propose to give up the study of methods of chemical warfare or that they have given up altogether the idea of relying or agreeing that any other country should rely on that form of warfare, they must take further steps than merely professing to abstain from evil doings. They must, as in the case of the air, get international control. I join those two things together, because, for all practical purposes, they run together—that is, aerial warfare and chemical warfare, the aeroplanes to carry the bombs and to drop them. If the Governments of the world are really in earnest, there should be international control of aviation and of chemical industries. The statement of the Lord President, which has been printed, says in regard to tanks that the United Kingdom unequivocally rejects the proposal of the United States of America that tanks should he abolished.


The right hon. Gentleman read "rejects"; he means "accepts."


No, you reject the proposal to abolish them altogether. The United Kingdom proposes only the abolition of all tanks above the weight of 20 tons. That is in the document. The United States, if their proposal is carried into effect, would at one stroke put out of business 924 tanks which they have already built; these are available for service, and their weight is from seven tons up to 40 tons. How many tanks do we now possess, and how many do we propose to abolish above 20 tons? A 20-ton tank is a very powerful weapon. We had none, I believe, during the War so powerful as this, but whether we had or not, the point about these tanks is that just as with the big battleships, we appear to be choosing the weapon that will suit us best, and standing for that. Our position on disarmament is exactly what our position is on reparations. We want to get the fullest and the best settlement of reparations possible, but on disarmament we are not going to be satisfied with being fobbed off again with a conference that passes pious resolutions and then goes home to rest.

The right hon. Member for Epping, when he spoke a week or two ago, said, quite truly, that all this was a question of the spirit in which you approached the matter, that you could abolish everything arid still, if you wanted to have a good old war, you could have it if you were determined to have it; and he went on to say that we had no tanks and no poison gas and so on previous to 1914. All that is very true, but if it is correct that there is a new spirit in Europe, and if all the old statesmen, the old and middle-aged men who have brought the world to what it is, have learned their lesson, let us put it into operation and let our country take some risk in this matter. We are going to risk a lot of money, and a jolly good job too, if it brings peace, but we do not want to take these risks and at the same time go on spending lots of money and then, at the end, perhaps have another war which will land us into a worse condition than now.

If the British people were polled, I am sure they would take a tremendous risk for disarmament, and I am sure too that no civilised people would for a moment want chemical warfare continued in any shape or form. I am sure also that they would vote whole-heartedly for the international control of aviation, and I am equally certain: that the women and men of the world, the ordinary common people, would vote always against any further resort to arms. It is time, we think, that this Conference at Geneva, instead of waiting on the experts, instead of balancing a little here and a little there, came down and either accepted Mr. Hoover's proposal or went one better and said, "We will not only accept your one-third, but we will go one-half."

5.30 p.m.


I should like to congratulate the Prime Minister on the fact that he has gone through a very difficult conference and that he has not strained or impaired his strength or vitality. No one knows better than I do what the anxiety of these conferences amounts to, and how very wearying they are. I should also like to congratulate his colleague who sits there upon the original proposals he submitted to the Conference, and my only regret is that he did not stand by them to the end, when he proposed that we should have the clean slate. That is not an idea which I have formed since I have seen the Lausanne Treaty. I endeavoured to get that 10 years ago, but I realised exactly what the present Government have understood 10 years later, when opinion was more mature, how difficult it is to achieve—that is, to wipe out the whole of the international debts. Had it been done in 1922, as the Government of which I was the head proposed, what a difference it would have made to the world at the present moment. As to whether they could have put it through or not, they are the best judges. I still think they could, if they had persisted. Italy would have supported them—I am taking that from the speech of Signor Grandi—I understand Belgium took the same view, Germany naturally would, and I do not believe France would have stood out alone. She would have been perfectly isolated, and not even a powerful country like France can afford that in these days, certainly not when it is only a question of £150,000,000 to be distributed among all the signatories of the Treaty of Versailles.

I have only just had in my hand, during the speech of the Prime Minister, "The Final Act of the Lausanne Conference." That is not all that happened at the Lausanne Conference. In fact, the most important thing that happened at the Lausanne Conference is not in this document. The documents upon which the life of this agreement depends are not here, and I should have thought that Parliament was entitled to have the whole story, every document that would enable it to judge upon a transaction which the Chancellor of the Exchequer and the Prime Minister described, one as a new era and the other as a new book. We have only got the preface to the new book, and as far as I can see, the new era is not here at all. This is rather important. No one knew when the announcement came what had really passed at Lausanne—a summarised statement that Germany had agreed to find £150,000,000 under certain conditions, that France had accepted it, that the word "Reparations" had been wiped out—practically a continuation of the same chapter. But no one knew that that was dependent upon some other document, some other transactions to which Germany was not a party, and it was left to the French Prime Minister to reveal it on Sunday to the French newspapers, first of all the "Temps," which is very much in touch, as everyone knows, with the French Foreign Office, the "Matin," and the "Journal."

