HC Deb 10 June 1932 vol 266 cc2267-352

Order for Third Heading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."


I beg to move to leave out the word "now", and, at the end of the Question, to add instead thereof the words "upon this day three months".

I feel sure that I am expressing the wish of the House in saying how delighted we are to see my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) with us this morning. I need not assure him that we have missed him very much for the last two months and I have no doubt, judging by some of his recent pronouncements in the Press, that the Government, at least have been very present to his mind too.

In moving this Amendment it will be assumed of course that I am expressing on behalf of my hon. Friends on this side of the House dissent from the policy adumbrated in this Bill. It is a singular fact that we are now discussing the third Finance Bill which has been introduced in the course of 15 months. The first of those Finance Bills was introduced by the late Labour Government, 15 months ago and the two subsequent Bills were introduced by the Coalition Government. If the Government which introduced the second Bill was not precisely of the same composition as the present Government, still "the more it has changed the more it has been the same thing". When we were discussing the first Finance Bill of last year the constant criticism advanced against the financial proposals for the year was that they had no relation to the actual financial situation which then obtained. It was said that the then Chancellor of the Exchequer, now an honoured Member of the present Government, had carefully avoided dealing as he ought to have done with the situation as it then existed. Now this Government has had two opportunities of introducing Finance Bills and, I ask, can it fairly be argued that the Finance Bill now presented to us, even pretends to deal with the situation in which the country finds itself, in the slightest degree more thoroughly than the Finance Bill for which we were criticised 15 months ago?

I think I should be right in saying that the Government and their supporters approach the problem of our financial situation in a somewhat chastened mood. When, not so many months ago, we used to argue that our efforts as a Government were handicapped by reason of the world crisis hon. Gentlemen opposite sneered. How they jeered at us when we ventured to point out the existence of a world situation over which we had no control. They carefully avoided making any allowance for the existence of that situation but on the contrary sought to place upon our shoulders the responsibility for all the country's financial tribulations. Six months have passed and now we find that "the world crisis" has become a favourite phrase on the lips of the hon. Gentlemen opposite. They mutter it like witch doctors muttering incantations over a prostrate body. I do not deny that hon. Gentlemen opposite are entitled to cite the world situation as a grave situation and one over which they have no complete control. I, at once, confess it, but my point is that hon. and right hon. Gentlemen might have had the decency to have acknowledged the existence of that situation last year when we were in the presence of a similar difficulty.

Having referred to the world crisis my first observation concerning this Bill is that it is very largely irrelevant to our present national and international situation. I understand that by the Rules of the House, on the occasion of the Third Reading I am prevented from entering into any elaborate discussion of external conditions, but the House will permit me to say that we are all obsessed with the consciousness that the proposals of the Bill must necessarily be limited in their scope and that they have nothing like the significance for the nation which the forthcoming international discussions will have. Perhaps I may avail myself of this opportunity to make a reference, on behalf of my hon. Friends here, to the fact that next week there is to be a discussion of grave international importance at Lausanne. Though we may have differing views concerning the way in which the problem ought to be confronted and approached, I am sure that I speak for all my hon. Friends on this side and for the whole House, in offering to the right hon. Gentleman and his colleagues our whole-hearted good wishes in the efforts which they are about to undertake.

I turn from that cursory reference to external financial conditions to the consideration of what is strictly relevant to this Bill, namely our internal debt services. Provision is made in the Bill for something like £289,000,000 in respect of repayment of Debt and the management of the National Debt services. We hear frequently, and quite rightly, cries of distress concerning the grave burden of taxation in this country. I should be the last to deny the truth of the statement therein contained. But I have never been able to and cannot now understand why this very heavy burden which the nation has borne tolerantly for the last 12 or 15 years, namely the burden of our internal national Debt, should be the only service in regard to which there is no criticism whatever. I have, however, heard mutterings from time to time concerning the heavy burden imposed by the interest charges upon our national Debt and, if I guess aright, mutterings are beginning to be heard on this score even in the ranks of orthodox Conservatism as indicated by the Questions which we have seen on the Order Paper in the course of the past week.

It seems to me that the Government have laid themselves open to the charge that they have not courageously faced the problem involved in this matter. The right hon. Gentleman, the Chancellor of the Exchequer, must not forget—indeed I think he very properly reminded the House of the fact this week—that he is a member of a National Government possessed of an overwhelming majority in this House, a Government able to speak, one might almost say, with the unanimous expression of the opinion of this House. Therefore, if it requires courage, as I admit it does, to speak boldly concerning the incidence of this interest on the national Debt we have a right to expect the Chancellor of the Exchequer, who is a distinguished Member of this great National Government, to approach the problem and to speak upon it, courageously and without any foreboding.

I cannot believe—I speak, I think, the mind of most of my hon. Friends on this side in this matter, and I certainly speak my own mind—that this nation of ours can contemplate going on for another generation bearing this exhausting burden that is-now involved in the interest on the National Debt, without reconsideration sooner or later. I know that this is not a subject that is spoken of in the market places of the country. You mention it in private and in the smoke-rooms, but it is about time, it seems to me, that the Government should approach this problem courageously and examine as to whether the time has not come to expect the rentiers, who rejoice today in the possession of a return on their war investments far above the value of them when they were first invested—whether they should not be called upon, like other members of the community, to accept a lower share of the national income than is now the case.

I know that hon. Members will suspect me perhaps of approaching tentatively something in the nature of repudiation. Far be it from me to speak in terms of repudiation at all, but I do say quite boldly that I cannot refrain from saying—the right hon. Gentleman may have his own views and reasons for them—that I have some sort of apprehension lest the Government may again "miss the boat" in the matter of this conversion loan which has been so much spoken of. I know the right hon. Gentleman has at his disposal information which we cannot pretend to have, but I do ask that this conversion operation that is to be undertaken shall be undertaken soon, so that the burden now borne so grievously by the people of the country shall be lightened as speedily as possible.

Not only have the Government failed to face that substantial primary burden of the National Debt services, but we are also, it seems to me, providing to an exaggerated degree for the Supply services of the land. I ventured to say the other day in this House, and I repeat it, because it contains an element of truth, that the road to Lausanne may very well be easiest through Geneva. You cannot get America to consider the question of the remission of our debt to her unless we give her some genuine proof of our intention to reduce our expenditure upon armaments. To spend £113,000,000 on Supply services seems to me to be the last sign of madness. The consequence of this avoidance of facing fundamental problems in connection with our financial difficulties, as indicated by avoidance of the problems of Debt services and Supply services, and expenditure on armaments generally, is that the House and the country are driven to look elsewhere for some sort of economy.

I come, therefore, to the second main observation which I wish to make about this Bill. I am not going to discuss fully, nor even in any degree approaching adequacy, the problem of tariffs generally, but we are brought up against the question of tariffs through the medium of this Finance Bill itself. I do not think I shall be overstating it when I say that many hon. Members who started on the high road of optimism some six months ago concerning the beneficial effects of tariffs and so on are to-day speaking in somewhat halting terms of that particular nostrum. They remind me of those lines of the poet William Cowper, where, speaking of the receipt of his mother's picture, he says: What ardently I wished I long believed, And, disappointed still, was still deceived. By expectation day by day beguiled, Dupe of to-morrow, even as a child. That seems to me to be the position of hon. and right hon. Gentlemen opposite, who pin all their faith on tariff reform as the one way out of our economic difficulties.

I will not discuss the problem of Ottawa, but I will say that we are in the presence of a new departure, I would almost say a new constitutional departure, in the treatment by the Government of certain aspects of this tariff problem. There is provision in this Finance Bill whereby the final determination as to whether certain commodities shall or shall not be subject to an import duty is removed from the Floor of this House to some ante-chamber far away down Whitehall. There is a new triumvirate established in the State, consisting, I will not say of three just men, but just three men, who are called upon to determine this question as to whether the people of this country shall or shall not be subjected to a new form of indirect taxation. The case may be good or bad for the imposition of import duties, but there is no place, it seems to me, even on constitutional grounds, for removing the ultimate, the effective, decision from this House to some three individuals, whoever they may be, however distinguished they may be, far away from the precincts of this House. They are there like Faith, Hope, and Charity, sitting together. From the point of view of hon. Members opposite they represent "faith in our friends, they have hope for our friends, and they have charity towards our friends."

It seems to me that this involves a very grave departure from our constitutional procedure, and may I, in connection with that, cite the similar departure in connection with the Exchange Equalisation Account? There again we have the same element, the removal of the duty of making a decision and the right of final review from this House of Commons to some orthodox or unorthodox body outside the precincts of the House; and once again I desire, on behalf of my friends, to express our gravest disapproval of this decision of the Government, taken finally last night, that the Exchange Equalisation. Account shall not, at an appropriate date after the end of the financial year, be subject to review and report by the properly constituted financial committee of this House.

I said just now that there is a danger that the inevitable consequence of not facing up to these primary problems, namely, the burden of Debt services and the burden of the Supply services, is to drive us to seek relief elsewhere, and I think this Bill has, as one of its gravest terrors, that it seeks once again, for the second time in the lifetime of the National Government, to force the burden to an ever increasing degree on the shoulders of those least able to bear it. There is obviously a conscious and deliberate attempt to readjust the proportions of direct as compared with indirect taxation in the land. I know it used to be a cardinal principle entertained by Treasury pundits years ago that the proper allocation of direct and indirect taxation was on the fifty-fifty basis. But we have never accepted that proposition. We have never subscribed to it and do not subscribe to it now, but, if we cannot subscribe to that allocation, we certainly cannot subscribe to the one in this Bill, because it is a reversion from that allocation in the opposite and, from our point of view, the most undesirable direction. Hon. Gentlemen opposite say that their case for the reduction of the incidence of direct taxation rests upon the proposition that it is in the highest degree desirable that those in charge of industry should be able to return their savings to industry from time to time. I do not challenge that proposition. It is quite a proper proposition to advance, but I do wonder whether it is in point of fact the first proposition which presents itself to our minds to-day.

What is the main trouble for this country and the world? Is it that the world is producing too little? Obviously not. The world is suffering from over-production or, to put it in a contrary way, under-consumption. If, therefore, the people in charge of industry possess more money to replace into industry, to refurnish their machinery, and so on, it will be nugatory unless the people have the power to spend money on the commodities manufactured. One of the great failings of this Budget is that it does not have regard to that vast potential home market which our working classes constitute. Whatever we may do concerning international agreement and so on, in the long run the well-being of this country depends upon the capacity of our people to buy goods, and there are no better buyers anywhere than the working classes. When therefore we impose, as we do in this Bill, further burdens through the medium of taxes upon tea, coffee, cocoa and other like commodities, which are an element in the daily consumption of the working classes, we are in point of fact striking a deadly blow at our own vast potential home market. Nature does not fail in her bounty. Our troubles do not arise from any failure on the part of nature to do her part in assisting the sustenance of man. Our trouble is that millions of people in this country who desire to buy goods and who ought to be able to buy them, are bereft of the means of purchasing the commodities they require.

11.30 a.m.

At the hustings last October, the great cry was "Equality of sacrifice". There never was such a shameful abuse of a slogan as the abuse of that phrase. Everyone will admit that in the last Finance Bill the main burden of the economies imposed upon the country fell upon those who belong to the poorer classes of the land. Here again, six-month later, presumably in accordance with the same policy of equality of sacrifice, the working classes are called upon to bear a further burden of indirect taxation. What about equality of relief? Is it not about time that the working classes got a larger share in relief? Let it not be forgotten that in the last ten or eleven years the working classes, through the medium of reduced earning power, that is, in reductions of wages, have sustained an aggregate loss of something between £6,000,000,000 and £7,000,000,000. It is a colossal loss indirectly for the trading resources of the nation, and it is a very grievous burden upon those who are not able to bear it. Therefore, I suggest to the right hon. Gentleman that his Budget fails in two or three, and possibly four directions. I submit that it has little direct relation to the main problems with which our country is now confronted. It avoids problems with which this country is specially confronted—that is, our own internal problems—and as a consequence of avoiding those problems, it has embarked upon a course which not only has involved inequitable taxation, but, in the ultimate resort, must involve this country in some financial difficulties and possibly social inequalities. Lastly, the method of imposing this taxation not only involves injustices to the poorest of the land, but involves an entirely wrong conception of social equality.

We were warned when the right hon. Gentleman spoke on the Second Reading of the Finance Bill that the country may be called upon to face even graver economies in the coming months. All I can say is that there is economy and economy. There is wise economy and unwise economy. There is a form of spending that is a real saving and a form of saving that is unwise in its character. I can only hope that the somewhat menacing words that fell from the right hon. Gentleman do not portend an attack once again upon the vital social services of the land. You may to-day be able to contemplate it with equanimity, but in doing it you will, as surely as you do it, hamper the resources of a generation from now. An old legend tells us that the Titan Sisyphus was called upon to roll a stone to the top of a mountain, and, that when he had got there, it rolled down again. I do not think the right hon. Gentleman has approached this problem in the right way. He does not through the medium of this Bill enable the people of this country to approach to task of rolling the stone to the top of the hill with courage and fortitude. If you want this financial stone to be rolled to the top of the hill, strike away from the limbs of the people some of those disabilities which handicap their efforts. I beg the right hon. Gentleman once again to face the problem with courage. If he does it with courage and circumspection, I am sure that I express on behalf of my hon. Friends a willingness to regard with sympathy all his efforts to examine once again these formidable items in our national expenditure, namely, the debt and Supply Services. If we are to have economies, they should be economies in directions which will not involve a limitation of the social resources of the nation.


As this is the first time that I have had the honour of addressing the House, I hope I may ask for the indulgence that is usually so kindly accorded to a new Member making his maiden speech. I think at the present time in the history of the world finance has reached the zenith of interest. Certainly for the first time in the history of our country it is the dominant factor in politics, domestic, Imperial and foreign. It is for this reason that I have felt it a very great privilege to be a Member of this House and to have been able to listen to the debates which have culminated in the Third Reading of this Bill. I should not have intervened had it not been for the fact that all my life I have lived among exchange bankers. I come of a, banking family, and, whatever may have been my own work, I have always been bound to be steeped in international business, especially in relation to foreign exchange. I am a supporter of this Bill, and I should like to extend my small contribution of congratulation to the Chancellor of the Exchequer for the courage that he has shown in bringing it before the House. His courage has been this, that he has brought forward a Bill which shows no departure whatever from sound finance. It gives away absolutely nothing and it goes for stability, and only stability, and I think it is really a great tribute to the National Government and their supporters that the Bill should have got so far. There are, nevertheless, one or two measures in it which fill me with a certain amount of dismay. There is the question of the Beer Duty, but, as that was so fully discussed only two days ago, I will not weary the House with my opinions on that.

There is another point which fills me with a certain amount of genuine apprehension, and that is the question of the Exchange Equalisation Account. This account is to my mind fraught with all sorts of dangers and pitfalls. I hope, when the Government start to operate this account, they will do so with the same courage that they have already shown. The Government have turned themselves into being, almost overnight, by means of this account not only the Government of this country, but also the greatest, the most powerful, and the most influential foreign exchange banking house in the world. I hope they will operate the Fund with courage. To me this Fund of £150,000,000 is somewhat like the British Expeditionary Force in 1914 of 150,000 men who went to France to face a Continent in arms, and I can but hope that it will not suffer the same losses or reach the same proportions as that great Army of ours which reached a figure of, I believe, somewhere round 7,000,000 by 1918. We must not deceive ourselves about this Fund, because it starts off with a loss of £8,000,000. Clause 23 says: There shall be paid to the Issue Department of the Bank of England out of the account such sum not exceeding £8,000,000 as is, in the opinion of the Treasury, equal to the amount of the net loss which, by reason of the variations in rates of exchange, has been sustained in connection with the credits obtained by the Bank of England from the Bank of France and the Federal reserve Bank of New York on the 1st day of August, 1931. I think hon. Members will agree that that is an exchange loss. Exchange is always a very complicated matter, and I think it is probably a more complex matter to an Englishman than to citizens of other countries, for the reason that England has for a great many years past had the sort of privilege, I might almost call it a right, that every exchange is quoted on London in sterling and, consequently, the English bankers did their exchange business in sterling. In the other great monetary centres of the world the bankers and the citizens do the greater part of their business in different currencies, and, consequently, they probably get a better view of the exchange situation in the world. Not only that, but in the exchange business we have to face some of the astutest minds in the world, minds of people who sit in their offices watching the exchange fluctuations of the day. It does not matter if it is in Yokohama, Sydney, Berlin, or New York. They watch these fluctuations, ready to take any profit at all that they can find and, surely, when this Fund is started, the greatest Fund for exchange business in the world, they are going to watch it even more closely than they ever watched the exchange before, and they will take every possible advantage of making profit for themselves and for the people who work with them. We must remember that in the operation of this Fund we have these people with really keen minds who are probably doing their best to make a profit for themselves out of it.

There is another risk that I should like to point out. I have definitely got into my head the idea that in the operation of this Fund the first and foremost thought will be that of safety for the money invested. There are to-day only four main gold exporting countries in the world, America, France, Switzerland, and Holland. I gather that with this Fund all the business, I presume quite rightly, will be done in the currencies of these four countries. I do not know what guarantee we have that exactly the same thing may not happen in one of those countries as happened to us last September. They may be pushed into a corner and they may have to go off the Gold Standard which is an exchange loss on our Exchange Equalisation Fund. I feel that this Exchange Equalisation Account has one great hope. It may be that it will really be a solution of our difficulties if it is operated in the way that I hope our Government will operate it. I think everyone will agree. The first and most essential palliative for our troubles at the moment is a monetary solution. I think other countries are showing definite indications that they agree with us in this, and it may be that our Exchange Equalisation Account may be the forerunner of what I may call an international exchange equalisation account subscribed to by all the great banking countries of the world. I believe, when you look at America and hear from the bankers there, they are beginning to feel the same way as we do, and in France especially, where M. Herriot has appointed as his under secretary a gentleman who is well known as the absolute apostle of monetary control throughout the world, it is safe to say that that one fact alone, the hope of a monetary solution of our difficulties and the question of being able to discuss a general account for the world, entitles us to hope that the London Conference will be brought about. I believe that it may possibly be, through the courage and determination of the National Government, our Chancellor of the Exchequer and our Financial Secretary to the Treasury, that this Exchange Equalisation Fund is the start, the first bit, of a remedy for the troubles that we are facing in the world to-day.


