HC Deb 14 March 1932 vol 263 cc41-85

Motion made and Question proposed, "That the Clause stand part of the Bill."


May I ask whether it is the purpose that the Act shall be continued beyond the period cited in this Clause?


I put one or two questions to the hon. Gentleman on Friday to which he said he would give me an answer to-day. I asked him, first, if he would tell us what machinery the Board of Trade possesses to see that there is no exploitation of the necessities of life. He remarked during his short speech that complaints had already been received at the Board of Trade in respect of some exploitation. I do not know whether he will be able to give us information on that score. The point that weighed with me most was this. Will he bear in mind that it is not sufficient to say that the consumer is not being exploited merely because the cost of living remains the same. I tried to put to him that, if the cost of commodities declined by 20 per cent. and the cost of living remained the same, in my view that would be some evidence that the consumer was not getting the advantage of the reduction in the price of commodities. An hon. Member below the Gangway put a very good case forward when he said that the price of wheat had declined enormously, but that the price of bread remained the same. The attitude of the Board of Trade up to now has been that, so long as the cost of living remained at 45 per cent. above pre-War rates, all is well. I want to put it to the Government that, if the cost of commodities declines and the cost of living remains the same, that is a case for inquiry by them as to whether the consumer is being exploited. Last of all, I want to make a point on this issue. It is apparent to me, from what the hon. Gentleman said on Friday, that the Board of Trade inquires from the wholesaler as to the price he pays and the price he charges the retailer. I want the Board of Trade to go a step further and make inquiries whether the consumer is exploited by the retailer.


I do not want to deprive the Committee of the advantage of getting an answer to one or two questions of that kind if the Minister is prepared to give it, but strictly it is entirely out of order on Clause 2. If the Minister chooses to answer, well and good, but any discussion on the subject must be reserved until we come to the Third Reading.


I am perfectly ready to reply to the questions that have been asked, as I should not like the hon. Gentleman to feel that we have any matter to conceal. First of all, however, I will answer my hon. Friend the Member for Torquay (Mr. C. Williams). It is not intended to keep these powers in operation longer than the period for which the Bill authorises them. Therefore, if it should be desired to extend them for a period longer than one year, of course, Parliament will have to be consulted. As to the points raised by the hon. Gentleman opposite, the Board of Trade has at its disposal the services of a retailers' informal committee, consisting of all branches pf trading, including cooperative societies. No changes of price have been made without the Board of Trade being informed, and I dare say the retail trades have worked in complete co-operation with the Board of Trade. There have been one or two individual complaints, but in all cases the wrongs alleged have been rectified immediately, and I think. if I remind the hon. Gentleman of certain figures, he will see that there has been very little necessity for us to put our powers into effect. The wholesale prices of food have risen from 111.8 in February, 1931, to 114.2 in February, 1932. In the same period the price of retail food has fallen from 36 to 31. Therefore, the gap between wholesale and retail prices has been contracted. Consequently, there has been no call on us to threaten traders.

The next point—one which he raised on Friday—was one of detail. He said that I had mentioned some commodities but not others, and the one which he instanced was Danish butter. I had told the House that New Zealand butter had fallen in price, but I had omitted to mention Danish butter. Danish butter is being reduced as from to-day by one penny per pound. I hope that that will satisfy my hon. Friend. There was one point about bread which he desired me to mention. He asked why, when the price of wheat had fallen from between 10 to 30 per cent. the price of bread had not fallen also? Of course, the price of bread is regulated by the Food Council scale—the scale which has been approved by every Government since it was initiated in the year 1925. It is true that the price of wheat has fallen, but other costs have risen considerably. Port costs have risen by no less than 120 per cent., and wages have risen in a noticeable way. Naturally, these factors have to be taken into account. I think that on the whole it may be said that the consumer has been very well used throughout this crisis and has obtained the benefit of very low prices in circumstances which nobody could have anticipated at the time that we went off the Gold Standard.

Bill reported, without Amendment.