Now let us see what it means, because the Chancellor of the Exchequer yesterday rebuked my right hon. Friend the Member for Epping (Mr. Churchill). It was severe, but the right hon. Gentleman, like myself, is so accustomed to rebuke that it does not seem to make very much difference on our subsequent appearance after the rebuke. I think the Chancellor of the Exchequer was rather hard; in fact, he was very severe, and I was surprised. I am new to this House, and I was under the impression that there was a new era of tolerance of differences of opinion, but I realise that that privilege is one which is confined to Members of the Administration and that it is not extended to supporters. But his rebuke was to the right hon. Gentleman. He said, when the right hon. Member for Epping suggested that this might be put off till after the Presidential election and that we should extend the moratorium, "We could not wait; it was essential that we should have some agreement; this was a sore which was affecting the vitality and the strength of the nations; trade was declining, and we must have something which was final." Where is the finality? I get my information from the French Press, and I am entitled to ask whether it is true or not. The right hon. Gentleman will see what is said there. The "Matin" says: The Gentlemen's Agreement is the link which has been not only clearly established, but openly avowed, between Lausanne and the adjustment of the American debt. It is the express condition of the ratification of the agreement by the Parliaments, and, if there is no settlement of the American debt, the Lausanne Treaty will be considered null and void. If there is no settlement also, the Young Plan would be legally the only system of fixing the actual payments of Germany. I could give other quotations from other French newspapers. The "Journal" referred to documents: It will be noticed that the Gentlemen's Agreement, which establishes the link between reparations and debts, does not figure in this White Paper. This document"— that is the Gentlemen's Agreement, which is not a, phrase used by the right hon. Gentleman but was obviously used in the conference: and the letter by which Germany is informed of the agreement will only be pub- lished when they are placed before the Parliaments. Why have they not been placed before the Parliaments? This White Paper is not complete. There is another document that may render it entirely nugatory. If France cannot agree with the United States and the United States with France; if Italy is dissatisfied with the terms and if we are dissatisfied, there is an end to this agreement; and, until these negotiations have gone through, that is, negotiations between America and every.individual debtor, and between ourselves and France and Italy, this White Paper is not alive, it is not a document at all. I think that the old legal term is "escrow." It is an escrow, and until that happens it has no validity at all.

I am not urging that we should take the extreme nationalist view, but we do come in. We have borne far and away the largest share of the burden. We have been quite willing to surrender our rights and interests if everybody else does the same thing. We made that offer. The right hon. Gentleman opened the Conference with it, and I wish that he had stuck to it. I thought that it was the right line. Suppose there is a satisfactory arrangement with France and the United States of America. We have got to pay; America has made it quite clear, and the fact that we are not going there with a clean slate means that we are going there not to discuss the wiping out of debts, but the question how much. That is the difference. If we had wiped out the whole thing, we could have gone to America and said: "Here we are; we have wiped it out. We, the most heavily taxed country in the world, lent money to all the Allies, and we have never exacted anything like a decent proportion of what we advanced. We were willing to give up reparations and debts. We made the offer 10 years ago, and we repeat it now. What are you prepared to do?" I have never suggested repudiation, but, if America insists, Britain must stand by her bond.

In the words of the old legal saying, he who comes to equity must come with clean hands and he who asks for forgiveness of his debts must forgive his debtors. But you have not. You have gone to Germany, and you have said to Germany, with 6,000,000 unemployed, and with debts which she has incurred to carry on her industries, "On the basis of your capacity—" [Interruption.] You must have judged capacity; you have not asked beyond her capacity. You are going to ask Germany for £150,000,000, and say to her, "You are not capable of paying in three years, but you may be." That is what I mean by judging capacity. [Interruption.] Do not let us dispute about that. You have asked Germany for £150,000,000 under certain conditions. Now you go to America, not to negotiate a clean slate, but upon the basis of the measure that you have meted out to Germany. You ask her what she is going to abate. I see in a paper that supports the Government for the time being, the "Daily Mail," that we should have to pay, if a full demand were made, £55,000,000 on the comparative value of the dollar and the pound. We may be called upon to pay a very substantial sum. What arrangements have we made with Italy and with France?