I am sure that every hon. Member will wish me to congratulate the hon. Member for Bath (Mr. Guinness) upon the valuable contribution he has made towards this Debate. We all hope that the hon. Member will make many more contributions towards the Debates of this House. During the Committee stage of the Finance Bill the Chancellor of the Exchequer was absent. We are pleased to see him back in his place again. I take this opportunity of saying also that hon. Members are pleased to see my countryman, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) in his place.

Hon. Members know that I am an unrepentant Free Trader. During the Debate on the Finance Bill and the Import Duties Bill, seeing that the Government had embarked upon a protective policy, I tried to be as helpful as I possibly could be to the Government, in questions affecting the trade that I represent, the iron and steel trade, but I discover that, although I have tried to be helpful, the Government's policy is not delivering the goods. Take the output of pig iron for March of this year, when we had embarked on the protective policy. We find that Derby, Leicester, Nottingham and Northants produced 88,200 tons of pig iron. In Lancashire and Yorkshire we find that the production was 22,600 tons; in Lincolnshire 43,300 tons; in the North- east coast district 76,000 tons; in Soot land 19,500 tons; in Staffordshire, Shropshire, Worcestershire and Warwickshire 21,300 tons; in South Wales and Monmouthshire 40,500 tons, and on the West Coast 24,200 tons, making a total of 335,600 tons. The figures for April—and I am not going to give the names of all the districts—totalled 316,900 tons The output in March was therefore 18,000 tons more than in April. In March a 10 per cent. duty was imposed. In April a 33⅓ duty was imposed, but the output of pig iron was nevertheless reduced, between March and April, by 18,000 tons.


How do those figures compare with the additional dumping that took place between the application of the 10 per cent. duty and the application of the 33⅓ duty?


I have not the figures by me, but I can give the hon. Member an illustration by which I will try and point out what I have in view. We used to import pig iron and steel bars into Swansea and Cardiff, and other parts, from France, Belgium and other countries on the Continent. The duties of 10 per cent. and of 33$ per cent. have been imposed on the pig iron and the steel bars from those continental countries, but I warned—


There is not any duty on pig iron at all.


Very well, I will deal with that, but I was saying that I warned the Government during the Committee stage of this Bill that India was now coming to Swansea and offering pig iron and steel bars cheaper than pig iron and steel bars could be produced on the Continent, and I wanted to know from the Government what they were prepared to do, so far as India was concerned. Pig iron and steel bars imported from India are coming into South Wales and other parts of the country duty free. Now I want to point out to the Government that it is not only a question of negotiating with the steel bar buyers and the pig iron buyers from South Wales; they are already importing the pig iron and the steel bars from India into South Wales. My men in South Wales were idle as a result of the importation of bars from France and Belgium. I want to know from the Government what is the difference between my men being idle because of Belgian and French steel bars, and being idle because of the importation of Indian bars? My men are still idle. I want to try to be helpful, but I want to see my men back at work. We want to see the steel trade revived, because we are the biggest consumers of coal in the country, and we shall be able to set collieries and engineering works going. If we are to embark on this protectionist policy, let us do it thoroughly. [Interruption.] I say that I am an unrepentant Free Trader, but, if the Government are going to embark on this policy, I want to see that my trade, the iron and steel trade, is going to get as much out of it as any other trade.

I have given the figures for pig iron, and I will now give the figures so far as the output of steel is concerned. The same district—Derby, Leicester, Nottingham, Northampton, Lancashire and Yorkshire—produced 25,700 tons of steel. In Lincolnshire they produced 40,100 tons; on the North East Coast, 84,300 tons; in Scotland, 60,000 tons; in Staffordshire, Worcestershire and Warwickshire, 60,600 tons; in South Wales and Monmouthshire, 124,100 tons; and in Sheffield and the West Coast 68,000 tons. In March there was an output of 462,800 tons, as against 433,300 tons in April. Although a duty of 33⅓ per cent. had been imposed, the output was 30,000 tons less in April than it was in March. That proves at once that, so far as the policy is concerned up to the present, the goods have not been delivered.

12 n.

I find that there are reasons for this reduction in output in other directions. Yesterday there appeared before the Railway Tribunal a gentleman of the name of Mr. Edmund Fox, and in his evidence before that body he stated that the cost of pig-iron was 65s. 2d. per ton, but that the railway costs on that ton of pig-iron amounted to 24s. 9d. Unless the Advisory Committee and the Government are going to endeavour to deal with this question of the steel and iron industry in some other direction as well, I am afraid that the protective policy of the Government is going to fail and to fail very badly indeed. I want to ask the Chancellor of the Exchequer whether the Advisory Committee have gone into the question as to why India, for instance, is able to send a ton of pig-iron to Swansea more cheaply than we can produce it. Surely it is not the wages cost that enables them to do that, because, taking a very moderate figure, the cost in wages of producing a ton of pig-iron is something like 3s. 6d. That is a very moderate figure, and in some cases they can produce even more cheaply than that. The Indians have to carry their pig-iron something like 7,000 miles to deliver it in Swansea. Surely there must be something other than the cost of wages to account for the difference, because it surely costs more than 3s. 6d. per ton in freight to bring pig-iron from India and deliver it in Swansea. Have the Committee inquired as to whether it is due to the natural resources in India, to the wages paid in India, to the rates and taxes paid in India, or to the mining royalties? Have the Advisory Committee and the Government gone into these questions in order to examine why it is that these people are able to produce their pig-iron and steel bars in India and deliver them in Swansea, Cardiff or Newport cheaper than we can produce them in South Wales? I appeal to the Chancellor of the Exchequer and the Advisory Committee to go into this question.

There is one thing upon which I want to congratulate the Advisory Committee, and that is on having commenced to adopt the policy of the Iron and Steel Trades Confederation. On several occasions in this House I have brought that policy forward, and to a certain extent it has been a triumph and a victory for the Iron and Steel Trades Confederation that they have, if I may use the term, compelled the Advisory Committee to call the employers together to see if they cannot do something in the way of national planning and the reorganisation of the industry. I find now that the employers have met and have appointed a committee in order to get some regional planning, but I cannot say how far they have been in consultation with the leaders of the men. If the employers are going to carry out the old policy of "Hands off; we will not consult with you; we know our business best", I do not believe that they will succeed as well as if they consult the representatives of the men. All the brains are not on the side of the employers; there are brains on the men's side as well, and I think that the employers would be wise if they consulted the representatives of the men. They have adopted the policy of the Confederation, and, surely, those who propounded that policy, and have public opinion to support them, ought to be consulted in any move that the employers are going to make. I have put my point of view before the Government, and I hope that they will go into these matters in order that the iron and steel trades, which I represent—and I am speaking for myself, and not on behalf of the party—may have the same treatment as regards either gain or loss as any other industry in the country.


I rise with a good deal of diffidence, and crave the indulgence of the House which is so freely given to one who is about to make his maiden speech. I support the Measure, and congratulate the Government and the Chancellor of the Exchequer so far as we have gone, but, with acknowledgements to my hon. Friend the Member for Pontypool (Mr. Griffiths), I am an unrepentant believer in economy, and I feel that we might, perhaps, have heard more from the Chancellor of the Exchequer as to his proposals in that direction. I think the Government are considering measures of economy, and I should like to feel that steps are to be taken immediately to bring about such economies. For example, I feel that many subsidies ought to be withdrawn. I refer particularly to the housing subsidy. I know from my own experience that people are living in houses subsidised by the Government to the extent of £11 or £12 per annum who are in no need of such subsidies. We should make room for other people who need to be accommodated. May I say a word about a system with which the Chancellor is very much au fait, and that is the system of rationing expenditure which has been developed by the City Council of Birmingham, where he has accomplished so much. Economy is effected there by a definite policy, followed out by the Finance Committee, of rationing the departments. I know that there would be difficulties in applying the same system to national expenditure, and that it could not be carried out in quite the same way, but I feel that if we are to save £50,000,000, £100,000,000 or even more millions per annum, such a policy should be adopted by the Government. Each of the Departments ought to be told by how much they must reduce their estimates, and it should be left to the Departments to show what modifications will be necessary in general policy if such reductions are to be effected, and then this House ought to have the opportunity of considering their proposals.

By such means we might be able substantially to reduce national expenditure, which in my opinion it is vital to do. Employers and employed in every part of the country, and certainly in every corner of my constituency, urge me week after week and month after month to do my best to secure that economy. We cannot continue our present scale of expenditure. Employers and employed are disheartened. Employers are giving up their businesses and men are being thrown out of work. But I am not a pessimist, and if the Government will undertake an energetic policy of economy I have no doubt that prosperity will return. If they will swing the axe of economy prosperity will return in time; but economy must be our watchword for at least the next year or two.


May I be allowed to offer my very sincere congratulations to the hon. and gallant Member for the Wrekin Division (Colonel Baldwin-Webb), and also to the hon. Member for Bath (Mr. Guinness), a neighbouring constituency to my own. They have brought an intimate knowledge to the subject under discussion, and their speeches were model speeches in many ways, particularly in their brevity. I promise to follow their example in that respect. When the Budget was introduced I regarded it, as I believe the majority of hon. Members did, as a plain, straightforward, honest statement of the nation's affairs. Its solvency depended upon a continuation of the conditions prevailing at that time, and also, perhaps, upon an improvement in them. Since then there have been many speculations as to how far the present Budget will balance. It is true that there is a cushion of £32,000,000 of Sinking Fund upon which the Chancellor of the Exchequer can fall back in case of any deficiency, but if it be necessary for him to do that I am afraid the taxpayers will have very little consolation next year.

Many of us believe that the return of prosperity to trade in this country is intimately associated with a reduction of taxation. Let me compare the Budget of £760,000,000 with the total national income. The total national income has fallen in the past two years, up to the end of 1931, by something between 10 and 15 per cent. and for the first six months of this year the figure will probably be nearer 20 per cent. than 10 per cent. The Budget has not fallen in the same proportion. Ten years ago the price level was somewhere in the neighbourhood of 200, whereas to-day it is between 130 and 140, but the Budget expenditure has not fallen in any comparable degree. I believe that a Budget of £760,000,000 imposes an impossible burden on this country at the present price levels. Whatever we may be able to do in raising price levels, and apparently everyone is agreed on the desirability of that policy, it will have very little effect on this year's Budget. Quotas, exchange restrictions, the impoverished condition of countries throughout the world, the cessation of foreign loans and the desire of every country to have a favourable balance of trade, will, I believe, mean that trade will be confined to goods which either cannot be dispensed with or which cannot be obtained elsewhere, and we as the greatest exporting country in the world will, of course, suffer particularly in that respect. I am afraid that the import duties will, as a consequence, show disappointing results. Next year a large number of guarantees within the Empire and outside for which the taxpayers of this country are responsible may come home to roost. For those reasons I believe the Chancellor will find himself compelled to make further economies.

If one may be allowed to speculate on a figure, I think we should aim at a Budget of somewhere round about £700,000,000. I quite appreciate that very little more is to be gained by the combing of the administrative Departments, and that it is almost impossible for any private Member to suggest means of economy which the Treasury have not already thoroughly investigated, but is it really justifiable or necessary to spend on the roads this year £20,000,000 out of the Road Fund and another £40,000,000 furnished by the local authorities? One could quote figures of other expenditure along those lines which, to my mind, is extravagant. Everyone in the House and outside it has his own particular pet expenditure upon which he believes no economy should be made, regarding any economy in that direction as being diametrically opposed to the interests of the country. It may be beet sugar, or cruisers, or aircraft, or roads or education; but in my opinion they will all have to suffer. We have got to take risks which I am afraid will not be approved by the Lords of the Admiralty, which will be strongly disapproved of by the producers of beet-sugar, and equally strongly deprecated by those interested in education. But I am certain that if the Government will say that, in the interests of the country as a whole, these economies and cuts are necessary, not only the majority of Members in this House, but the majority of people in the country will accept and endorse it. I quite appreciate that the Chancellor does not want to put into execution these additional economies until he sees that they are necessary, but, of course, the longer uncertainty reigns with regard to these matters, the more difficult will it be to restore confidence in the country.

There is another point. Some weeks ago the right hon. Member for Hillhead. (Sir R. Horne) made a very interesting speech on monetary policy. Its effect has been very considerable not only inside the House but outside. Until quite recently it was only certain economists, bankers, millionaires and people who have written books on financial matters which were quite unintelligible to anyone who was not an expert, who discussed matters such as currency reform and controlled inflation. A mere amateur was hardly allowed to mention these matters. To-day it is very different. There is hardly anyone who takes an interest in our nation's affairs who has not these phrases constantly on his lips. I realise that not all those who talk about these matters have a full understanding or apprehension of what they mean, but it does not really much matter, because whatever point of view you take, whatever solution you suggest, you can to- day find a well-known expert economist who will support you in your views.

Why is it that this is a matter of such intense interest to everybody? Surely it is because we are being forced to appreciate the situation by the most disagreeable of all methods, namely, personal experience. An individual who is paying off a loan or mortgage which he contracted some six years ago finds that, as expressed in commodities, he has to pay nearly twice the amount he paid six years ago. We are faced to-day with a financial paradox contrary to every tradition to which we have been brought up. Apparently, the cheaper you produce an article, the less you are able to sell it. At the same time, there is more real wealth in the country to-day than at any moment in our history, and not only real wealth, but better, more efficient means of transport and communication. Is it any wonder, in view of those facts, that people are asking, and asking without in any way criticising the Bank of England or the Government, whether there is not something wrong with our monetary system? May not over-production and low price level be the consequence of our monetary policy, rather than the cause of the present position in which we find ourselves to-day? We have been told that Reparations, War Debts, and hoarding of gold are responsible. Upon that there is general agreement, and we hope and trust that, in regard to some of the aspects of the question, the conference at Lausanne will find a solution in the next few days. Everyone is agreed as to the desirability of raising the price level. Sir Arthur Salter says: If gold prices could be brought back to the 1929 level, every economic and financial problem in the world would be relieved, and their definite solution made more practicable. That is a fairly conclusive statement. Then, of course, one asks the question, How is it to be done? Presumably, we are told, by some form of inflation. Well, we have already heard in the House how inflation can be effected. I have no intention of going into it this morning. There are, of course, many ways by which inflation can be effected. The obvious proposition in support of inflation which has always appealed to me is that, if prices have fallen, as undoubtedly they have, but neither wages, rents, rates, nor interest have fallen, or can be made to fall in like proportion, you are faced with the inevitable necessity of some form of inflation if you are going to solve your problems. If you could, of course, follow up the logical method of inflation which has been followed in Italy and Germany, and cut the rate on fixed interest-bearing securities, and rent, rates and wages by administrative action, perhaps that is one method of solving the problem, but I do not believe that any such method is possible in this country, and therefore, you are forced to turn to the solution of the problem by what is known in that very general term, inflation. There is a body of very eminent economists and bankers who believe that the policy of inflation can be effected by certain actions of the Bank of England. It may well be that the Bank of England is pursuing that policy at the present moment, because the first sentence in the monthly review, published a few days ago, of the Midland Bank, which has always defended this policy says: The Money Market in recent weeks has given evidence of the development of a monetary policy in every way to be desired and pursued to ultimate fruition. The Bank Rate is down, bank deposits have increased and it may well be that the Bank of England is pursuing this very policy which so many people desire at the present moment. One must, of course, admit that there are a number of economists who believe that such measures will not produce the desired or expected result. [Interruption]. In time they may be represented in this House, and time will show who is right. But is it any wonder, when we are told that prices must rise and yet each week we see them falling away, and the world rushing to financial chaos, and when we have a body of experts who say that if you pursue a certain line of policy you can restore, at any rate, a degree of prosperity, and who have definite views upon one aspect of the situation—is it any wonder, in the present state of financial chaos and ruin that lies about us, that the number of people who support that view is growing every day? Those of us who are not experts in this matter do look to the Government not only for correction, but for some guidance on these points.

One further question is, whether, if you raise sterling prices in this country, it will have any effect unless you get other nations to follow suit? The Chancellor of the Exchequer last night made a very interesting statement in regard to this matter. He pointed out that, unless you are extremely careful, by artificially raising sterling prices, it may have the exact opposite result from what you desire of depreciating gold prices. It was pointed out that that was exactly what happened when we went off the Gold Standard in September last. I believe that the answer to that is that you have got to begin somewhere, that England has in the past led the world on to the Gold Standard, and, since the War, has led the way in Disarmament and in Debt Settlement, and led the world off the Gold Standard. I believe to-day that England has got to lead the world in formulating some policy which will tend to raise prices throughout the world.

In a few weeks' time the Ottawa Conference will be meeting. There, I believe, this Government and this country have a unique opportunity of formulating such a policy. As a result of that conference, I believe that we shall largely increase the sterling area of the world, not merely that area which does not recognise the Gold Standard, but definitely that area which follows the fluctuations in sterling. In that case, we may be able, over a very large portion of the surface of the world, to have some control over the relationship between commodities and sterling prices. We may, I believe, make gold, and even silver, be of some service to us, instead of being our taskmaster. We shall at any rate to a certain degree—to a limited degree it may be true—be masters in our own house, and I hope and trust that that house will constitute the most prosperous and largest economic unit in the world.


May I claim the customary indulgence of the House in addressing it for the first time. I should like to congratulate the Chancellor of the Exchequer upon bringing in, in such a year as this, a Budget of model correctness. I believe that he is sound in his financial methods when he must have been sorely tempted to raid, as others have raided in the past, any nest egg he may have got, and that he has done much to restore world confidence in the stability of Great Britain. May I therefore be allowed to add my congratulations on that account to those expressed in a former speech. I also wish to associate myself with the remarks of the hon. and gallant Member for Chippenham (Captain Cazalet). His remarks were full of common sense and were, in fact, correctly made about the hope of the world lying in our hands, and especially at Ottawa. I do not wish, because I have no special knowledge of the subject, to embark upon matters of high finance, but I will make a few observations about the Budget itself. If we look at the Budget Statement, we have Income Tax as the first item on the Revenue Account, and in my opinion it is the height of the Income Tax which, more than anything else, is handicapping trade and industry at home at the present time. I am convinced that no greater boon to employment, to production and to the return of prosperity to this country, no greater step to bring us back to better times, can be made than by reducing the standard rate of the Income Tax.

The third item is that of Estate Duties, of which we are convinced that the Chancellor of the Exchequer has been over optimistic in estimating his yield for this year. I hope, although we cannot demand it at this time, that before many years are out some Chancellor of the Exchequer will be able to place the Estate Duties where they should rightly be placed in a. Budget statement such as this. Estate Duties have no business to be in the Revenue Account. Estate Duties, as capital, should be collected in War Loan or in some such national Debt which should immediately be cancelled by Statute and therefore be prohibited from the use of bolstering up internal expenditure.