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


The Government, I think, may well congratulate themselves upon having secured the passage of this Bill in the stages through which it has passed so far with so little discussion. I do not think that there is any opposition to it in any part of the House and there has certainly been little discussion upon a Bill which is of such momentous importance. I had only one quarrel with the remarks of my right hon. Friend the Chancellor of the Exchequer on Friday last, and that was when he expressed some measure of surprise that the House should have taken so much interest in the Bill or consider it a matter of such importance. I am bound to say that that attitude surprised me considerably the more so, as only that morning there appeared in the "Times" newspaper a letter from no less an authority than Lord Bradbury stating that in fact the changes in the value of sterling in the past few days had been sufficient to offset at once the whole effect of the 10 per cent. tariff under the Import Duties Act which this House required of necessity a great deal of time to discuss and to pass into law. Further than that, I cannot understand the attitude which considers this Bill of little moment. To my mind, it may be the most important measure from the point of view of trade and industry which the Government have brought before the House. I say this with some reason.

I want, in the first place, to remind the House of the reasons for, and the authority under which we originally discussed this matter six months ago. At that time the then Chancellor of the Exchequer made a very definite promise to the House of Commons. It will be found in the Debate which took place on Monday, 21st September, in which he said that the Government would take such measures as may be necessary to circumscribe the fluctuations of the exchange. I would point out to the House that this definite promise which was given to it upon the bringing forward of the Bill was that the Government would take definite steps to avoid undue variations in the value of sterling. I think, therefore, the House is entitled to ask what measures the Government intend to take to bring about that very desirable result. I do not suggest for a moment that it is within the power of the Chancellor of the Exchequer or even within the power of the Bank of England to fix the Exchange at an exact figure at this time, nor do I think it would be a desirable thing to endeavour to do at this stage. But that is rather a different matter from the position we are left in by the answer which the right hon. Gentleman the Chancellor of the Exchequer gave us on Friday. He then indicated that he himself and the Government would regret any rise in the pound which would react adversely upon trade, but he did not in any way indicate what measures the Government were to take to stop any possible speculation or the operation of other causes such as the continuance of an unreal Bank Rate—which might mean a sudden jump in the value of the pound. I do not think that the influence of speculation or an influx of short term money upon the changes in the value of sterling will be disputed by those who have studied the question. While as I have said it is probably very undesirable for any person at this time to forecast what will happen in the future as to the value of the pound —and it is undesirable probably to attempt any measures to deal with that long-term question at this moment—still it is quite within the power of the Government to prevent undue fluctuations in the immediate future.

I have not often in the House of Commons quoted Lord Bradbury as supporting any views that I might humbly hold but I again would remind the House that Lord Bradbury himself in the same letter that I have already quoted refers to the perfect mastery of the problem which the Government and the Bank can exercise at the present time. When we bear in mind the immense hardship which falls upon trade and industry of all kinds by these fluctuations in the exchange, I think we are entitled to ask the Government to say a little more definitely than they have done so far what they intend to do in the near future if we should be menaced by foreign or other speculators endeavouring to force up the value of the pound unduly. While I realise very freely the difficulties of laying down any long-term policy, as I have already said, and deprecate it being attempted now, at the same time I would ask whether we are not really entitled to consider whether the record of the Bank of England in the past is such that we can really trust entirely to the views and opinions of those in control of that great institution to deal with the future. It is impossible for anyone outside that magic circle to know exactly what is going on, and it may well be that it is not entirely desirable that we should know all that goes on. But I am beginning to wonder whether the only real justification for there being a magic circle at all is not that the operations of that circle should function for the benefit of industry and whether in fact that has been the case in the past. The actual situation is that in the past few weeks the attitude of the Bank of England has been absolutely impossible for any outsider to understand. It appears to have been purchasing dollars and francs, no doubt for the purpose of part liquidation of our debts abroad, and suddenly without notice to have ceased those purchases when it should have known, and must have been known that a sudden change in operations of that kind would result immediately in fluctuations of a violent character in the gold value of the pound.