There is a written document. It is part of the transactions at Lausanne. It was entered into six days—I get that information from the French side—before we negotiated this bargain with Germany. What is it? Surely the British Parliament which has the responsibility of finding this money and facing its constituents, is entitled to know something which is so vital to it. I now press for an answer. Are these documents—the letter to Germany, written a day after Germany signed the Pact on the 9th, and the Gentlemen's Agreement entered into six days before that-to be withheld from the British Parliament? We ought to know. The public ought to know.

The next question I ask is this: Did von Papen know when he signed that agreement that there was another agreement entered into Which might render the whole of it nugatory? Were the terms of that agreement given to him? [Interruption.] I think that that is rather important. When you are entering into negotiations with a man with a view to getting him to commit himself to £150,000,000, and he has great difficulties with his own country, he is entitled to know if you have entered into another agreement which will affect his agreement; he is entitled to know the facts. Did he know when he signed the agreement with the right hon. Gentleman, France and the other countries of the existence of the other agreement, and of the terms of it? If he did, he withheld it from his public, but that is his responsibility. If he did not, then surely you cannot, whatever this other agreement is, call it a Gentlemen's Agreement.

Let us pursue this, because it is rather important. There was a considerable amount of satisfaction that another agreement had been arrived at which all the parties were prepared to sign. In the main, I think that that is the thing that gave satisfaction—that at last you had something that Germany and France signed together. It looked like the final word on Reparations. It was not. You have got to discuss something in three years hence with the other Powers. There was great satisfaction, and there was great satisfaction, too, in America—and that is vital. I am just as anxious as the right hon. Gentleman not to say a word that will create any difficulties. [HON. MEMBERS: "Oh!"] I do not see why hon. Gentlemen should always suspect the motives of men who are just as much patriots as they are. I could easily make mischief if I really wanted to. It does not require very much power or authority to make mischief. Therefore, I do not want to do it. I am bound, however, to call attention to this, because I am calling attention to something that appeared in a paper, which even the right hon. Gentleman will not claim is not patriotic—the "Morning Post" of today. Here is a telegram from the correspondent of the "Morning Post" in America. It is headed "Washington and Lausanne," and "From our own Correspondent." He says: While it is not expected that any move will be made by the debtor nations until after the November election, the disclosure that a Gentlemen's Agreement ' has been drawn up which nullifies the Lausanne accord, threatens to make a political football out of what should be primarily an economic question. The jubilation in the Press which bad hailed the Lausanne action "— I think that is probably the jubilation in America because of real satisfaction when they heard the news— as a big step by the European Powers to set their own house in order has changed to general resentment over the supplementary agreement. Already a number of Conservative papers"— not mischievous fellows like myself— have begun attacking the agreement. If you are going to negotiate with a creditor, the worst thing you can do is to make him angry. Having done that, whatever there is in these agreements it would have been better to have them all out—much better. It would have been far better to tell the whole story to the public, and certainly to Parliament. Why was it withheld? It was not withheld from Germany on the 9th. I do not know whether it was on the 8th—and that is important. On the 10th France knew it. Britain knew nothing of it except through France and through America. That is not quite playing the game with the British public, who have given overwhelming support to this Government. This is what I have to ask. I would like to ask, first, whether those documents are going to be published, so that we shall be fully informed of what is in this new book that was issued at Lausanne. It is quite true, probably, that it would never have come out until after the American Conference, but M. Herriot let the cat out of the bag, and, incidentally, set the cat among the pigeons. And there it is. He is very pleased with himself, and he showed it in a very dramatic way in the conference hall. It makes conferences very attractive for Prime Ministers. He is very pleased, obviously—and the French are.

But what does it mean? An agreement of this kind, as it has now been elucidated from the facts we have received from France, could have been entered into at any time during the last 12 months. Chancellor Bruening would not have been less reasonable than Chancellor Von Papen. This has been the French thesis always—to get one final payment from Germany, provided you could wipe out the debts to America. They have always taken that view. If this is the kind of thing which is going to start a new era, and to clear away the difficulties from the recovery of trade, why in Heaven's name was it not entered into months and months ago—if this is all you have got out of it? The right hon. Gentleman was very severe on elections—in other countries. He quite forgot a little election in which he was engaged a little earlier. The era of elections had begun then, and election after election has been going on since, while all the time the world has been getting worse and worse.