12.30 p.m.

Next I come to the figure of Customs and Excise. The hon. Member who opened the Debate to-day made the remark that he thought that a great number of new Members, probably coming to this House six months ago burning with zeal for high tariffs and Tariff Reform, may now feel their spirits a little damped and their convictions a little shaken. I may say in response to him that I came to this House six months ago with my opinion on Tariff Reform undecided. I have never been in the past a believer in high tariffs, and I have never been an ardent believer even in protection of the home market, and in my constituency they know that that is true. But the experience of the last six months has forced me to the conclusion that tariffs are vitally necessary at the present time. It has forced me to the conclusion that without tariffs England would at this time be sunk, and for that reason, one's tariff convictions rather than having been shaken, have been markedly strengthened by the results shown by the action of the Government. I congratulate the Government upon the speed and efficiency with which they have changed the fiscal system of this country.

I turn to the expenditure side. It is not the duty of a private Member or a new Member to suggest ways and means to the Government by which they could save the national expenditure. I can only say that whatever methods the Chancellor of the Exchequer may be forced or may see fit to take in drastically and substantially reducing the expenditure of this country, he will have my whole-hearted support. I think that I can also promise him the support of the very large number of younger new Members of this House. He made a speech at a banquet at the Mansion House in which he stated that he believed England suffered from gross over expenditure which filled us with hope. May we beg of him to carry out the intentions that he there laid before the country as speedily as possible. So much for the actual Budget.

I wish to detain the House a little longer in order to make one or two observations upon the Exchange Equalisation Fund, and the monetary policy which lies before us. I feel that if the Exchange Equalisation Fund is used it will be a failure, but that, being in the hands of the Chancellor of the Exchequer as a weapon to prevent undue speculation on foreign account, it will be of the greatest advantage to the country. I feel that to have a fund available for use when necessary is an excellent thing, but I feel that if the Chancellor of the Exchequer has to use it, he will very probably also have to lose the great bulk of it. Therefore, I hope that he and his advisers will act with the utmost circumspection in dealing with the Fund. A great deal has been said about the advantage to trade and industry of this country of a stable currency, and that is certain, but such advantage would, I believe, be far outweighed by the additional tax which would have to be put upon industry in this country if the amount of £150,000,000 was lost and had to be made up out of revenue.

With regard to the monetary policy, we received from the hon. Member for Gravesend (Mr. Albery) yesterday a most interesting short resumé of speeches made by the Chancellor of the Exchequer outlining his monetary policy, and I was delighted to hear the Chancellor of the Exchequer, accept it as being substantially correct. That resumé disclosed a policy which most of us ordinary people who have not got some fettish on the brain about these matters can understand and with which we can agree. I only hope that he will go forward to the realisation of what he has in mind. Finally, if I may make so bold, I would say to the Chancellor of the Exchequer, in his campaign to reduce expenditure, and to the Government, in view of next week's conference at Lausanne, in the words which the followers of Joshua, in an extremely awkward situation used to their leader: Only be thou strong and very courageous in action, and I believe this country would still continue to lead the world back to sanity and prosperity.


I am sure that I shall be expressing the sentiments of all hon. Members in congratulating the hon. Member on his maiden speech. I sincerely trust that we shall have the advantage of hearing his views again on an early occasion. There have been three maiden speeches this morning and whilst I presume it is not customary to criticise them unduly—they have certainly been three splendid maiden speeches—their tenour has been the word "economy." I am really amazed that the younger members of the Conservative party should come to this House and talk about economy, particularly the way in which they suggest that economy should take place. It is natural that persons who occupy those benches should differ upon fundamental principles from hon. Members who sit on this side. As a Socialist I disagree fundamentally with them. I cannot see how it is possible for this country to reach a state of prosperity until we first change the motive of industry. The conception of prosperity must be radically changed. Instead of looking at the profit and loss account, merely looking at the balance sheet and assessing prosperity by the profit that the balance sheet may reveal, hon. Members had better look at their constituencies and endeavour to visualise the state in which the community happens to be living.

I congratulate the hon. and gallant Member for Chippenham (Captain Cazalet) on his very good speech. If we all represented Divisions of that kind we might be able to take a very different point of view from that which now obtains. When I endeavoured to visualise the state of things in South Wales, as I know them, and in other parts of the country where poverty is rife, I cannot understand why so much time is spent in talking about the super-structure of things. We talk about currency and commodities and this, that and the other, forgetting all the time that scores of millions of people in the world are in the depths of destitution and penury because governments like the present have for generations carried out principles precisely the same as those that are practised by this country. I am amazed to find that young members of the Conservative party are endeavouring to pursuade the Chancellor of the Exchequer that it is necessary to cut social services. I am amazed that they do not appreciate the fact that the only tangible achievement of prosperity is in the social services, and that all the rest that may be talked about in this House is purely ephemeral and fleeting; things that could be changed if we had the right motive of approach. If we impair social services, prosperity will be deprived of the only means by which civilisation can be maintained.


Who pays for it?


The poor always pay for all things. You will not save the poor by cutting social services. All the endeavour on the part of hon. Members is not to save the poor by cutting social services but to save themselves. In this Finance Bill we find that practically three-fourths of the total has to be expended either in the payment of War debts or in the maintenance of war services. [Interruption.] Shall I say about 50 per cent. of it? There has been no speech from hon. Members opposite, not even one of the maiden speeches, in which the vital cause of the trouble has been attacked. Would it do radical harm if the rentiers were deprived of the total amount of their interest. [Interruption.] It would be harm to them, I admit, but not to the nation.


All your insurance funds would go.


You might damage a few people who have £100 here or £100 there, but the people who would be damaged, and damaged radically, and I think that is fully appreciated by hon. Members, would be the bankers, who hold most of the stock. [Interruption.] They hold very little of it. As I have said, 50 per cent. of the income is being expended in the maintenance of war services and the payment of war debts, and attack is made upon the £110,000,000 that have to be spent on social services and education. We fundamentally disagree with the whole policy of the Government. I do not want to speak about the Exchange Equalisation Account. We have had quotations from Ricardo and from all the orthodox economists, including the old Manchester school. They have all been trotted out before us. We have had years of deflation. If the working people of this country who after all are the tangible market for goods, and the working people of other nations, who comprise 99 per cent. of the markets of the world, were given a living wage, something which would enable them to purchase the goods which they themselves produce, it would not be necessary to dabble with the technicalities of exchange or talk about the technicalities of inflation. It would be possible to create trade revival and at the same time create prosperity.

We have been talking about tariffs. I am interested in the coal trade. During the last few weeks repercussions have taken place as a result of our tariff policy. This week France is again tightening licences, and less South Wales coal is being permitted to go into France. Week after week this is going on and thousands of men attached to the export trade are losing their employment. A week ago I had figures from the Minister of Labour as to the state of things in my own constituency. I am not exaggerating when I say that within a comparatively recent time over 6,000 men were employed in the Llyn Valley, Maesteg, but now there are 4,230 of that number idle as a result of this policy. One could go along the ten or 12 valleys in South Wales and in a slightly lesser degree tell the same story. There has been an increase of 63,000 miners rendered unemployed since January. I read of the number of new industries which have been set up and the number of persons employed, but they are infinitesimal as compared with the number of miners who have been rendered idle as the result of this policy. This is not nonsense; this is not bunk. Thousands of men have been rendered idle during the last few months from the repercussions of the protectionist policy of this country. [HON. MEMBERS: "No!"] South Wales miners are being rendered idle because France will not take their coal, and because Germany will not take their coal. The Chancellor of the Exchequer will be obliged before the end of this year to come again to this House in order to square accounts.

Trade is falling, income is less, and the greater the number you have unemployed the less productive capacity you have. Receipts must go down. We submit that this Government is failing completely because it is not attempting in any sense to employ those who are unemployed. It is failing the mining industry and the steel industry. As far as South Wales is concerned, and the Midlands, as far as the coal trade generally is concerned, things are going from bad to worse. The Chancellor of the Exchequer when he comes to this House again will do so when our resources are becoming less and less, and I expect to hear from hon. Members opposite, in their state of frenzied indignation, further attacks upon the social services. We oppose the Finance Bill because it places heavier burdens upon poor people, whether it is beer or tea, and we oppose it because it violates a principle which hon. Members opposite have held for years and years. It takes away from this House its powers over taxation and hands them to persons who have not been appointed by the electorate and who are not re- sponsible to the electorate for their conduct. We oppose the Bill because, whilst agreeing with the Exchange Equalisation Account as such, the operations will not be placed before the Public Accounts Committee and this House will not be able to ascertain what is being done. We are led to believe that the whole matter is nothing less than a sheer gamble. We have to wait and see what will turn up. It will depend on the pertinacity of private Members in putting questions in the House and raising the matter on the Adjournment to ascertain in the future precisely what has been done.

For these and many other reasons we are opposed to the fundamental structure of this Bill. Speaking for myself I should oppose indirect taxation in all its forms. The only really equitable method by which people should be taxed is through their income. People should be given a minimum means below which there should be no taxation, and above that figure they should be taxed in accordance with their capacity to pay to maintain the services of this nation. That is my personal view. In this Bill we are increasing indirect taxation as against direct taxation; and we are opposed to it. There are other avenues by which money could be found. Less should be spent upon the Services; less should be spent upon means of destruction; less should be paid to the rentier class. To the extent that less should be paid to these things and people, more could be saved, and instead of an endeavour to contract and restrict social services we could by that means expand the social services, give milk to children who are really on the verge of starvation in our mining valleys, give boots to children who are going to school ill shod every day, and give clothes to children who are really without clothes.

It is from this aspect that I look at the prosperity problem, this human problem. I know that there are Members here who will look upon the statements I make as mere sentimentality, but, however much you may increase your bank balances and square your accounts by millions, if people are living deprived of the means of subsistence you cannot look those people straight in the face and say that you have prosperity. With science, with the advances that have come down to us from the ages, with the enormous potential productive capacity of each man in this age as compared with men in past ages, it is really a standing scandal that we should be discussing these things from this angle, whilst millions of people are in penury and want. The motive of industry, the motive of trading as such, should be completely changed, and instead of looking at it purely from the point of view of profit-making as such, we should look at it from the standpoint of social services, and see that every individual is so trained as to be able to produce, not something to enable another to live well above his means, but to produce in order that the mass may live in comfort and contentment and happiness.


Unlike the hon. Member who has just spoken, I think that the three hon. Members who chose economy as the subject of their maiden speeches can hardly have chosen a subject which will commend itself better to the majority of Members of this House and to the country as a whole. I would also like to congratulate them on the very reasonable brevity of their speeches, whereby they set an example which many Members might follow. At least I will do my best to follow it, and in the fewest words possible express some measure of my own disappointment and dissatisfaction with the Finance Bill. I, of course, speak only for myself, but I believe that a great many people in the country—as to my own constituency I am quite sure of it—have felt a lot of disappointment and have been really disheartened ever since they read the Chancellor's Budget speech, and found that hopes which had been raised after the general election were somewhat dashed. Nothing that has happened since has done anything to raise those hopes again. That disappointment was not so much because we found ourselves faced with a deficit instead of a surplus, but because the country realised that a dwindling revenue was not being met by reduced expenditure.

I do not wish to take up any lime talking about economy. I will merely say that unless by the time the next Finance Bill is introduced there has been very substantial reduction in expenditure, I think the Government will find it difficult to carry their hitherto very loyal majority with them in supporting them in that Budget. There are one or two points on which I am bound to say that I agreed with the hon. Gentleman who opened this Debate. It is surprising to me to find myself in agreement with him, but when he said that many of the criticisms levelled with perfect justice at the Budget of a year ago by our party ought to be applied to the present Budget, he had some reason on his side. We attacked that Budget because we said that it did not meet the case and that it did not make due provision for the future. I think that the present Finance Bill does not meet the necessities of the country, and indeed we have the Chancellor's own hint that it is not going to meet the necessities of the future.

1.0 p.m.

That Budget was passed by a majority of the House a year ago, and in the autumn we had another Budget. It seemed to me at the time that it was very much the same Budget, only rather more so. That second Budget, the first Budget of the first National Government, was introduced by the present Lord Snowden. It was conceived and born in a hurry, and for that reason a lot was excused of it. Personally, I thought it was a bad Budget, and when Lord Snowden was met, as I remember, with a storm of applause at the end of the Third Reading Debate, I was one of those ignoble Members who did not join. Especially I thought that in one or two of his impositions he was dealing a last blow at his hereditary enemy. I hate to use the word "beer". It is met with a groan in this House now; indeed, it is met with a groan all over the country. But in imposing his extra penny on beer I think Lord Snowden knew very well that he was doing something which was likely to put the Conservative party into a very unpleasant hole in future. He succeeded admirably.

I am not going to enlarge upon the subject of beer. I voted yesterday to retain the duty, but I did so with the greatest misgiving and only because I was following out a long habit of loyalty to my leaders, that blind loyalty which carries the Conservative party so far. My complaints about the Budget are complaints which might be levelled at almost any Budget since the war. The chief is that there seems to be the greatest possible difficulty in ever making any readjust- ment of taxation. It seems to be laid down as a sort of axiom to be followed by one Chancellor of the Exchequer after another, that if a tax has once been imposed nothing can be done to alter it, except to increase it. It does not seem to me that it is necessarily good policy to maintain a tax year after year just because it may have been a good tax in the past. Conditions change very quickly. I think that any Chancellor of the Exchequer, and our present Chancellor himself, might take a little more—I was going to say trouble, but perhaps that would be impertinent—might pay a little more attention to the possibilities of readjusting taxation to keep pace with the times.

We have various examples in the present Finance Bill. One example is motor car taxation. I do not try to suggest any alternative for the present system but it is generally admitted to be far from perfect. Yet it continues the same year after year. We had some sort of an assurance that there might possibly be an inquiry into the subject, in which ease there might possibly be some change next year. I can see no reason why a change should not have been made already. The same argument applies to any other things. We have been met once or twice. Some concessions were made under pressure in reference to the question of the Silk Duties. I myself have taken no part in the controversy on the Silk Duties for obvious reasons, but I should like to be told how mistakes of that sort arise. We were met by the Chancellor of the Exchequer in a perfectly generous way and the mistakes which had admittedly been made in connection with the imposition of the Silk Duties were, to some extent, remedied.

It is surprising and it gives rise to disquietude in the country that such mistakes should occur. People ask "Is it through ignorance?" It cannot possibly be through ignorance. Is it because the Chancellor of the Exchequer and the Treasury have not taken the trouble to find out the facts? I cannot believe that, because it presupposes some laziness which is quite impossible. Is it that certain industries are being deliberately penalised? Are they being thrown as a sop to the other side from the Government? I should be the last to believe that such a thing was possible. But I only mentioned that case as an example, because I wish to emphasize as strongly as I can that there is a great feeling throughout the country that the Treasury are not in very close touch with everyday life; that they do not take enough trouble in finding out conditions before a Budget is framed. Once a Budget has been framed we have to accept it. We have to vote for it because a supporter of a Government cannot possibly vote against that Government on the Finance Bill knowing that if the Government are defeated they will have to resign. I hold very strongly the theory that no supporter of a Government has a right to vote against that Government unless he is prepared to see the Government resign on the question at issue. I know that that opinion is not shared by a good many other hon. Members on this side of the House. I understand it is not shared by a good many Members of the Government but I myself am quite emphatic upon that point. Therefore, little as I like it, I shall vote for this Finance Bill to-day but I would in all humility offer this warning. If we have another Finance Bill which is as unimaginative as the present one, the loyalty of many on the Conservative side of the National Government will be strained rather near to breaking point.


Having heard or read the speeches of the Members of the Government I have come to the definite conclusion that I must give the Finance Bill my wholehearted support. I was sent here to support the Government, after exercising my judgment upon any matter discussed in this House, and I think that in the circumstances the Government have done as well as anyone could expect, with certain slight exceptions on which I wish to address the House. I, like all Members, consider this Finance Bill in general as it affects the nation, and in particular as it affects my part of the country. Considering all that has transpired in the last few momentous months, I have thought of how harshly the conditions of life have impinged upon our people on the North East coast while things have been going from bad to worse since 1921. The return to the gold standard in 1925 at a level above the internal purchasing power of the pound was, in the opinion of all observers, in the North at any rate, the principal cause of our trouble in 1926. When we got through that great turmoil in 1926 without rancour or bitterness—to my amazement—we thought that the air would be all the purer and clearer for that thunderstorm and that things would get better. By 1928 we were feeling somewhat better but, again, observers noted that France was back on gold at that time and that the United States was beginning to hoard and that between them it was being made impossible to play the game of international exchange.

The slogan to-day is "Back to the price levels of 1929," but I suggest that it is idle to talk in that fashion if we have not some international agreement on the matter. We cannot hope to balance this and succeeding Budgets, restore prosperity to industry, get our unemployed into remunerative and reproductive work—for any kind of work will not do—or reduce the grievous load of taxation, until the Government say what is our international policy and determine, come what may, to carry it out at once. To borrow a, phrase of Robert Louis Stevenson's "it is no use saving candle-ends when the house is on fire." It is idle to talk of the curse of unemployment and the cures for unemployment, to talk of doles to industry at home, to talk of Protection or Free Trade until we have settled the paramount question of currency. I think that taxation has reached its limit. We do not want to depress our people who are so amazingly patient and loyal any further or any longer. The man in the street up North with ordinary, common, horse sense knows that we have less money than is needed for the conduct of our national and international business and that operations are curtailed for that reason.

I have thought over this currency problem for some years. I am sorry that the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) is no longer in his place because two years ago I wrote to him in the strain in which I am speaking this morning. I said that I would not be a party candidate again; that we would with difficulty balance our Budget in 1931 and would never do it in 1932, and I told the right hon. Gentleman who was then the Leader of the Liberal party, that we were heading straight to dis- aster. I have been obsessed by this problem. It is with me day and night when I reflect upon the condition of our people. Coming down in the train to King's Cross the other day, knowing as I did that the train would reach King's Cross to the precise minute, I remembered how 100 years that would have been impossible. Anyone who had said 100 years ago that it could have been done, that with 1,000 tons weight you could overcome the forces of nature and physics by the application of other forces, would not have been believed. How was it done? I am not an engineer, but I understand that he watches his pressure gauge, he knows his loads, he knows the time he has to be there, he watches his signals, and, by long training and the application of wit and science, he can get to his desired destination, as I have said, to the very minute.