It seems to me, therefore, looking at recent events, that we are entitled to say that a consideration of the past gives us no guarantee that the operations of the future will be carried out entirely for the benefit of British industry. If we go back to past history in this matter I think it will be agreed that there is no particular reason from our examination for us to have confidence. In this House, in connection with previous Bills, the report of the Cunliffe Committee has been referred to again and again. That committee, presided over by a very eminent gentleman, and composed almost entirely of bankers, made a report which, however valuable it may have been for the purpose of bringing back London to its position as a great financial centre, certainly did not tend to benefit British industry. Following upon that report we had during a long number of years a large number of very optimistic statements from various eminent gentlemen regarding an immediate revival of trade, all of which have proved hopelessly wrong.

Further, we had the operations of last year which, so far as any outsider could tell, resulted in our rushing about the world seeking to secure credits which were quite ineffective when we had secured them. We were told in some cases that as the result of those operations, and of the wonderful recuperative power of the British trade, a revival of industry would result and bring about rapid prosperity. None of these things happened. Those prophecies have all proved wrong. In the same way the international bankers have proved to be utterly wrong. The Young Plan followed the Dawes Plan. We are therefore entitled to say to those to whom we ought to look with confidence that, so far as any guidance they have given us during the past few years is concerned, they have proved utterly false prophets. In this connection, and again turning to a source which I would not usually be found quoting as supporting my arguments, I cannot help being reminded that the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), speaking in this House and addressing the late Chancellor of the Exchequer, urged him not to be too afraid of the bankers. The right hon. Gentleman went on to say that since the War the City of London has invariably been wrong in advising the Government, and that the bankers have been wrong every time.


I cannot see that this argument has anything to do with this Bill. The hon. Member must recollect that, although such argument may have been in order on the Second Reading, when we get to the Third Reading he cannot go outside the Bill itself.


I, of course, bow to your Ruling, but may I, with respect, point out that this Bill is continuing powers which the Government have taken for the express purpose of curtailing the fluctuation of the exchange. The whole object of my argument is to show the necessity for the Government using those powers and to ask the Government what they intend to do in that connection. I will not, however, pursue the past history of the question, in view of your Ruling. I would ask the Government to tell us whether, if we pass the Third Reading of the Bill and they receive the powers for which they ask and which I am anxious they should have, they intend to carry out what was clearly in the minds of those who introduced the original Bill of last September, and whether they intend to take measures to curtail within reasonable limits the fluctuations of the exchange. Further, as it is the Government's desire, as the Chancellor of the Exchequer said on Friday, not to see the pound increase in value to the detriment of trade, what measures they will take to bring about that very desirable result.

The operations of the Bill may or may not affect the long-term policy of the settlement of the value of sterling which, in view of your Ruling, I cannot raise to-day, but I do think that within the terms of the Bill we are entitled to know what the Goverment intend to do during this year, seeing that they will have these powers. I ask that they should make it clear that they are satisfied that the powers are sufficient and that they will take steps to prevent undue fluctuations which would tend to make trade impossible in this country and would have an effect upon our commerce far more serious than any action that might be taken by the financiers in any part of the world. Before the Bill receives the Third Reading the Government ought to give the trading and commercial community of this country the strongest assurance possible in these matters to enable them to go forward with renewed confidence in their business and to promote that revival in industry we believe to be in sight.


It is a source of great satisfaction that the House is now taking so great, and so increasing, an interest in the monetary policy pursued by this country, which it has neglected, to its own cost and the cost of the country, far too much during the past few years. There was one observation made by the Chancellor of the Exchequer on the Second Reading of the Bill which caused me some apprehension, when he said that there were disadvantages in our having gone off the Gold Standard, and that one of those disadvantages was that we had not got the stability that we had when we were linked up to gold. I suggest that since we left the Gold Standard we have enjoyed far greater stability than at any time during the five or six years that we were on the Gold Standard —[HON. MEMBERS "No!"]—so far as prices are concerned, which is what really matters. We are now considering the future monetary policy of this country, which the Government are asking the House to grant them special powers to conduct.