I would like with the indulgence of the House to say a word upon the general situation. I have no right to speak except for myself. I represent no one. I am an independent Member of this House. I have only got a very long experience of this House and a long experience in government. But there it is. I stand alone. I did not even get a letter from the Lord President of the Council telling my Conservative constituents to "play the game" by electing me. I got no letters of commendation from either of the leaders of the two rival sections of my party. I did not get a passport from the Foreign Secretary, nor a reprieve from the Home Secretary, and therefore I am standing quite alone; but if the House of Commons would like to hear the views of an old Member of the House, who has seen a good deal of the difficulties of which the Prime Minister has given so eloquent a description, I am prepared to give them quite fearlessly.

There is no doubt about the gravity of the position. I do not want to use strong, and certainly not panicky terms; but I need not use them myself. I can quote them from authorities who are not generally accused of that kind of nervous disorder. The "Times" the other day talked about the "violent destruction of the present economic system." as a possibility. The experts on currency, in their report just issued, which is a very remarkable document but, like most of these currency documents, not very intelligent to an ordinary man, talk about the gradual strangulation of trade, the starvation of millions, and the end of the present civilisation. The right hon. Member for Hillhead (Sir R. Horne) used language of that kind here. The highest ecclesiastical authority in the world said this was the greatest world crisis since the Flood. Well, that is very strong language. I hope it exaggerates the position, but I am afraid it does not. Certainly there has been nothing which is comparable to it. The post-Napoleonic crisis was on the whole confined to this country. Europe was then a peasant Continent, and so was America. Since then there has been erected in every Continent and in every land this ugly, flimsy, ramshackle structure of modern industrial civilisation. The first great earthquake has thrown it out of shape and balance, and experts say that unless something is done to shore it up and strengthen it it will come tottering with a, crash. That is the situation with which we have to deal.

What are we doing in this country to tackle this grave situation? The Government claim that they have restored the balance of trade and restored general confidence. They have certainly won the confidence of all the pundits whose shortsightedness and bungling have plunged the world into this disaster. But that is not the point I want to make. The point I want to make is this. The more you believe that, the more serious is the fact. You restore your Budget, restore the balance of your trade, you win general confidence here and abroad—let us assume that. In spite of that trade is going down, unemployment is increasing, pauperism is increasing in this land. The figures of the unemployed are 2,700,000, though if we had comparable figures with last year's the total would be much nearer 3,000,000. Here, again, I quote from the "Morning Post." I wonder how many people have read those very remarkable articles in the "Morning Post" about the black-coated unemployed. They are very grave. One is constantly getting letters on them from every part of the country, and one is sorry in his heart that he cannot do more for them. They are reckoned at half-a-million.

6.0 p.m

I am not now blaming the Government; the point I am making is that whatever they have done it has not yet touched the root of the evil, and some of the Measures they have passed have aggravated it. We have only to look at our shipping—at the ships that have been laid by; at the speeches which have been made about the effect on the railways; and then that blow at the coal trade. We had a crisis in the past. We treated it as a sterling crisis. As a matter of fact it was purely a symptom of a local injury inflicted upon us very largely by the stupidity of our own advisers, and its very outbreak relieved the pressure of the deeper evil for a short time. In 1925 we restored the sovereign to parity. It was a fatal error. Hon. Members may ask why I go back to 1925. Because we are dependent upon exactly the same advice to-day. In 1925 I sat on the benches behind—there. By my side was the late Sir Alfred Mond. That act, on the advice of the highest financial authorities in the City of London, urged by them, was hailed by every pundit in the land as a triumph. As a matter of fact, we have descended from triumph to triumph to the present pit. In 1925, if you wished to pose as a great and sound financial authority, you had to acclaim the restoration to parity, and do it with due pomposity. Then you were a pundit. Parity and prosperity were interchangeable terms, just as Protection and patriotism are interchangeable terms to-day—or were yesterday. I think there were just three Members in this House who protested at that time. I am glad to see here my hon. Friend the Member for East Aberdeen (Mr. Boothby), who was one of them, and there were also the late Sir Alfred Mond, as he then was, and myself. [Interruption.] Four men on the plain of Dura who ref used to bow to the golden idol; and we were treated as a sort of curious cross between heretics, fanatics and lunatics, and we were let off the fiery furnace on the last-named plea! We said, "It will queer your exports"; so it did. We said, "It will be a bonus on your imports"; so it was. We went on, and there is no greater 6.0 p.m. proof of the innate strength of this country than that we were able to carry this terrible burden on our backs, with a gigantic trade, for six whole years, without stumbling. British commerce marched through the marts of the world on high stilts. In 1931 the support gave way. There was a panic. What was the result? British commerce fell flat—on its feet on the high road. That is all that happened.

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