What is currency but steam, or steam but currency? What is it but circulation? They are precisely the same thing in connotation, and will anyone in this House say to me that it is beyond the wit of man now-a-days to find out what pressure is required to take the load, to watch commodity price levels, and to get the currency equal to it? It seems to me a simple and obvious proposition, and I suggest that it can be done. For this or any other nation to cut down its transactions in order to balance exports and imports because of currency difficulties which are capable of solution, while we have 3,000,000 people unemployed, who are just as good as we are, is stark, staring madness. Suppose that all the nations go on reducing their purchases abroad, and this gold and exchange problem is not solved this year, what then? Where is the Income Tax coming from, for one thing? We are looking for trouble.

We know that nature gives fourfold, tenfold, sixtyfold, a hundredfold, and civilisation is only aiding that beneficent work of nature. There is enough for everyone in this world, but there are not golden measures enough to contain the commodities. This is, I suppose, Malthus up-to-date. We have proved nowadays that Malthus was a silly old fool. He said there were not enough plates in the banquet of life to supply all who sat down to table, and we know that he was just a silly old fool. It is absolutely incorrect, but we are actually practising the same thing, although there is any amount of commodities in the world, and more than enough. The man in Brazil who wants to sell his coffee to the man in Berlin cannot do it; he burns it. The man in Berlin who wants to sell his commodities to the man in Burnley or Blackburn cannot do it; and so the cycle of world trade is broken, and we should be fools if we did not try to mend it. I will not refer to the folly of trying to get a quart into a pint pot; we are trying to get a gallon into a pint pot. When I hear hon. Members talking about stability, what they really mean is stagnation.

The other day it was a beautiful morning, and I went to Lord's, and I got on to the Inner Circle. Coming from the North, I hate the tubes; I do not like the smell of them or the stuffy air, and when I got on the Inner Circle, thinking about this problem, I thought how like it was to the position in which we find ourselves. I remembered the story of the stout old lady who, as "Punch" said, "had no sideways," and who had to get out of the train backwards. She went round the Inner Circle 10 times, because, as she was carefully getting out, she was bundled back again every time, and told to hold tight. We have been told to hold tight for 10 long, weary years. We are going round and round, and because we are moving, we think we are progressing, but we are just going round and round, at the behest of international, cosmopolitan financiers. I can tell you all the stations on the Inner Circle, starting from Versailles, past the Dawes plan, the Young plan, then Locarno, and I could tell you all these stations. We think we are getting out of it, but we are not. "Hold tight" is the slogan, and we are sick of holding tight. There is a way out. As I got out at Lord's, I saw another slogan, and the slogan there was "Play the game." I wish to God that America and France had learned to play cricket and would be better sportsmen.

The right hon. and gallant Gentleman the Financial Secretary to the Treasury recently said in this House that we were sailing uncharted seas, full of danger to the ship of State, that unusual courses had to be taken unexpectedly, and at great cost; and we all agree. I admire the skill with which he has piloted the ship of State, and I congratulate him upon it, but help has had to be given to other ships, other nations, in distress, and I suggest that now we are so weather-beaten ourselves that we want to get to our desired haven, and we shall have to concentrate all our energies on saving ourselves. I agree with one hon. Member who said earlier to-day that the rentier class had had a good time for 10 years. I do not care who they are. They have had 10 years' good time and on money invested when it had only half the value that it has now. They have had 10 years' good going at the expense of industry, and I stand for industry and for the men who ought to be at work.

There are 13,000 men in my constituency, good men and true craftsmen, who want to get to work and who are sick of the dole. That is serious enough, but when they come to my time of life the die is cast; they are what they are, and they will be nothing else. But what of the boys and girls who have been expensively educated, who have been given the best education in the world? What is going to happen on Tyneside in 20 years' time? It has been our proud boast that we have bred the finest craftsmen in the world, of all trades. These boys in their impressionable years have never learned to use their hands or to equip themselves for the life that is before them, and I say with all the meaning that I can give to it, as a working man's son, bred of that industrial aristocracy which carries everything in this nation, that we must do something for those people.

This currency matter, to me, is the simple way of solving this difficulty. The time has come for a change, and I say to the Chancellor of the Exchequer and to his worthy lieutenant that they want courage and again courage. Our people will forgive anything that is attempted, as long as something is done. They will forgive mistakes or anything so long as the Government try to do something that is worth while, and I suggest that we could save £20,000,000 a year by a conversion loan. There could be a patriotic appeal to the rentier class. I do not think they are disloyal. When at the election I said to the men on the dole that I preferred that they should have 15s. 3d. that would mean 15s. 3d. worth of goods to 17 discs, they believed me, and to my amazement some of those thousands of men on the dole supported me and sent me here. I think their loyalty could be followed by the rentier class and that the Government could make a public and patriotic appeal to these folk to take 1 per cent. less. We could save £20,000,000 a year. I know there is £400,000,000 held by foreign investors, but where else could they put it? Where could it be safer than here? There is no choice before them. I think a patriotic appeal should be made and that a subsidy should be given to the coal trade. I am tired to death of helping some country in the Balkan Peninsula whose name I could not pronounce, of subsidising some foreign country, when £18,000,000 for the better utilisation of coal in crude oil or something like that would be much more worth while, so that our men in Durham could be employed always. If we could do that, put our brains in steep, and take courage, something would be done—

Mr. DEPUTY-SPEAKER (Sir Dennis Herbert)

The hon. Member is getting rather far from the contents of this Bill.


I deserve that reproof I dare say, but I feel very strongly on this matter, and I hope you will overlook my transgression. The Government should, I am sure, have courage in this matter and let the country know what their monetary policy is, and I am certain that our people would give them every support.


Before I make the few remarks I want to address to the House, I wish to say a word on economy. Many hon. Members, especially those who have made their maiden speeches, have devoted themselves to economy, and I heartily agree with what they have said. But in defence and in justification of the attitude adopted by the Chancellor of the Exchequer, it should be asked how he can make up his mind what stops are necessary in the direction of economy until the Ottawa and Lausanne Conferences are over, because, say what we will in this House, world reactions are an integral part of the reactions of this Budget. I am sorry that the hon. Member for Caerphilly (Mr. Morgan Jones) is not in his place. He is a friend of mine, and he made a wonderful speech from an oratorical point of view, but I would like to ask him what right he has to charge the Government and the Chancellor of the Exchequer with want of courage and vision when, in the crisis last August, he was a member of the Government which ran away, and he deserted his post. It is very easy for Members of the Opposition to criticise those who have borne the heat and burden of the day. I have not for a long time heard a more unhelpful speech than that of the hon. Member for Chichester (Major Courtauld). I will not waste time on it, and I have no language at my command which can express the disapproval that I feel of a speech of that character.

1.30 p.m.

We have heard many speeches to-day dealing with particular points in regard to industry and commerce, but I want to ask the House to come back to the bigger issues which this Budget involves. I wonder if the House realises what an historic day this is, not only in the annals of our country, but in the annals of the world. To-day we set the seal on the pledges which we gave at the election. We can say that it is indeed a triumph for England and for the expression of English character; a triumph for the Chancellor, who is in a kind of hybrid Cabinet where, I feel sure, he has had great difficulties in carrying his point of view; and a great triumph for the Financial Secretary who, when his chief was away, carried the burden on his shoulders. The House and the country have to realise that the effects of this Budget are not only domestic, but, owing to our dominant position in the world, are felt all over the world. When we are considering our national position in comparative domestic safety, I would ask hon. Members to cast their eyes round the world and to look at the position of other countries. I will not discuss that position, for it would not be in order, but I will simply mention the countries by name, because, if hon. Members have followed the papers lately, the point that I wish to make will immediately leap to their minds. Look at the position, financial and social, of America, France, Germany, Belgium, Austria, Greece, Rumania, Japan, Russia and many others. However much we may wish it otherwise, the effects of this Budget cannot be purely domestic. They must be worldwide, because, looking round the world, we find the ships of State in the countries I have mentioned tossed about in an international tempest, and the only safe anchor to which they can attach themselves is England and the Empire. The return of the National Government restored the credit, the name, arid the honour of this country. As examples, I will point out that since the Government's return to power, Government securities are up 20 points roughly, and the Bank Rate is down from 6 per cent. to 2½ per cent. Sterling, although off the Gold Standard, has remained stable, because it has behind it the character and the traditions of the British people. Sterling was, is and must remain the currency upon which the commerce of the world is carried on. That position, although it gives us great advantages, carries with it heavy responsibilities. A few days ago the Lord President of the Council issued a timely warning against hysteria. Surely the best cure for a person with hysteria is to throw a bucket of cold water over him. This country in the financial crisis last Autumn threw a bucket of cold water over itself and came back to reason. Up to date we have done our bit; we have done all that is possible according to our best traditions.

The question now is whether other countries will take a cold douche as we did last Autumn. If they will not take it can we and should we, administer that cold douche at Lausanne or Ottawa? We have a right to do it because we have all through practised what we have preached, and the world must acknowledge that we are indispensable to the proper working of the world. The world really knows it and for its own sake must recognise it. In considering this final stage of the Budget, a great deal depends, in regard to the extent to which we can make our influence felt in the world, on the way in which the provisions of the Finance Bill can be implemented, and whether the necessary income can be gathered in. I hope and believe that after we have done our bit in this country, our representatives will go to Lausanne and Ottawa and, with the right which they can now exercise, will say to other countries: "Go and do likewise; put your own house in order; balance your budgets, and, if you balance your budgets, your currencies can take care of themselves." There is a lot in the proposition that if we balance the Budget currency can take care of itself.

It has been said in several speeches today that we cannot achieve much by ourselves. I agree and, therefore, when we go to Lausanne and Ottawa it is up to us to get all the co-operation that we can and to work in the direction of a policy which will raise the commodity price level, because let the country and the world be assured that, if prices continue to fall, all debtors will be ruined. It has been said by many people I have met that we are in one of the ordinary world cycles of depression and that, if things are left to themselves, they will work out in the long run through the ordinary working of economic law. I say with regret that I believe we are not in one of those world cycles, that we are on the downward slippery slope, and that the efforts, not only of this country in balancing its Budget but of all countries, must be directed, and soon, to stopping that downward tendency at all costs by getting together and by using all the means—not only monetary policy—which will restore confidence, and enable people all over the world to exchange goods and services on a profitable basis.

We have lately had the announcement that our Government has called a world conference to consider what to my mind is vital, the raising of commodity prices. I notice that the word "raising" was not used. The word used was "stabilising." I wish the Government had had the courage to say "raising" the price level—to raise the price level roughly to 30 per cent. and to reflate it roughly to the 1928 level. But I see a great danger to the finances of the country in this London Conference, because it may be made the excuse for no decision being taken either at Ottawa or at Lausanne. But before we can attempt, in co-operation with other nations, to raise the price level—this is not politics; I believe this to be hard, common sense, sheer fact—there are two things upon which the world has to come to an agreement and which have to be settled. The first thing we have to do is to come to a final decision on the question of debts and reparations. This year, if there were no Hoover moratorium we have to pay to America £38,000,000. With a depreciated pound, that comes roughly to £52,000,000 sterling. Owing to the action of the United States themselves there is no gold left to save. Tariffs or no tariffs, we have to pay them in goods or by rendering services, and, if we send across the Atlantic £52,000,000 worth of goods and services, the only effect it can have is to depress by £52,000,000 the already terrible state of things in America. It must have the effect of further depressing the world's commodity price level. I hope it will be pointed out at Lausanne that, however difficult it may be for the debtor countries to pay their debts, it is not only difficult but ruinous for the receiving countries to receive.

I cannot explain my point better than by referring to two announcements in yesterday's "Times." I do not know whether the editor had them printed in corresponding columns in similar type to draw attention to them, but to my mind the comparison was so well drawn that it gives a picture of our difficulties and those of the world as a whole in a very few words. The first item is headed "Cancellation, an American View." It refers to the publicly announced policy of the American Government not to cancel reparations and to the fact that a plan of cancellation would hardly appeal to the American psychology, and it says no responsible official of the American Government would be likely to say so for publication because in a country where the political standard is not so high as here it is impossible for their politicians to say much on the eve of an election. The other announcement refers to the bonus parade and to the march of the veterans on Washington, and how the Senate had suddenly to pass a Measure before the procession arrived. It said that, if Washington had seen a parade like that before, the oldest inhabitant had forgotten it and that there is something radically wrong with the body politic.

This question of debts and reparations is an integral part of our Budget. I hope it will be pointed out to America at Lausanne that they have a choice to make between the kind of statements put forward in those two articles. They have to choose between coming into the comity of nations, being good neighbours, willing to take part in international conferences, willing to bear a responsibility in the running of this world of ours, and a continuance of the desperate state of things in America with unemployment, it is said, mounting up to 10,000,000 or 12,000,000, having an outlook which is purely domestic and having no regard to the good of the world as a whole.

We in this country have taken brave and great decisions which come to their head in the Third Reading of this Bill, but there is a danger, in the great economic and financial crisis that is spreading through the world, that people are getting to a state of mind that they will support anyone who is likely to do something. Do not let the motive for doing something come up from below, from uninstructed mass psychology. Let the lead come from those at the top, who have all the information at their disposal and have expert advice. Is it possible to believe that Europe to-day could give a lead to America and say: "We want a clean slate"? Is not that exactly the thing that America is waiting for?

I want to make one other point with regard to the commodity price level. It is no good trying to stabilise or raise the commodity price level, unless the world as a whole will first deal with the economic policy of Russia. To-day there are two units in the world, Russia and the rest. It is perfectly open and fair for the world to say to Russia: "We will only treat you as you treat us." Russia has, in fact, economically and financially ostracised the world. It is up to us—[Interruption.] This has to do with the Budget. I am coming to that point in a minute. It is essential, if the commodity price level is to be raised, for the world to say to Russia: "Until you are prepared to play the game"—to use a cricket simile—"in the ordinary accepted terms as we know it, we will refuse to trade with you." When Russia is able to sell for cash and to buy on 12 or 18 months' credit, it is a policy of absolute folly to back Russia up in its avowed object of creating a world revolution.

To sum up what I have just said: If the nations of the world will not take the lead in these financial and economic questions, and if something is not done to stop this downward slide on the slippery slope, the world will be faced with two alternatives. At whatever price you stabilise to-day Russia will sell at 5 per cent. less tomorrow morning. It is no good trying to stabilise commodity prices until some understanding has been reached among the nations of the world as to debts and reparation payments, and as to the Russian economic policy. If something is not done, the world will be faced with two alternatives: either to reduce wages in civilised countries to the level of those paid in Russia, or to cut the interest on fixed-interest bearing securities. A most moving appeal was made by the hon. Member for Gateshead (Mr. Magnay). I sympathised very much with his point of view, but he approached the matter from the wrong angle, if I may say so. If you cut the interest on fixed-interest bearing securities, what will be the effect? Only a year ago, I think it was, the President of the Board of Trade gave figures to show that there are 15,000,000 people in this country, leaving aside the so-called rich, who hold £2,256,000,000 of Government securities, through the friendly societies, the co-operative societies, the National Savings Certificates, etc.; all the small investors. I ask the House to picture the effect on this country if the interest on those securities were cut and if the price of those securities fell to half. We are so dependent upon our national credit. We are more dependent upon it than is any other country in the world.


Surely the hon. Member does not suggest that, if we cut the interest by one-half of one per cent., that would result in a reduction of prices by one-half.


If the hon. Member will ask me a question about doctoring I will tell him that he knows more about it than I do. If an announcement was made that England was going to reduce interest on fixed-interest bearing securities, it would create a panic in this country, would let loose forces and would destroy our credit to such an extent that it would bring untold misery and disaster, not only to the so-called rich, but to the 15,000,000 to whom I have referred, and who represent the total savings of the country invested through the cooperative and other societies. If there are any trade union representatives here I would appeal to them, after the fight they have put up throughout the years to maintain and to raise the standard of living in this country for the men whom they represent as trade union officials, seriously to consider the effect of allowing this depressing of commodity prices by the economic policy of Russia, to continue.

I believe that action of this kind must be made immediately. I believe that time is the essence of the contract. I believe that it is now or never. This country must give a lead, and can give a lead, to the world, which is expecting a lead from this country. I beg our representatives that, at the forthcoming world conference, England may not be a party to delay, because the longer the delay the more tardy the effects will be of the wisest measures. I hope that when we go into the world conference—and it is upon world conferences that the very implementing of this Budget depends—our representatives will have the courage to say to the nations that they must, for their own good, and for the good of the world, consider what they can put into the common pot, and not what they can take out of it. If the common pot of the world is emptied or broken, I believe that uncontrolled forces will be let loose which it would be beyond the power of civilised Governments to overcome. I would like to be able to repeat to France and America the old proverb that a man without money is poor but a man with nothing but money is poorer.

There is a point which I think is most important in regard to international conferences. I do not think we should ask any nation to surrender its nationality. We should ask the nations to retain to the full their national aspirations and their national policies, but to get those policies into a form in which they can be used for the good of the world as a whole. I am reminded of the old Arab story in which the Arab King said to his chieftains: "Now, gentlemen, keep your tents separate, but bring your hearts together." I hope I am not saying anything that will do any harm, but I hope that, not only for the good of the world and of this country, but for the good of America herself, she will be told at Lausanne, or at the London Conference, or at whatever Conference she consents to come to, that she must, for her own sake and for the sake of the world, be more neighbourly. I should have liked to say to the Chancellor of the Exchequer, had he been here, that he can go to Lausanne and take his courage in both hands. The world expects, and wants, a lead from England. I believe that England is the keystone—I say it with humility—of the future good working of the world's economic and financial institutions, and I know of nobody who is better fitted than our present Chancellor of the Exchequer to go as our representative and put forward the case, not only for this country, because that is not England's policy, but to put forward a policy which will uplift and upraise the dreadful conditions that exist all over the world. If I may say so, I wish him God speed.


I would like to take up the line that was followed by the hon. Member for Caerphilly (Mr. Morgan Jones), and in some degree also by his colleague the hon. Member for Ogmore (Mr. E. Williams). The hon. Member, in moving that the Bill be read a Third time this day three months, dissected the expenditure, and gave to some of us a peg on which to hang our reply. He took the service of the National Debt, the Defence Services and the Civil Services. He was wrong in saying that the National Debt costs £289,000,000. It costs £276,000,000, and, although these are large sums, it is just as well to be accurate about them when we are speaking in debate.


The figures are not mine; they are in the White Paper.


No; if the hon. Member will look at the statement of the Financial Secretary published on the 19th April, 1932, he will see that, at the top of page 18, the figure is given as £276,000,000. I do not know where the hon. Member got the other figure, and I do not take much exception to it. References were made by the hon. Member, in dealing with the National Debt, and also by the hon. Member for Ogmore, and the hon. Member for Gateshead (Mr. Magnay), to the rentier class receiving interest on the National Debt; and I see, also, that my hon. Friend, the Member for Spennymoor (Mr. Batey), who referred to this very point in a debate some time ago—


If I might interrupt the hon. Baronet for a moment, I have looked again at the White Paper, and I see that in Table VIII, on page 10, which gives comparative figures with respect to the interest on and management of the National Debt, the figure for 1931–32 is given as £289,400,000, and the figure for this year as £273,000,000. Therefore, I really gave the wrong figure.

2.0 p.m.


I am much obliged to the hon. Member; I was not blaming him for his error. I should like to deal with the statement that the rentier is the holder of this National Debt. Although there is no representative of the Treasury here at the moment, I should like to say that I think it would not be a bad thing if the Treasury would take the opportunity, when it may be possible, to get accurate information on the subject of the holding of the National Debt. Some time ago I myself, from such material as I could get from the Colwyn Committee's Report and other sources, tried to draw up a rough-and-ready guide as to who held the National Debt. It has been said to-day, I think by the hon. Member for Ogmore, that the National Debt is held by bankers. I have not any figures with me, but I can give the picture from memory, as it is very clear in my mind. The total amount of the National Debt is, in round figures, £7,500,000,000. Of this total, £2,000,000,000 is held, not by any rentiers at all, but by public owners. Public departments hold £750,000,000, and I think £123,000,000 is held by the National Debt Commissioners in the form of Victory Bonds received by them in payment of Death Duties; and the United States and our Allies in the War hold over £1,000,000,000. I am giving these round figures from memory, and I speak subject to correction. Then there are National Savings Certificates and Bonds, the provident funds of the railways, and the holdings through the Post Office and trustee savings banks; and the Post Office is limited, as one knows, to poorer people. Millionaires and large rentiers are not the people who put very large sums in the Post Office Savings Bank, because they would not be allowed to do so. These items alone represent £1,000,000,000 held by poor people, and they will not thank anyone who interferes with their holdings or shakes the credit of the National Debt. Then there is another £1,500,000,000 of the National Debt that is held by trustees of dead people, trustees under marriage settlements for widows and children, and trustees for churches, chapels, universities, scientific institutions, friendly societies and trade unions. I can substantiate these figures, which I am giving roughly from memory, from the Colwyn Committee's Report, and I have published a statement of them. There is also £350,000,000 in the hands of insurance societies, including one holding of £60,000,000 by one of the greatest of such institutions—I do not want to give the name, because it might look like an advertisement—which is really a great beacon-light of national saving in the form of life insurance, and which has in issue among the poorest of the poor no fewer than 20,000,000 policies.

These amounts which I have mentioned are not held by rich people or rentiers, but represent the savings of the general body of 40,000,000 people. Of those 40,000,000, I think, speaking from memory, there are not more than 600,000 who have over £10 a week, so that some 39,500,000 of the people of this country are people with less than £500 a year, and they are the main holders of the National Debt. They hold a further £2,000,000,000 of the National Debt. I think that, if the hon. Member for Caerphilly, who has now left the House, had acquainted himself with these figures, he would not have talked so much about the advisability of cutting down the interest on the National Debt, and breaking the bargain that was made, without hurting anybody but the so-called rentiers. On the contrary, the first who would be hurt if anything were done by involuntary conversion or by a reduction of loan interest without the patriotic help or the wish of the holders, would be the poorest of the poor.

It must be remembered, also, when we are speaking of the £2,000,000,000 of Five per cent. War Loan, which we hope to reduce in due course, that the Government are not holding up that conversion because they want to do something wicked, but because they are awaiting a favourable moment at which to get the conversion done on the most favourable terms to the taxpayer. If the interest were reduced from five per cent. to four per cent., it would mean a saving of £20,000,000, less what would be lost in Income Tax and Super-tax, and if it were reduced to 3½ per cent. the saving would be a little more. If we take the interest on the whole of the nominal National Debt as £276,000,000, that represents a cost to the public of no more than £3 12s. 6d. per cent. gross roughly, from which must be deducted the Income Tax paid by income taxpayers and the Super Tax paid by super-taxpayers. The nett interest rate of this debt received by the public represents not very much more than the rate of Post Office Savings Bank interest. An hon. Gentleman spoke about the possibility of reducing the interest on the National Debt. I would like to see the rates of interest reduced if possible by voluntary conversion, but if we reduce the rate by violence Britain will never be able to borrow again in time of peace or in time of war. Britain's credit is nailed to the National Debt. Moreover, if we are able by voluntary conversion to bring down the price of the National Debt it will tend to reduce the general cost of money for industry and reduce by so much the price which industry has to pay for money when it wishes to borrow for expansions. Therefore, it is to everyone's advantage that nothing should be done to shake faith in the National Debt or to raise any doubts even by a speech here; the confidence we have in the National Debt should be adamant because it is the thing upon which the whole credit of the country relies. It is the standard by which industrial loan capital is measured and we must treasure it as if it were our life blood. Certain people are in the habit of referring to it as the war debt. Why call it the War Debt? A large portion of the debt existed a long while before the war, and a large portion represents money which has since been spent upon social services. Some of that money has been used for unemployment insurance, for which it had to be borrowed. The housing policy and every other policy for the betterment of the people is embedded in and embodied in the National Debt. I will finish my remarks about the National Debt by asking the hon. Member for Caerphilly to look further into this question and inform himself about it, and if he does so he will take a different view about the rentier. He will find that the so called rentier represents the very poorest of the poor, and if anything goes wrong with the national debt or credit the men affected will be those whom we would most wish to help.

We have had speeches from the hon. Member for Chippenham. (Captain Cazalet) and the hon. Member for East Aberdeen (Mr. Boothby) who always plays his "Maiden's Prayer" with variations about the Gold Standard. I wish he were present now. We have had from him the same attractive speech on the Gold Standard in different clefs and with variations, week after week. It gives him an opportunity of giving a bang to the Bank of England. The directors of the Bank are very conscientious men doing the best for their country but he tries to make them look as wooden as their pictures now in the Royal Academy. They are not as foolish as all that. He and others, including the hon. Member for Chippenham, said we must put up commodity prices, though they seem to be uncertain whether they desire to go back to the 1028 or the 1929 level. I am not a stockbroker and not a banker; all my life I have been connected with a manufacturing industry. One of our difficulties for some time has been that we cannot sell our goods. They are too dear to compete abroad. Let hon. Members ask the hon. Member who represents my native city of Norwich and he will tell them that the reason we cannot sell our goods oversea is that they are too dear, although they are much better in quality, as compared with the goods with which they have to compete. Now in face of the fact that our goods are too dear people come along and say that we must put up prices.

But they always hedge on the subject. Realising that if goods are dearer we shall have an even greater trouble to sell them whether they be shoes or coal they say, "There must be a universal raising of prices". How is that to be brought about? Are they blind or forgetful? Have they never heard of copper, cotton, rubber, coffee, sugar, tin, silk and wheat? For years merchants, agriculturists and bankers and lately United States statesmen have been trying to hoist the prices of those leading commodities. What has been the result? Instead of rising, prices have fallen. Have the United States suc- ceeded in raising their prices? In the last week we have seen the Japanese Government, who have been trying to put up the price of the staple commodity in Japan, silk, having to unload that silk at a loss of £20,000,000 to its people and those who finance that industry. It is impossible to work against the law of supply and demand. If hon. Members do not believe me let them ask Lord Pass-field. When people were talking about manipulating prices some years ago I saw him turn round from the bench and say "If anyone can tell me how to alter the law of supply and demand I will thank God for him to do it".

We cannot do it by any monetary manipulation, in spite of all the admonitions of the "school of too clever by half". They say it must be done by international conferences but other nations will not agree with us how to put up the prices of these things. They will only pick out the particular things they want, and they will remind us that it has been tried in the case of coffee and rubber and sugar, copper, silk and tin, and that everybody was ruined. The tin market smashed one of the big metal firms this week, and trying to keep up the price of sugar has ruined innumerable people in the South American States and in Cuba. Values must find their own level, in spite of anything the Midland Bank says. I care nothing about what they say about inflation or manipulation of currency. I disagree with them entirely. Monetary manipulations will never solve this difficulty.

Our difficulty is to get going on the routes of trade, to sell our manufactured goods in return for raw materials. When people talk about conferences I say "God bless these conferences", but what are they going to do if we live in a world of illusions, in a mirage? Is America coming into this conference which my right hon. Friend the Member for Epping (Mr. Churchill) suggested—the Anglo-American Conference. Is America going to put on the Agenda war debts, reduction of excessive tariffs and exchange restriction problems? Unless those things are on the Agenda any conference between America and us or any other countries will be merely a self deception. An hon. Member opposite talked about millions in wages already lost. In Column 2085 of the OFFICIAL RE- PORT for yesterday, there is a statement, in reply to a question that I put to the Ministry of Labour giving particulars of the wages in three or four leading industries and I would commend them to his attention because it is no use making out things to be worse than they are. We have the unweighted average of wages in the building trade, in the services run by local authorities, and in the electricity supply industry, and in the case of the railway services, the wages in industrial areas other than London. I would say in passing that I wish to see high wages. It is our business to increase the comfort and prosperity of the people and I like to see people getting as high wages as it is possible to pay them. The percentage increase on building from July, 1914, to May, 1932, is 105. On local authority non-trading services it is 113 per cent., electricity supply industry, 128 per cent., and in railway services 95 per cent. The average increase in the cost compared with pre-war cost of living of working class families was 43 per cent. Notwithstanding that, we can say with great satisfaction that our poorer people are better off than in 1914. It is all very well to say that they have lost many millions a year.

There is another fallacy of the same kind trotted out, if I may be forgiven the expression. Someone said that the rentier, the man who receives interest on debt is getting a better pound than he lent. That picture is not quite true. Nearly all the National Debt, with the exception of two loans, the Funding Loan and Victory Bonds, was borrowed not Inter than 1918, when the average plus rate of the cost of living, that is the index of the purchasing value of the pound, was somewhere about 60 over 1913, and the figure to-day is 43. So that those who say that the people have been given back a much better pound than they lent are nearly wrong. They also forget that some of the lenders up to 1915 or 1916 lent much better pounds than they received in interest, when the cost of living was 176 over 1913. Therefore, putting one thing against the other, it is not fair or just to say that they have received a better pound than they lent. The hon. Member opposite, I think, is the last man who would say anything unfair. The hon. Member also dealt with other elements in the Budget. He talked about the defence services, but over- looked the fact that of the £104,000,000, £17,000,000 is for pensions. I do not want to see more money spent on armaments than is absolutely necessary; if we get agreement at Geneva we may be able to get armament expenditure down, but I do not think so. We have scraped off and drawn back from the defence services as much as is feasible if you are going to keep something which is no more than a police service to look after our people in all parts of the world. I do not think, therefore, that you can get much off the defence services.

I am not going to deal with the following matters gingerly, because I am answerable to no one but myself and my constituents. I speak only for them. I say I am not satisfied with the Budget. If ever a man was heir to a damnosa hoereditas it has been my right hon. Friend the Chancellor of Exchequer having to take over a system of finance which is now being implemented in this Budget. He could not help it. The Budget finance has given satisfaction to no one in this country. The outcry in the whole country is for reduced expenditure, but you cannot reduce expenditure while you have implicit in the Budget two principles which are well known in this House. Lord Snowden (then Mr. Snowden) said in our hearing that he believed in the distribution of wealth by means of taxation. He has used that method savagely, and we are suffering from it now. The right hon. Member for Wakefield (Mr. Greenwood) declared from that Box a most improper and unjustifiable policy, that this country could afford anything in reason that it wanted. While those two principles continue to operate in our finances we cannot hope to get very much economy.

Another thing which is injuring our finances is not realised, I think, by many people. I am now unfortunately among the oldest Members in the House, and I remember well when my right hon. Friend the Member for Billhead was Chancellor of the Exchequer, pointing out to him that I totally disagreed with Budget under-estimation and taking money from War store sales to put into the national revenue. He made a reference to the surplus the other day—I do not know where. He under-estimated and put into the revenue about £120,000,000 more than we thought we would get, and most of it was from the realisation of War stores. Through putting this War store realisation into revenue, taxation did not pay the current expenditure which went for various social services. When the proceeds became diminished, as they have become, from the sale of War stores we were left high and dry with the expenditure which we indulged in unjustifiably. There was no War store revenue to cover it. That same defect in our finance is operating in a different way. It must not be forgotten that we are paying from Income Tax and Death Duties a greater drain than this country can afford. We shall find that there will be a fall in the supply of revenue which has hitherto been received from income from investment. We know that the revenue from the source of oversea income has fallen very greatly; yet we are still going on with expenditure and are masking our difficulties by Death Duties capital payments as we did with War stores proceeds.

I have two Treasury papers here which I do not think are very well known to the House. They show what we are spending on social services. We are raising this year £732,000,000 of tax revenue. On top of that, local expenditure for rate fund services in 1930—the last paper I could get—as shown on another paper from the Ministry of Health, page 71, is £340,000,000 plus the £732.000,000 from taxation. I have estimated the Irish amount and the Scottish local expenditure. We are thus spending over £1,000,000,000 a year, and on top of this there is £90,000,000 more borrowed by local authorities. We are spending one-third of our income in rates and taxes. That means the income of the work of four months in the year goes to the rate collector and the tax collector. So far as local expenditure is concerned, the local authorities ought not to be allowed to borrow as they are borrowing. They have increased their loans since 1914 by nearly as much as the National Debt was before that year. They have added in 18 years to their local debt something like £630,000,000. If I were called upon to give a concrete way to stop this, I would not allow the local authorities to borrow for unproductive purposes, unless with a sinking fund for five or ten years—not a day longer. The idea that they can borrow the money with a small sinking fund and leave those who come after to pay at the end of 30, 40, 50, 60 years is wrong. Sinking funds running to 30 years should not be allowed by the Ministry of Health. Debt and long dated repayment conceal extravagance. Municipal and county council debt must now be restricted. They have a system whereby when they want to borrow again they use the sinking fund of their own earlier debts. No municipality should be allowed in future to use its sinking fund to mask further debts. Every sinking fund should be allocated and maintained in respect of the debt to which it relates, so that the ratepayers may know when fresh debt has been contracted.

The hon. Gentleman the Member for Caerphilly (Mr. Morgan Jones), who opposed the Third Reading of the Bill, placed expenditure under three heads. They were Debt Charge, Defence Services, and Social Services. Any economy which my right hon. Friend may get in Social Services will undoubtedly assist the conversion of the 5 per cent. War Loan. There is no doubt that if the country sees that the Chancellor of the Exchequer and the Treasury are determined, in face of all the screams and threats uttered by any parties, to reduce taxation, it will be very eager to back up, not only conversion, but to provide money to help conversion, so that we shall have no trouble with those foreign investors who may refuse to convert. I have looked through the expenditure on Social Services.

Let us crystalise it in our minds for a moment. We ask for economy. Would reduction in taxation do us any good? I maintain that no industry known to the world or to Great Britain can continue with an Income Tax of 5s. in the pound besides rates and indirect taxation and Death Duties. It is impossible; we cannot go on. If you get 1s. off the Income Tax it will only bring the Income Tax down to 4s., and £60,000,000 will require to be found in order to do so. Where are we to get the £60,000,000? If you take anything off Income Tax, you must at the same time give the indirect taxpayer relief. I take the easiest thing which comes to my mind, the round figure of the Beer Duty. If you allow as relief to the poorer man, a penny off his innocent pint of beer, it will cost £10,000,000. The very least you can do for the indirect taxpayer is to give him that little amount of relief; you ought also to give him some relief by taking something off the Income Tax by way of family allowances. £60,000,000 to give 1s. in the pound off Income Tax is, I think, impossible as. things are now.

I am satisfied, in order to make my point now, to take 6d. only off the Income Tax, which will amount to £30,000,000, take £10,000,000 off beer, and £5,000,000 off in family reliefs of Income Tax. Remember we need £45,000,000 off taxation to give us any relief we could feel at all. Where are you going to get that money? You may get £16,000,000 or £20,000,000 off Debt Charges and a little off Social Services. I have sat in six Parliaments, and, with the exception of the time when I was a Minister, I have been either on the Estimates Committee or National Expenditure, or Public Accounts Committees, besides for two years on the Public Accounts Committee as Chairman. I am still a member of that committee, and I would say from my experience that the idea that every little helps in economy is of very little use towards securing material reductions. You may economise and collect £5,000,000, or £10,000,000 at the outside, by sacking a few poor civil servants and shutting up a few offices, and by seeing to it that the blotting paper is made a little smaller. That is not the way to secure material economy. People must not run away with. the idea that it is the poor civil servants, who do the best they can for the country, who make away with the money. I, as: a former Minister, resent the continual attacks upon what is called the idleness or inefficiency of the Civil Service. I have worked with civil servants for years, and I can say that they do their best, and that best is better than perhaps some people are willing to realise. Suppose you sack the whole lot as we are urged, the total salaries of all the non-industrial Civil servants, excluding the Post Office and Revenue Services is about £33,000,000, just sufficient to allow for 6d. off the Income Tax. If you sacked the lot the whole of the administration of the national life would come to ruin. You can get nothing which will be of any use from administration. You must touch policy.

2.30 p.m.

Here are the two papers to which I referred earlier in my remarks. One deals with public social services, No. 3971, published in November, 1931. It states that the Public Services, etc., are under certain Acts of Parliament. That is the important point in this Paper. Parliament has passed certain Acts calling for expenditure and they have to be obeyed. They are obeyed as far as we knew in the Estimates Committee, of which I used to be a member, and in the Public Accounts Committee. Those Acts of Parliament are law and are carried out in accordance with the law as economically and efficiently as it is possible to carry them out, and while those Acts of Parliament continue to exist you cannot get very much off administration. There are, among others, four services dealt with in this 3971 Paper—education for England and Wales and Scotland, housing, unemployment and relief of the poor, and the expenditure upon those four services is £286,000,000 all ordered, and taxation authorised, by Act of Parliament. If you want to secure economy by a reduction in expenditure you will not achieve it by using cheaper blotting paper or sacking half the Civil Service or shutting up a few Government buildings. You will have to reverse your engines and go backwards and repeal those costly social service Acts wholly or in part.

I pass on to the other White Paper No. 39 issued by the Treasury four months ago—Public Departments Gross and Net Cost. I advise hon. Members to get those two White Papers as they are very little known in the House. I have examined every one of the items, and I have classed them up into 10 groups. Out of £335,000,000 spent in the period covered, £311,000,000 is dominated by Acts of Parliament. There are 100 separate items left, not one of which is of any great account, except perhaps the War Graves Commission which costs £600,000. Some of the services are for very trivial amounts. If you take them all out they amount only to £24,000,000. Would you upset the whole life of the nation by doing away with those services? You will have sooner or later to realise as to economy by reduction of expenditure, as was said a few weeks ago by my hon. and gallant Friend the Member for Chelmsford (Sir V. Henderson) who is chairman of the Estimates Committee, that there is no great relief from taxation to be got out of administration or by expecting the House to scrape it out of the Estimates.

The House of Commons has been elected by a patriotic electorate determined to put the country right. I do not believe that the House of Commons need fear that if the Government tell the country that the expenditure on Social Services must come down the country as a whole would gib at it. We might lose a few seats. Well lose them; this is a National Government. If the Government with their great majority have the pluck to go to the country and say "We are going to cut down this or that social service because we think that it is for your good and it is the only way to reduce your taxes," and the country refuses to support them the electorate cannot grumble if we have no economy. If the country really wants economy, it has the power to obtain it. If the electors at by-elections refuse to send men back to the House of Commons authorized to reduce expenditure in certain social services, although it might hurt them individually as it hurt citizens at the last election when they were told that they would have to submit to reductions and cuts, then it is no good the electorate saying to us: "You are spendthrifts." The onus rests upon the country because it is not upon administration or upon estimate cutting but by the repeal or alteration of the spending Acts that economy and reduced taxation can be secured. If the Government with their huge majority are not willing to take their pluck into their hands and run the risk of losing seats, there will never in our lifetime be another Government with such a majority possessing the opportunity of putting right the national finances.


I rise to express my support, in great degree, of the Budget. It had been my intention earlier in the day to deal with the point made by my hon. Friend the Member for Caerphilly (Mr. Morgan Jones) and my hon. Friend the Member for Ogmore (Mr. E. Williams) regarding what they termed as the position of the rentier classes. I have before me the figures with which the hon. Member for Farnham (Sir A. M. Samuel) has already dealt. I agree with him and with the majority of Members of the House that, however desirable it may be to have some legislation or to bring about the conversion of some of our War Loan, we must be very careful that the class to be injured most shall not be those whose earnings are the lowest. It is a very easy matter for speakers to make general propositions which are acceptable to all. The hon. Member for Ogmore spoke at some length on the principle of indirect taxation and was very anxious that steps should be taken as early as possible to get rid of indirect taxation. I suppose we have all at various times in our political careers advocated that policy. As a general principle, I believe that the only legitimate form of taxation is direct taxation, in the form of Income Tax if you like, which would be applicable to every person in the community.

The hon. Member for Ogmore made a statement which rather surprised me. He said that it was a mistake to judge the prosperity of a country merely from the balance-sheet of industry, forgetting that the prosperity of an industry judged from its balance-sheet did not reflect the prosperity of the people generally. Surely, the converse must be true. If an industry is doing badly, it is not able to pay satisfactory wages, or is unable to employ its workpeople. The hon. Member for Caerphilly made an attack on the Advisory Committee which I, as a supporter of the Government, cannot allow to pass unchallenged. He made what he may think was a very clever remark. He said that the three gentlemen who composed the Advisory Committee could not be called three just men, but just three men. That may be a bit of witticism, but I think it is rather unfortunate that one of the leaders of the official Opposition should use a phrase of that kind in respect of three gentlemen who have a reputation for possessing great knowledge and understanding. I deplore very much that the official Opposition, in a speech by their spokesmen in moving the rejection of the Finance Bill, should have put forward a statement of that kind.

The hon. Member for Caerphilly, and I am proud to number him among my friends, poked a little fun at those of us who came to support the National Government in their policy of tariffs. He said that we were already very seriously disappointed. I admit frankly that some of us were disappointed that the Government did not take action in connection with these matters earlier. It is well that the House should appreciate the fact that British industry, in spite of the tariffs which have been placed upon the imports of foreign manufactured goods, is suffering very severely from an aspect of competition which very few of us have thought about until the last few months. May I give a little experience of my own. We have been suffering very severely in South Wales from the importation of foreign steel bars. During the last few months in spite of the tax of 33⅓ per cent. on foreign steel bars, we find that they are still pouring into South Wales, of course in much smaller quantities, at prices of 10s. or 11s. below the price of the Welsh steel bars.

Hon. Members may ask how this is possible, and it may be suggested that the steel industry in South Wales is inefficient. Nothing of the kind. I have taken the trouble to examine the delivery prices of foreign steel imported into this country and, after making the deductions for railway carriage, for the tariff of 33⅓ per cent. for the freight from Antwerp to the South Wales ports and from the railway to the producing works, I find that the foreign steel is actually placed on the truck at the producing works at between 50 per cent. to two-thirds of the actual cost of production. Some people may say that foreign countries cannot go on doing that. What are the reasons? One of the reasons is that the foreign steel maker, whether in Belgium or in France, is in the position that he cannot find a market even at home or in other Continental countries for his steel, and get cash against delivery.

This is the only country where the foreign steel producer can sell his steel cash on delivery, or cash against delivery. He can sell a portion of his product at a price which will secure him a market in this country, in order to secure immediate cash payments to carry on his business. The hon. Member for Pontypool (Mr. T. Griffiths) made another of his amusing incursions into our debates, gave his views as to the reorganisation of the steel industry and complained that the Government had not taken his views. He said that he was an unrepentant Free Trader, but, if Protection was to be introduced, he said: "I want my men to be so protected that we shall get the best out of the system". I might have said: "I am a teetotaller, but, if I have to have a drink, let me get drunk". That is the kind of argument which the hon. Member has used time and again.

Continental steel and iron producers find to-day as a result of their organisation that by-products in the form of electricity and gas which they were supplying to the municipalities in their neighbourhood have now become their main products. Instead of selling that electricity and gas to the consuming municipalities as a by-product, their failure to sell their iron and steel as their main product has made it necessary for them to carry out their obligations to the municipalities to supply electricity and gas and to dispose of their pig iron and steel as a by-product at any price that they can get. This is one of the problems that British industry is up against, and I believe that before very long the Advisory Committee may have to tackle this question.

The suggestion was made by the hon. Member for Caerphilly that the Advisory Committee has been given certain powers which should have been retained by the House of Commons. I have always understood that the greatest complaint any free trader could advance at any time against a discussion of tariffs in the House of Commons was that it would introduce log rolling, but when the Government are taking the step of handing over to the Advisory Committee, which is supposed to be beyond the interference of politicians generally, the duty of fixing tariffs, the first complaint we get from the Opposition is that the Government should take this step. I suppose the Labour party desire the House of Commons to decide these questions in order that we may have all the corrupt influences in the Lobbies of the House. I was surprised to hear the hon. Member for Pontypool, who I know has had no experience of the commercial problems of the iron and steel industry, put a question to the Government to-day as to what the Advisory Committee were doing in the matter of the importation of Indian steel and pig iron. I thought he would have known that the Colonies and Dominions were excluded entirely until after the Ottawa Confer- ence from the application of these tariffs and that consequently there is nothing that the British Government can do in the matter of these Indian imports until after the decision at Ottawa. I realise that there are a number of speakers who want to take part in the debate and, therefore, I will only say that as a humble new Member I heartily support the Budget, at the same time retaining for myself certain reservations on matters with which one may not be in agreement.


I should like to say to the hon. Member for Farnham (Sir A. M. Samuel) on behalf of my hon. Friend the Member for Caerphilly (Mr. Morgan Jones) that the figure which my hon. Friend quoted will be found on page 126 of the Ministry of Labour Gazette, 1932. It refers to the reduction in wages, which I understand the hon. Member for Farnham tried to controvert. As this is an official document we can only leave it at that.


The other is an official document.


If the hon. Member has another official document he must have it out with the Editor of the Labour Gazette.


Mine was an official document.


I am not going to argue the matter with the hon. Member. I refer him to page 126 of the Ministry of Labour Gazette for justification for the figures quoted by the hon. Member for Caerphilly as to the reduction of wages.


I do not deny that, but one official document is as good as another. I quoted figures from the OFFICIAL REPORT. Can the right hon. Member controvert them.


No, but I put forward this document to controvert the figures quoted by the hon. Member for Farnham; and this is the Government statement which is published for the information of the country. The other question—and I am not going to argue it with the hon. Member, I am only going to give him the foundation for the statement made by my hon. Friend the Member for Caerphilly—is that which refers to War Loan now. A question was put down on the 2nd June in this House to the Financial Secretary in reference to the Debt which we owe to America. Here it is: what our American War Debt would amount to if the commodities forming it had been supplied by America to Great Britain at the prices now ruling in 1932 as compared with those ruling at the time when the United States supplied the commodities which formed the substance of the American war loan to Great Britain? Major ELLIOT: The outstanding British War Debt to the United States is $4,398,000,000 or £904,000,000 at par of exchange. It would be too complicated to base a calculation on the change in price of the actual commodities bought, but the United States Bureau of Labour Index number of wholesale prices has fallen by about one-half—from an average of 189 during the period between April, 1917, and November, 1918, to 94.6 in March, 1932.—[OFFICIAL REPORT, 2nd June, 1932; col. 1813, Vol. 266.]


That has nothing whatever to do with my point.


We listened to the hon. Member quite quietly, and he made a series of statements which this reply controverts. If he wants any further information let him consult the right hon. Member for South Molton (Mr. Lambert).


On a point of Order. May I ask if it is in order for the right hon. Member to put up an argument which has no connection with anything that I have said. I do not agree for a moment that it has anything to do with the argument I put up. I do not know if the right hon. Gentleman even was present.


I disagree; and the hon. Member for Farnham is not yet the Pontiff of this assembly. When the hon. Member speaks he may occasionally be wrong, and this afternoon he has been totally wrong. As he will take no notice of me I refer him to a respectable supporter of his own party, the right hon. Member for South Molton, who is continually imploring the Government to remember that his poor hard-pressed farmers have to give three bushels of wheat where formerly they had only to give one. That proves quite conclusively that nowadays people have to pay very much more in commodities for War Loan than they did when the money was borrowed. That is accepted in all parts of the House. If it is not accepted by the hon. Member for Farnham I am sorry for him; that is all. I want to ask the Chancellor of the Exchequer to give some attention to a matter of some importance to industry, and that is the entry into this country of foreign firms to establish factories. I have a letter here from the Darwen weavers, from the Association of working people. They say that they submit: A strong protest in respect of the introduction of a number of Swiss girl weavers into the Lancashire Silk Mills, Limited, the Anchor Mills of Darwen. From the nature of the processes and the materials woven we submit that more than sufficient plain weavers could have been obtained from our own local unemployed, especially from those formerly employed by Messrs. Thompson & Co., Orchard Mills, Darwen, which have been closed for nearly two years. But this is what I want to call attention to: Therefore we protest against foreign firms attempting to overcome the handicap of tariffs by undertaking a manufacturing process in this country and seeking to obtain labour at prices considerably below those in being in this country. Here are the figures: In Macclesfield the rates were 28s. and 32s.; in Lancashire Silk Mills they are 15s. and 28s. And so on. I will not detain the House by reading any more, but I will hand this letter to the Chancellor of the Exchequer, and hope that he, or some member of the Government, will have the matter investigated, because I am sure that the right hon. Gentleman does not wish the result of the introduction of tariffs to be the bringing of foreign firms into this country for the purpose of still further pressing down the standard of living of the workers.

This Debate and the whole discussion on the Bill have been very extraordinary. There has hardly been an hon. Member who supports the Government who has not in one form or another condemned the Government. The hon. Member for Putney (Mr. S. Samuel) last night said that it would be wrong not to admit that this Government, after nearly 12 months of office, had severely disappointed its supporters, because it had failed to achieve what it set out to achieve. Even if we were a much bigger Opposition than we are, we could not say anything more damaging to the Government than that. In the whole of these discussions, from the introduction of the Bill, hon. Member after hon. Member has joined in expressing disappointment at the condition in. which the country finds itself. We have had the extraordinary spectacle of two ex-Chancellors of the Exchequer telling us, not in any vague language but in quite clear and definite language, that the policy of the Treasury and of the Bank of England has been entirely wrong in the past, and especially during the last 10 or 12 years.

The right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), whom we are all very glad indeed to welcome back, some months ago described the Treasury and the Bank of England directors as penguins. He also took the lead in telling us that we should never trust the Treasury, that we should never trust the Bank of England, because they were always wrong. I should think that he must feel rather proud to-day that two of his successors in the Chancellorship, the right hon. Member for Hillhead (Sir R. Home) and the right hon. Member for Epping (Mr. Churchill), should have joined in this criticism. I am sorry that the right hon. Member for Epping is not here, because I would have liked to have reminded him of the fact that his periodic chant is dead and done once and for all. Whenever in the past we discussed the depression in trade and the serious condition of the country he gave us a hymn of hate against the miners and told us that if it had not been for the miners' stoppage and the general strike everything would have been all right in the best of all possible worlds. But I have lived to hear the right hon. Gentleman tell us that the experts, whoever they are, led him wrongly when he proposed that we should go back to the Gold Standard. He has told us that he is convinced now that that was a mistake. It has been a pretty costly mistake for this country, and this action of his was responsible for much of the trade and other difficulties which followed.

3.0 p.m.

The central part of the Financial Bill, to which, after economy, most attention has been paid, is the establishment of the Exchange Equalisation Account. I say very respectfully that here I am in the same position as the late Lord Balfour, who once said that he was a child in such matters. When I listen to the hon. Member for East Aberdeen (Mr. Boothby) and the hon. Member for Farnham I am very glad that I am a child in these matters. Really, if there is one subject under the sun about which all the experts disagree, it is the subject of currency and finance. I have sat and listened throughout these Debates. I wish that more members sat and listened, because we all get very well educated as to the ignorance of the experts. We discover that these right hon. and gallant Gentlemen all cancel each other out. We have got a Committee just set up to deal with mental deficiency. I suggest that the first people they should examine should be the Treasury and the Bank of England experts. It is said that genius is akin to lunacy. These may be men of genius, but whoever else has made an unholy mess I think that they must take a large share of the blame, because each of them has proved conclusively that if only something had been done differently everything would be all right. I want to put the ordinary person's point of view. I am one of those who has to deal only with small transactions. The Chancellor of the Exchequer told me on one occasion, when I very timorously dealt with this matter, that, of course, I did not understand. I dare say he does understand, but I am rather doubtful about him.

The point that we have to get to in this matter is that things are as they are. [Laughter.] Hon. Members laugh, but that is so simple a proposition that people very often forget it; the more simple a thing is the less people recognise it. We are told by the right hon. Gentleman, who ought to know, that the position of the country is very terrible, and the right hon. Member for Hillhead made my spine go very creepy when he said "It is going to be a damned near thing whether we get through or not." When people like the right hon. Gentleman tell us that we are in that sort of plight, I begin to ask who is it that is responsible. I am bound to say that up to the present no-one has put the responsibility either on the Bolshevist government in Russia or on this little lot on the Opposition benches. The people who are responsible are those who have had the management of affairs. Some of the pundits tell us that the establishment of this Exchange Equalisation Account will result in a loss of millions of pounds to the taxpayer. Whether that be true or not, we do not believe that the mere establishment of the fund is going to work a miracle, or that it is only necessary to wave a wand and everything will be all right again.

The fact is that what is wrong with our own country and with mankind is that the results of the labour of men and women in the mass are gambled with on the stock exchanges of the world. If this fund is to be maintained in order to perpetuate the gambling and swindling that has been going on in the money markets of the world, then it will be of no use. If anyone doubts what I say I propose to read a statement by one who is not a Socialist but who is, if I may again use the expression, a respectable member of society. I refer to Lord Revelstoke, and the statement is in a speech which is quoted in Messrs. J. Henry Schræder and Co's. quarterly review of business conditions. I take it that these are experts. Lord Revelstoke anyhow is an expert and at a meeting on April 13th this is what he said. I am quoting it because, unless the condition of things which he describes is dealt with, this world is not going to be any better. He said: What do we see when we look abroad to-day. We see the world writhing as it were in a purgatory of its own making. We see the stream of international commerce which is said to require for its normal flow some £400,000,000 of fresh credit every year reduced to a trickle and losing its way in bogs and sands, the price of goods having fallen below the cost of production. This is the point which I hope the House will bear in mind. We see these goods"— goods, I would remind hon. Members, which have cost the sweat, almost the blood, but anyhow the sweat and labour of millions of people's hands. —"losing value daily because they have ceased or nearly ceased to change hands. We see the burden of debts and taxation intensified to breaking point, solvent debtors in default, banking facilities at a standstill. We see the delicate mechanism of exchange crippled by arbitrary control and barter between Government supplanting the efforts of individual traders, foodstuffs being destroyed in despair, warehouses glutted with a surplus that is only redundant because the consuming power of millions of people has been either frustrated or paralysed. Think of that. The people who need the goods cannot get them. The whole of their demand as Lord Revelstoke says is paralysed. This is the point however to which I direct the attention of the House: Worse than all we see standards of honour debased, and goodwill, the leaven which ought to permeate humanity, slowly perishing, while distrust, that fear of our neighbours which it is the mission of Christianity to dispel, spreads like a pestilence from day to day. Such a picture, every line in which we must all admit to be true, is one of the most terrible indictments of modern civilisation. I say to the Government and to the House: What are you going to do about it? What is the use of creating some new system to perpetuate the condition of things described by Lord Revelstoke? What steps are the Government going to take to deal with investments abroad, to prevent the further swindling of this nation or other nations by swindlers like the late Mr. Kreuger and others? What is there in this Budget or in any proposal of the Government that will deal with this set of things? When you come to get down to this question, what is it that the gambling does, or, rather, what is it that they gamble with? It is gambling with the results of men and women's labour in every part of the world, and when there are these great bankruptcies that take place because of these defaults and because of this swindling, who is it that suffers? It is the masses of the people, because they are not allowed to become consumers of the very goods which they produce.

The root thing that has to be tackled is to find out how you can pay to the workers sufficient wages to enable them to buy back the goods which they produce, and you will never do that until you destroy the power of the money markets of the world. What the world is facing to-day is the Nemesis of usury. We talk this afternoon about war debts and reparations and the evils that these have brought into the world, but what has happened to mankind now is that we have lent and lent. The unpaid wages of the workers of this country have gone out all over the world, and we have lent so much that now we cannot get back the interest and repayment, even if those people who owe the money could pay back. Chile has nitrates, Brazil has coffee, the Argentine has meat and wheat, Australia has an abundance of raw materials and goods, and yet these nations cannot pay their way. Why cannot they pay their way? The world wants their goods, but something stops the flow of the goods to those who need them.

In my view, the thing that is wrong is that in this world the thing that men and women think most of is how to get something for nothing. That is what the evil is. [Laughter.] I do not see anything very extraordinary in that statement. I should not have thought myself that that statement was one which would have caused any amusement. I should have thought the whole House could have supported me in it. I repeat that the thing that is wrong in the world to-day is that the mass of mankind are trained to believe that it is better that you should get money without working by manual labour than in any other way. [Interruption.] The hon. Member must speak for himself. For my part, I am never going in this House to defend my life in regard to what he or anybody else may say about it. My life has been lived much too publicly for me to worry about his beliefs about it; and I repeat, at the risk of being charged with repetition, that in my view the thing that is wrong with the world to-day is this craze for getting something for nothing.

In this world the money markets are based entirely on that. The men who run great industries have to work and slave and toil in order to organise them and in order to keep them going. The men who are in the factories and workshops, in the pits, and on the railways have to carry on the manual labour, and they are all the time subject to a toll that is paid to people in the cities, like London, Paris, New York, and elsewhere, who gamble first of all to corner wheat, then to corner tin, then to corner rubber, then to corner something else, and in the end so tie up the results of these men's collective labour that there is no chance of getting the goods circulated. The people who win money and wealth in that way are ennobled and looked up to in this country. If they fail, they are put on one side. If they succeed, they are treated as wonder- fully clever people, and that is true in what is called every civilised nation of the world. I repeat that anyone who makes money merely by gambling on the money market in London or in Paris is simply a parasite on the labour of the masses of the people. I say further that no redemption of the world is possible until that is put an end to. When I say that the masses of the people believe in that doctrine, it is because I know how much it is taught and practised, and how much the people who practise it are honoured by human society generally.

The right hon. Gentleman said during these debates that this country cannot stand any more taxation. Hon. Gentlemen stand up, as they have done to-day, and talk of the patriotism of the people who elected them here because they were willing to make sacrifices. The Government were elected because the people who voted for them believed that the Government would find a reasonable and rational way out of the evils and discontents from which they are suffering. At the end of nearly a year we are in a worse plight than we have ever been—more unemployed, more poverty, and more destitution. Yesterday in Bristol there was a small riot. Everywhere men and women are beginning to ask themselves: "What is the good of Parliament, what is the good of a National Government, what is the good of any Government, here?" They are saying that economic forces which move along irrespective of what any of us may say or do, are working along the lines which they believe are inevitable from this competitive struggle of man against man and nation against nation.

The hon. Member for Bath (Mr. Guinness) to-day made one of the best maiden speeches that we have heard in this House. The burden of it was that we would be in a better position to compete with other nations if we did so and so. That is where we are all wrong. This competitive struggle of one set of nations against another, or of one nation against another is only on a big scale what we do inside the nation—fighting one another and in the end coming to beggary for all. A hundred years after the establishment of the competitive commercial system under which we are living, we are all wondering how long it will stand and how soon it will topple over. The only sort of remedy that comes from Conservatives and Liberals is how to clear the deck, so that we shall have a bigger chance of holding our own against the world.

I want to put against that what I think is not only a nobler doctrine, but a more effective doctrine. How can Great Britain lead the world in a great co-operative effort to save the world? We are as proud of our country as anyone else. We would like to see her taking the lead and saying that we want nothing from the world except that which we ourselves under similar conditions would concede to other nations. I want the British Empire to be consolidated into a Commonwealth. I only want it as part of the great international commonwealth. Someone spoke about Russia just now. I do not believe there can be any real peace in the world till Russia is brought into the comity of nations on equal terms with every other nation. The fact that she runs her country in a different fashion from ours is no reason why she should be ostracised and kept outside and, if it is a question of debts, if we are only going to deal with nations that pay their debts, you will have very few nations to deal with in the near future. I want, therefore, to see the British people leading the way in bringing the whole world into co-operation.

It is a crying scandal and a disgrace to us all that in the East End, where I live, and to which whatever position I have in life I owe, in the mining valleys, in the iron and steel districts, in the shipping districts, throughout the length and breadth of the land, people are starving in the midst of plenty. What we have to do is to find the means to solve that problem. We Socialists say you cannot solve it within the capitalist system. You cannot solve it within the system of buying cheap and selling dear. You cannot solve it within that system which gives great wealth to a few without any labour at all. You can only solve it by having a co-operative system of distribution just as to-day, even under Capitalism, you have a co-operative system of production.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

The right hon. Gentleman has developed a theme with which we are very familiar in his speeches. He always comes round to the same story and tells us that the salvation of the world is alone to be found in the universal adoption of a system of Socialism. He believes—I do not for a moment question his sincerity—that all the troubles from which the country and the world are suffering to-day arise out of the wicked operations of a group of speculators and gamblers on the Stock Exchange and in the money markets of London, Paris and New York. If only really the matter were as simple as that, it might be comparatively easy to deal with it, but I am afraid there were speculators and gamblers in these three capitals long before these troubles arose, and that they will continue to be found there long after these troubles had passed away. Whatever may be the difficulties that are common not only to ourselves but to every country, it is certain that they are not going to be solved by any Finance Bill that can be introduced in this country alone. To that extent, at any rate, I can agree with the right hon. Gentleman, that co-operation between nations is necessary, and is indeed the only way in which we can ultimately find a solution of the problems that are baffling us to-day.

We have now come to the last stage of the long discussions upon the Finance Bill. It is a matter of very great regret to me that owing to circumstances which caused me both physical and mental discomfort I was unable to be present during the Committee stage. I would like very sincerely to thank hon. Members for the kindly sympathy which they have extended to me. There are disadvantages as well as advantages about heredity. I deeply appreciate the many tokens of their understanding and sympathy in those circumstances. The loss was, indeed, to some extent mitigated, because I was fortunate enough to have the assistance of my right hon. and gallant Friend the Financial Secretary to the Treasury who has won the admiration of the whole House,, and whose achievements in that respect gave to no one greater pleasure than to his official chief, who has the most complete confidence in him. Also I can pay my tribute to the hon. Member for Canterbury (Sir W. Wayland) who was good enough to reserve until I could be back again—[Interruption]—his Amendment upon what was perhaps the most controversial aspect of the Bill.

Although I paid very great care and attention to the Debates which took place during the Committee stage during my absence, I am conscious that it is impossible, merely by a perusal of what has been said, to get the feeling and the atmosphere of the House, which is only possible to those who actually listen to the speeches and observe the impression that is made by them. To that extent, therefore, I am at a disadvantage to-day, but I have heard the latter part of the Debate, that upon the Report stage and the interesting and valuable discussion today. It was opened by the hon. Member for Caerphilly (Mr. Morgan Jones) in a speech which showed, if he will allow me to say so, that, although the Opposition has been deprived of the services of the ex-Chancellor and of the ex-Financial Secretary, they have known how to find other speakers to maintain the discussion at a very high level. The hon. Member suggested at the beginning of his speech that we might in the past have made those allowances for the Labour Government which the present Opposition are ready to make for us, in that so much of the difficulties with which they had to contend were beyond the control of any government in this country. If we were all scrupulously fair to one another on all occasions, our Debates would be so impartial that I am afraid that they would become very dull.

3.30 p.m.

I would venture to remind the hon. Gentleman, however, that the real charge against the late Government was not that they had failed to deal with problems beyond the capacity of any individual Government to deal with, but that, whatever the cause of the troubles, they ran away from the consequences, and had not the courage to take the measures which were necessary to restore confidence. It is rather surprising that, in these circumstances, the hon. Member should be the one to claim that this Government was lacking in courage, and I wondered a little upon what circumstances he was founding an accusation of that kind. His statement was that this Finance Bill did not deal with the real crux of the situation to-day, and he referred to the debt charges which form so large a proportion of our national expenditure. He did not, as I was very glad to observe, suggest for one moment anything in the nature of repudiation; he specifically excepted that. He did not take up the attitude adopted later by another member of his party—he did not say that no particular harm would be done if interest on the National Debt were abolished altogether.

That was not the attitude of the hon. Member. His attitude was that the Government should have the courage to undertake a conversion operation. But it is not a question of courage that arises in connection with an operation of that kind. It is, indeed, a very large and formidable operation to undertake, but what is really required is judgment as to the moment when that operation can be undertaken with the greatest advantage to the country and with the greatest certainty that the object in view will be achieved. On that point I think I need hardly assure the hon. Gentleman that an operation the success of which would be so important to the Chancellor of the Exchequer is not likely to be very long absent from my mind; and, when the Government consider that the circumstances are favourable to a plan of that kind, they will not hesitate to act, and to act promptly.

We have had a number of other speeches, and I was almost hoping that in the course of the Debate we might have had a contribution from one who has become a rare visitor to this House, but whose presence here gives the utmost possible pleasure to everyone, and more especially, perhaps, to those who have sat with him in other Parliaments, and who feel that in his absence this House is robbed of a great deal of its interest. No doubt, however, other occasions will offer themselves, and we shall look forward with interest—I hope not with apprehension—to anything that the right hon. Gentleman desires to say at a later stage. The speeches to-day have been very interesting, and I would like to express, as other Members have done, my pleasure in listening to some of the maiden speeches that have been made. Particularly I may mention those of my hon. Friend the Member for Bath (Mr. Guinness) and of my hon. Friend the Member for the Sowerby Division of Yorkshire (Mr. McCorquodale).

I think that perhaps it will not be out of tune with the general desire of the House if I offer one or two observations upon the prospects for the future, and I am the more tempted to pursue that course because it seems to me that, while I have been away, there have arisen some feelings of uneasiness, not only in this House, but perhaps outside it, which do not seem to me to be well founded. It has been suggested for instance, that the returns of revenue indicate that the estimates which I made of the eventual outcome from that source were not likely to be fulfilled, and, at the same time, it has been suggested that the national expenditure in various directions is likely to exceed that for which I have budgeted.

There are two errors into which it is very easy to fall, each of which may be particularly injurious. First, there is the error of a sort of breezy optimism which makes its wishes the criterion of its beliefs, and, without going into any facts or evidence, assumes that prosperity, if not actually in sight, is at any rate just round the corner. The danger about that is that that optimism may prove to be premature, because if you get round the corner and find it is not there, it very often happens that when it really is coming into view there is scepticism. People remember that they were deceived before, and are not ready to take advantage of the real and genuine opportunities which presently come to them. Another class of error is to indulge in an unfounded pessimism, to think that any symptoms of improvement which may appear are sure to be illusory, and to suppose that only those signs are to be treated as genuine which show that there are still further troubles ahead. I hope we shall not fall into either of those errors, but that we shall coolly and with carefully-preserved judgment weigh up such evidence as we have, giving to each factor its due importance and weight, and that we shall keep our heads and not run into extremes either in one direction or the other.

I cannot find in any speech that I have made, or in any passage of any speech of mine, that I have said anything which would justify the assumption that I thought a second Budget this year was inevitable, or that the people of this country must look forward to a further increase in their burdens some time in the course of the present year. Take the returns of revenue, so far as they have gone. Anybody who has studied the figures in the past must know that it is absolutely futile to base any estimates of the revenue from Income Tax and Surtax, two main items of the year, on the figures of April and May. The bulk of the collection of those taxes comes in in the beginning of the new year, and to base any calculations upon what is happening in April or May is only to deceive oneself. All I would say at this stage, and subject to what I have just said, is that I myself see no reason at the present time to expect that there will be any appreciable short fall in the yield of In land Revenue, including of course Stamp and Death Duties, as well as Income Tax and Surtax. As to the revenue from Customs, I have said all along that we have no experience in the past which would guide us with any certainty in making calculations as to the yield of the new Import Duties. Any estimates must be to a large extent conjectural; and there, again, I would ask the House to remember that we cannot base any calculation about the yield of the Customs-revenue during the whole year upon the results of a single month, and that the month which is most likely to have been affected by any forestalments which took place in anticipation of the new duties.

I freely admit that the figures of unemployment are to some extent disappointing. We had hoped that we should' see substantial reductions in unemployment at this time of the year, but let the House remember that the last figures which were published were affected by the Whitsuntide holidays, and that it would not be safe to suppose, from the fact that they show a considerable increase, that that will be a permanent increase in the figures, or that when the next figures are published you may not find a different aspect of the situation.

When we consider the record of the Government, I think that we are entitled to make two comparisons. We may compare the situation in this country as it is to-day with what it was when we took office, and we may also compare the situation as it is in the country to-day with what it is in other countries. I say that, taking either of those two comparisons, we have no reason to fear the result. Before the first National Government came into office, it is well known that confidence in the future of this country, not merely at home, but in many other countries of the world, had fallen away. It was not merely that they saw we had not balanced our Budget, that we had an unfavourable balance of trade, that we had rapidly rising figures of unemployment, but above all, there was a sort of feeling that the spirit of this country was broken. It was an idea, which has since been thoroughly falsified, that the old courage of the people of this country had broken down, and that they were—to use the common phrase—down and out.

There has been a very big change since then. We have now got to a position when we have restored confidence, not only in our own eyes but in the eyes of the world. That has come back to us to an almost embarrassing extent. The figures of unemployment, which had been rising in 1930 and 1931, have at last been checked. It is a remarkable fact that if you take the Stock Exchange price of the 3½ per cent. Conversion Loan, last August it stood at 77 ]ths, and to-day it stands at 88—a rise of 10 points in that comparatively short time. It shows how enormously has the position improved. Indeed, Members of the Opposition are now persuading themselves there never was any crisis at all. If you take our position and compare it with other countries, there is also cause for satisfaction. I have here a comparison showing the trend of trade during the period from January to April, 1932, as compared with that period of 1931. I find that during that period the percentage of fall in imports into the United Kingdom was 12, but the United States of America had a fall of 30 per cent.; France, 35 per cent.; and Germany, 36 per cent. If you take the figures of exports, whereas the French exports fell off by 38 per cent., the United States by 36 per cent., and Germany by 36 per cent., the exports of the United Kingdom fell only by 7 per cent.

Of course, part of that great fall in values is due to a difference in prices, and although we have not got complete figures showing the volume of trade, yet, if I compare the first three months of this year with the first three months of last year,, I find that in volume the percentage fall in imports in the United Kingdom was nothing, whereas in the United States it was 4 per cent. and in Germany 12 per cent.; while the fall in exports in Germany was 21 per cent., in the United States 16 per cent., and in this country it was less than one per cent. Our imports, eliminating price changes, in the first quarter of this year were the same as the first quarter of last year. Our exports were practically the same, and they would have shown an increase had it not been for coal. Our exports of manufactured goods in the first quarter of 1932 were higher than any quarter of last year. The Board of Trade index number of industrial production for the first quarter of this year is 6 per cent. greater than in the first quarter of last year, but, in view of the fact that the Easter holiday came into March this year whereas last year it was in April, the rate of production last quarter was really probably about 3 per cent. greater than it was a year ago. Taking manufactured industries alone, that is to say, excluding coal and other kinds of mining, the United States showed a decrease as compared with a year ago of 20.5 per cent., whereas our index shows an increase of 1.4 per cent.

I think at any rate that those figures show that we have no reason to desire to exchange our lot for that of any other country in the world. Of course, it is perfectly true that, while we are getting a larger share of the world trade than we were, the world trade as a whole is continually diminishing, and that is only another illustration of what I began by saying, that we cannot expect that any single country can be prosperous when all the rest of the world is depressed. The ramifications between one country and another and their connections have become closer than they ever were before. Until we see a change in world conditions it is not reasonable to expect that we should be able to derive the full benefits from the various Measures which have been taken by the Government. But I think we may say that the very fact this world depression has been widening and deepening in the last few months has brought home to other people a sense of the realities of the situation which perhaps they had not before. In my view, there is to-day in Europe a, greater approach to unanimity both as to the causes of the trouble and also as to the steps which are necessary to solve the problems than there has been at any time since the termination of the War.

Next week we shall be entering upon a great conference at which an earnest endeavour will be made to come to an agreement with other countries directly concerned in the solution of these difficulties, and, while it would be a rash man who would care to prophesy with any confidence or certainty what may be the outcome of our deliberations, yet I myself feel hopeful about the result, and I consider that it may well prove that Lausanne will be the turning point in the history of Europe during these difficult days. But even supposing that our hopes are disappointed, supposing that once again we are checked and delayed and we find that it is not practicable to make the progress which we anticipated, even then do not let the House suppose that further taxation is inevitable.

My right hon. Friend the Member for Epping (Mr. Churchill) went so far as to reproach me and to call attention the other day to the fact that I said that in circumstances like these we ought to be careful not to dissipate our resources but to keep them in reserve. I think that is only prudent in times when there are many factors of which we cannot predict with certainty the outcome. To say that we desire to keep some reserves in hand is not to say that we are expecting to have to use them. I did not convey anything of that kind in the observations that I made. After all, the resources of civilisation are not yet exhausted, and an increase of taxation is not the only way to meet the problems which lie before us if we find it necessary to tackle them afresh. I decline altogether to accept the view, if anybody put it forward, that we have come to the end of the possibilities of reduction in national expenditure. I need hardly say that this is a matter which is constantly before the mind of the Chancellor of the Exchequer, and not only before his mind but that he is actually all the time taking measures to ascertain how further reductions in expenditure can take place.

I have had occasion before to say to the House that if you are to obtain substantial reductions in national expenditure you have to contemplate something more than a mere paring down. I expressed the view that before embarking upon serious changes in national policy it was desirable that some hard thinking should be done. I have been criticised for suggesting that any hard thinking was necessary. It has been suggested that all I had to do was to take my pen and write quickly how much I wanted the bill reduced, and that there was no reason why that should not be done at once. I have seen attempts at national economy made before now. I have seen economy undertaken in haste and repented of at leisure. One has to be careful, in the first place, that substantial changes of the kind that I have referred to are changes which can be permanent. When I say permanent, I mean that they will not be reversed, or will not be reversed within a short time because they have been insufficiently thought out.

I say more than that. I say that if you look at the main items in our national expenditure which are of such a size that they would warrant the belief that substantial reductions can be made, they arise in matters of very vital importance either to the safety of the country or the standards of living of its people. Take Defence, on which the expenditure is now only £106,000,000, War Pensions £47,500,000; Old Age, Widows' Pensions, Health and Unemployment Insurance, £122,000,000. Block grant to local authorities, £46,000,000; Education, £50,000,000; and Housing, £15,000,000. Here are items which in the aggregate form a great part of our national expenditure bill, apart from the debt charge which I have already touched upon. I do not say that in no circumstances should any of those things be touched, but I do say that we want to be very sure that changes are necessary before we undertake them. It is quite certain that the Government of this country would never be forgiven if it undertook to introduce changes which vitally affect the life of many millions of the people if it should be found hereafter that after all they had been unnecessary.

The Government, if it sees that changes of this sort are necessary, will not flinch from the task of telling the House and the country, and I am satisfied that if it were necessary to do that we should be supported by a. big majority of the opinion of the country. I do not want hon. Members to try and rush us into taking rash decisions without having thoroughly investigated the case. I ask them to remember that a substantial rise in wholesale prices, which has been recognised as desirable in all quarters of the House, might materially change the whole situation, and I say to them that if they will give us the opportunity, which I think it is not unreasonable to ask, of giving a thorough, careful, impartial and courageous consideration to all these problems, then I think they need not fear that we shall shrink from doing our duty when the times comes. On the whole then it seems to me that we have no cause for pessimism to-day. On the contrary, while I believe it is necessary to watch carefully the situation, and that we must certainly lose no opportunity of reducing national expenditure where it can properly and wisely be done, yet I say that we have already taken measures which should prepare the way for a rapid advance as soon as general conditions become favourable.

We have taken measures through our monetary policy to set the stage for the rise in wholesale prices which we desire to see take place. We have held the pound reasonably steady at a level which is certainly not inconvenient to industry, and we have also indicated in the Finance Bill measures which are not designed as the right hon. Gentleman suggested to

perpetuate swindling and gambling but which are designed rather to prevent it taking place, and to avoid violent and irregular fluctuations in the exchange. We have instituted a system of tariffs on a scientific basis which, so far from disappointing those who supported it, has, I think, convinced the great majority of those who perhaps entered this House with rather doubtful convictions on the subject of tariffs that they were necessary in the present circumstances. We have entered upon an era of cheap and plentiful money. We have seen that the monetary policy in the United States appears to be running parallel with our own, and we may, therefore, especially in view of the conferences at Lausanne and Ottawa, and possibly later on in London, think that we shall have there a series of opportunities which will enable us to contemplate the future with cool heads and with cautious but reasonable optimism.

Question put, "That the word 'now' stand part of the Question."

The House divided: Ayes, 409; Noes, 34.

Division No. 226.] AYES. [4.0 p.m.
Acland-Troyte, Lieut.-Colonel Bracken, Brendan Clarry, Reginald George
Adams, Samuel Vyvyan T. (Leeds, W.) Braithwaite, Maj. A. N. (Yorks, E.R.) Clayton, Dr. George C.
Agnew, Lieut.-Com. P. G. Braithwaite, J. G. (Hillsborough) Clydesdale, Marquess of
Albery, Irving James Briscoe, Capt. Richard George Cobb, Sir Cyril
Alexander, Sir William Broadbent, Colonel John Cochrane, Commander Hon. A. D.
Allen, Lt.-Col J. Sandeman (B'k'nh'd) Brockiebank, C. E. R. Colfox, Major William Philip
Allen, William (Stoke-on-Trent) Brown, Ernest (Leith) Collins, Sir Godfrey
Amery, Rt. Hon. Leopold C. M. S. Brown, Brig.-Gen. H. C.(Berks., Newb'y) Colville, John
Anstruther-Gray, W. J. Browne, Captain A. C. Conant, R. J. E.
Applin, Lieut.-Col. Reginald V. K. Buchan, John Cooke, Douglas
Apsley, Lord Buchan-Hepburn, P. G. T. Cooper, A. Duff
Astbury, Lieut.-Com. Frederick Wolfe Burghley, Lord Copeland, Ida
Atkinson, Cyril Burgin, Dr. Edward Leslie Courtauld, Major John Sewell
Barilla, Sir Adrian W. M. Burnett, John George Courthope, Colonel Sir George L.
Balfour, George (Hampstead) Butler, Richard Austen Craddock, Sir Reginald Henry
Balfour, Capt. Harold (I. of Thanet) Butt, Sir Alfred Cranborne, Viscount
Balniel, Lord Cadogan, Hon. Edward Craven-Ellis, William
Barclay-Harvey, C. M. Caine, G. R. Hall- Croft, Brigadier-General Sir H.
Barrie, Sir Charles Coupar Campbell, Edward Taswell (Bromley) Crooke, J. Smedley
Bateman, A. L. Campbell-Johnston, Malcolm Crookshank, Col. C. de Windt (Bootle)
Beauchamp, Sir Brograve Campbell Caporn, Arthur Cecil Crookshank, Capt. H. C. (Gainsb'ro)
Beaumont, Hon. R. E. B.(Portsm'th, C.) Carver, Major William H. Crossley, A. C.
Belt, Sir Alfred L. Cassels, James Dale Cruddas, Lieut.-Colonel Bernard
Benn, Sir Arthur Shirley Castlereagh, Viscount Dalkeith, Earl of
Bennett, Capt, Sir Ernest Nathaniel Castle Stewart, Earl Davidson, Rt. Hon. J. C. C.
Betterton, Rt. Hon. Sir Henry B. Cautley, Sir Henry S. Davies, Maj. Geo. F.(Somerset, Yeovil)
Birchall, Major Sir John Dearman Cayzer, Sir Charles (Chester, City) Davison, Sir William Henry
Bird, Ernest Roy (Yorks., Skipton) Cayzer, Ma). Sir H. R. (Prtsmth., S.) Dawson, Sir Philip
Bird, Sir Robert B. (Wolverh'pton W.) Cazalet, Thelma (Islington, E.) Denman, Hon. R. D.
Blaker, Sir Reginald Cazalet, Capt. V. A. (Chippenham) Denville, Alfred
Boothby, Robert John Graham Cecil, Rt. Hon. Lord Hugh Dickie, John P.
Borodale, Viscount Chalmers, John Rutherford Dixon, Rt. Hon. Herbert
Bossom, A. C. Chamberlain, Rt. Hon. Sir J. A. (Birm., W) Donner, P. W.
Boulton, W. W. Chamberlain, Rt. Hon. N. (Edgbaston) Doran, Edward
Bowater, Col. Sir T. Vansittart Chapman, Sir Samuel (Edinburgh, S.) Drewe, Cedric
Bower, Lieut.-Com. Robert Tatton Chorlton, Alan Ernest Leofric Duckworth, George A. V.
Bowyer, Capt. Sir George E. W. Chotzner, Alfred James Dugdale, Captain Thomas Lionel
Boyce, H. Leslie Christie, James Archibald Duggan, Hubert John
Boyd-Carpenter, Sir Archibald Churchill, Rt. Hon. Winston Spencer Duncan, James A. L. (Kensington, N.)
Dunglass, Lord Hurst, Sir Gerald B. Palmer, Francis Noel
Eady, George H. Hutchison, W. D. (Essex, Romt'd) Patrick, Colin M.
Eales, John Frederick Jackson, Sir Henry (Wandsworth, C.) Peaks, Captain Osbert
Eastwood, John Francis James, Wing-Com. A. W. H. Pearson, William G.
Eden, Robert Anthony Jamieson, Douglas Peat, Charles U.
Edmondson, Major A. J. Johnston, J. W. (Clackmannan) Penny, Sir George
Ednam, Viscount Johnstone, Harcourt (S. Shields) Percy, Lord Eustace
Elliot, Major Rt. Hon. Walter E. Jones, Sir G. W. H. (Stoke New'gton) Perkins, Walter R. D.
Ellis, Sir R. Geoffrey Jones, Lewis (Swansea, West) Peters, Dr. Sidney John
Elliston Captain George Sampson Ker, J. Campbell Petherick, M.
Elmley, Viscount Kerr, Hamilton W. Peto, Sir Basil E. (Devon, B'nstaple)
Emmott, Charles E. G. C. Kimball, Lawrence Peto, Geoffrey K. (W'verh'pt'n, Blist'n)
Emrys-Evans, P. V. Knatchbull, Captain Hon. M. H. R. Pickford, Hon. Mary Ada
Erskine, Lord (Weston-super-Mare) Knebworth, Viscount Pike, Cecil F.
Essenhigh, Reginald Clare Knight, Holford Potter, John
Evans, Capt. Arthur (Cardiff, S.) Knox, Sir Alfred Power, Sir John Cecil
Falls, Sir Bartram G. Lamb, Sir Joseph Quinton Pownall, Sir Assheton
Fermoy, Lord Lambert, Rt. Hon. George Procter, Major Henry Adam
Fielden, Edward Brocklehurst Latham, Sir Herbert Paul Purbrick, R.
Foot Dingle (Dundee) Law, Richard K. (Hull. S.W.) Pybus, Percy John
Ford Sir Patrick J. Leech, Dr. J. W. Ralkes, Henry V. A. M.
Fox Sir Gifford Leighton, Major B. E. P. Ramsay, Capt. A. H. M. (Midlothian)
Fraser, Captain Ian Lennox-Boyd, A. T. Ramsay, T. B. W. (Western Isles)
Fremantle, Sir Francis Levy, Thomas Ramsbotham, Herwald
Fuller Captain A. G. Lewis, Oswald Ramsden, E
Galbraith, James Francis Wallace Liddall, Walter S. Rankin, Robert
Ganzoni, Sir John Lindsay, Noel Ker Ratcliffe, Arthur
Gault Lieut.-Col. A. Hamilton Lister, Rt. Hon. Sir Philip Cunliffe- Rawson, Sir Cooper
Gilmour, Lt.-Col. Rt. Hon. Sir John Llewellin, Major John J. Ray, Sir William
Gledhill Gilbert Lloyd, Geoffrey Reid, James S. C. (Stirling)
Glossop, C. W. H. Locker-Lampson, Rt. Hn. G. (Wd.Gr'n) Reid, William Allan (Derby)
Gluckstein, Louis Halle Locker-Lampson, Com. O. (H'ndsw'th) Remer, John R.
Glyn Major Ralph G. C. Loder, Captain J. de Vere Renwick, Major Guttav A.
Goff, Sir Park Lovat-Fraser, James Alexander Reynolds, Col. Sir James Philip
Goldie, Noel B. Lumley, Captain Lawrence R. Rhys, Hon. Charles Arthur U.
Goodman, Colonel Albert W. MacAndrew, Maj. C. G. (Partick) Rosbotham, S. T.
Gower Sir Robert MacAndrew, Capt. J. O. (Ayr) Ross, Ronald D.
Graham, Fergus (Cumberland, N.) McCorquodale, M. S. Ross Taylor, Walter (Woodbridge)
Granville Edgar Mac Donald, Malcolm (Bassetlaw) Rothschild, James A. de
Grattan-Doyle Sir Nicholas Macdonald, Sir Murdoch (Inverness) Ruggles-Brise, Colonel E. A.
Graves Marjorie Macdonald, Capt. P. D. (I. of W.) Runciman, Rt. Hon. Walter
Greaves-Lord, Sir Walter McEwen, Captain J. H. F. Runge, Norah Cecil
Greene William P. C. McKie, John Hamilton Russell, Albert (Kirkcaldy)
Grenfell, E. C. (City of London) Maclay, Hon. Joseph Paton Russell, Alexander West (Tynemouth)
Gretton, Colonel Rt. Hon. John McLean, Major Alan Russell, Hamer Field (Sheffield, B'tside)
Grimston, R. V. McLean, Dr. W. H. (Tradeston) Salmon, Major Isidore
Guest, Capt. Rt. Hon. F. E. Macmillan, Maurice Harold Salt, Edward W.
Guinness Thomas L. E. B. Macquisten, Frederick Alexander Samuel, Sir Arthur Michael (F'nham)
Gunston, Captain D. W. Magnay, Thomas Sandeman, Sir A. N. Stewart
Guy, J. C. Morrison Maitland, Adam Sanderson, Sir Frank Barnard
Hacking, Rt. Hon. Douglas H. Makins, Brigadier-General Ernest Savery, Samuel Servington
Hales, Harold K. Mallalieu, Edward Lancelot Scone, Lord
Hamilton, Sir George (Ilford) Manningham-Buller, Lt.-Col. Sir M. Selley, Harry R.
Hamilton, Sir R. W.(Orkney & Zetl'nd) Marsden, Commander Arthur Shakespeare, Geoffrey H.
Hammersley, Samuel S. Martin, Thomas B. Shaw, Helen B. (Lanark, Bothwell)
Hanbury Cecil Mayhew, Lieut.-Colonel John Shaw, Captain William T. (Forfar)
Hanley Dennis A. Merriman, Sir F. Boyd Simmonds, Oliver Edwin
Hannon Patrick Joseph Henry Millar, Sir James Duncan Simon, Rt. Hon. Sir John
Hartington, Marquess of Mills, Sir Frederick (Leyton, E.) Skelton, Archibald Noel
Hartland, George A. Milne, Charles Slater, John
Harvey, George (Lambeth, Kenningt'n) Milne, Sir John S. Wardlaw. Smiles, Lieut.-Col. Sir Walter D.
Harvey Major S. E. (Devon, Totnes) Mitchell, Sir W. Lane (Streatham) Smith, Bracewell (Dulwich)
Haslam, Henry (Lindsay, H'ncastle) Mitcheson, G. G. Smith, Sir Jonah W. (Barrow-in-F.)
Haslam, Sir John (Bolton) Molson, A. Hugh Eisdale Smith, R. W. (Ab'rd'n & Kinc'dine, C.)
Hellgers, Captain F. F. A. Moore, Lt.-Col. Thomas C. R. (Ayr) Smith-Carington, Neville W.
Henderson, Sir Vivian L. (Chelmsford) Moreing, Adrian C. Smithers, Waldron
Heneage, Lieut.-Colonel Arthur P. Morgan, Robert H. Somervell, Donald Bradley
Hills, Major Rt. Hon. John Waller Morris, John Patrick (Salford, N.) Somerville, Annesley A. (Windsor)
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Morris, Owen Temple (Cardiff, E.) Somerville, D. G. (Willesden, East)
Holdsworth, Herbert Morrison, William Shepherd Soper, Richard
Hope, Capt. Arthur O. J. (Aston) Moss, Captain H. J. Sotheron-Estcourt, Captain T. E.
Hope, Sydney (Chester, Stalybridge) Muirhead, Major A. J. Southby, Commander Archibald R. J.
Hore-Belisha, Leslie Munro, Patrick Spears, Brigadler-General Edward L.
Hornby, Frank Nail, Sir Joseph Spencer, Captain Richard A.
Horne, Rt. Hon. Sir Robert S. Nail-Cain, Arthur Ronald N. Spender-Clay, Rt. Hon. Herbert H.
Horobin, Ian M. Nation, Brigadier-General J. J. H. Stanley, Lord (Lancaster, Fylde)
Horsbrugh, Florence Newton, Sir Douglas George C. Steel-Maitland, Rt. Hon. Sir Arthur
Howard, Tom Forrest Nicholson, Godfrey (Morpeth) Stones, James
Howitt, Dr. Alfred B. North, Captain Edward T. Storey, Samuel
Hudson, Capt. A. U. M.(Hackney, N.) Nunn, William Stourton, Hon. John J.
Hudson, Robert Spear (Southport) O'Connor, Terence James Strauss, Edward A.
Hunter, Dr. Joseph (Dumfries) O'Donovan, Dr. William James Strickland, Captain W. F.
Hunter, Capt. M. J. (Brigg) Oman, Sir Charles William C. Stuart, Hon. J. (Moray and Nairn)
Hunter-Weston, Lt.-Gen. Sir Aylmer O'Neill, Rt. Hon. Sir Hugh Stuart, Lord C. Crichton-
Hurd, Sir Percy Ormsby-Gore, Rt. Hon. William G. A. Sueter, Rear-Admiral Murray F.
Sugden, Sir Wilfrid Hart Vaughan-Morgan, Sir Kenyon Wilson, G. H. A. (Cambridge U.)
Summersby, Charles H. Wallace, Captain D. E. (Hornsey) Windsor-Clive, Lieut.-Colonel George
Sutcliffe, Harold Wallace, John (Dunfermline) Winterton, Rt. Hon. Earl
Tate, Mavis Constance Ward, Lt.-Col. Sir A. L. (Hull) Wise, Alfred R.
Taylor, Vice-Admiral E.A.(P'dd'gt'n, S.) Ward, Irene Mary Bewick (Wallsend) Withers, Sir John James
Thomas, James P. L. (Hereford) Warrender, Sir Victor A. G. Womersley, Walter James
Thomas, Major L. B. (King's Norton) Wedderburn, Henry James Scrymgeour. Wood, Sir Murdoch McKenzie (Banff)
Thompson, Luke Wells, Sydney Richard Worthington, Dr. John V.
Thomson, Sir Frederick Charles Weymouth, Viscount Wragg, Herbert
Titchfield, Major the Marquess of White, Henry Graham
Todd, Capt. A. J. K. (B'wick-on-T.) Whiteside, Borras Noel H. TELLERS FOR THE AYES.—
Touche, Gordon Cosmo Williams, Herbert G. (Croydon, S.) Captain Margesson and Mr. Walter
Tryon, Rt. Hon. George Clement Wills, Wilfrid D. Rea.
Turton, Robert Hugh Wilson, Clyde T. (West Toxteth)
Adams, D. M. (Poplar, South) George, Megan A. Lloyd (Anglesea) Mason, David M. (Edinburgh, E.)
Attlee, Clement Richard Grenfell, David Rees (Glamorgan) Maxton, James
Batey, Joseph Grundy, Thomas W. Milner, Major James
Bevan, Aneurin (Ebbw Vale) Hall, F. (York, W.R., Normanton) Parkinson, John Allen
Cocks, Frederick Seymour Hall, George H. (Merthyr Tydvil) Price, Gabriel
Cove, William G. Hicks, Ernest George Thorne, William James
Cripps, Sir Stafford Hirst, George Henry Tinker, John Joseph
Daggar, George Jones, J. J. (West Ham, Silvertown) Williams, Edward John (Ogmore)
Davies, Rhys John (Westhoughton) Jones, Morgan (Caerphilly) Williams, Dr. John H. (Llanelly)
Duncan, Charles (Derby, Claycross) Lansbury, Rt. Hon. George Williams, Thomas (York, Don Valley)
Edwards, Charles Lawson, John James
George, Rt. Hon. D. Lloyd (Carn'v'n) Lunn, William TELLERS FOR THE NOES.—
Mr. John and Mr. Groves.

Bill read the Third time, and passed.

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House without Question put, pursuant to Standing Order No. 3.

Adjourned at Thirteen Minutes after Four o'Clock, until Monday next, 13th June.