In retrospect, I do not think that anyone would deny that the monetary policy that has been pursued by this country ever since 1921 has been, in effect, disastrous. Calamitous. It damaged our export trade to such an extent that we were not able to take advantage of the world boom, which other countries enjoyed, between the years 1924–1929. It led, in the opinion of some of us, almost directly to the industrial upheaval of 192g; it has almost trebled the real burden of our internal debt; and it has increased the burden of all the fixed interest charges, which press so hard upon the producing classes in this country, in proportion. Sir Josiah Stamp, in a most interesting article, the other day, estimated that, as a result of the monetary policy we have pursued, about £200,000,000 every year inside this country is transferred from what he described as active to inactive hands. In other words, it is transferred from the producing to the rentier class. We ask, and we are entitled to ask, that the Government should give some indication that the policy of deflation is not going to be continued in this country now, or in the immediate future.

4.0 p.m.

The Macmillan Committee was quoted in the Debate the other day and it has been quoted again to-day. One of the things that the Macmillan Committee said, quite specifically, was that an era of "conscious and deliberate management" had now succeeded an era of natural evolution. We cannot allow complete free play in economic affairs in the modern world. Things have become too complicated. They are on too large a scale, and events move with far too great rapidity. I agree with what the hon. Member for Kidderminster (Mr. Wardlaw-Milne) said, that if we are going to allow fluctuations to take place, such as occurred last week, in the exchange value of the pound sterling, the whole of this tariff business will have been a pure waste of time. A condition of the success of the tariff policy, which I want to see successful, is that, so far as our monetary policy is concerned, we shall keep the pound more or less stable in terms of commodities. Some of us have been very much surprised, to say the least, at the policy of the Bank of England in continuing this deflation during the past few weeks. Indeed, it was not until my right hon. Friend the Member for Hillhead (Sir R. Horne) made an impassioned plea in this House for the reduction of the Bank Rate, as a first step towards checking the continued policy of deflation, that the Bank of England took any action at all. What we would like to hear this afternoon is some more or less definite assurance with regard to monetary policy from the Government. We do not want a final statement. Nobody expects that the Government can say what the ultimate policy is to be; or, at what figure they anticipate that the pound will be finally stabilised. But I would remind the Financial Secretary to the Treasury that during the last few months the sterling area has been continuously enlarged, and that we want to see it enlarged to the greatest possible extent. More and more countries have adopted the sterling standard. There are others who would do so if they knew what it involved, and what our policy was going to be.

We owe it, I think, not only to our industrialists and to ourselves, but to foreign countries, to make a much clearer statement as to what our intentions so far as monetary policy is concerned than we have done in the past. I would beg my hon. Friend at least to give us an assurance that, in so far as the Government are concerned in this matter, and in so far as it lies in their power, they will do everything to secure the stability of sterling in terms of commodities during the next few months, and to prevent a fluctuation in the exchange value of sterling such as occurred last week. I was speaking the other day to a prominent authority of the Bank of England, and I asked him what the object of the Bank of England was in continuing to pursue a deflationary policy. He replied, "We do not know what the policy of the Government is. We have received no instructions. For all we know, the policy of the British Government at the present time may be the restoration of the Gold Standard at the pre-War parity of exchange. We have been told nothing at the Bank of England." According to this gentleman, the Bank has been told nothing specific; and the country and the world have been told nothing specific with regard to the monetary intentions of the Government. Therefore I do hope that, in the interests of our trade and industry in particular, the Government will give some assurance that they do not intend to allow the pound sterling to be forced up by foreign speculators to a level which will damage our industries, and completely wreck the tariff policy which we have been carrying through this House.


Without in the least desiring to criticise the Government—I want to help them as much as possible; I am very desirous of their success—I would impress upon them the one fact that the record of the Government will be judged entirely by how they deal with the unemployment problem. There are 2,700,000 unemployed, and unless we can get that figure down, the Government will have a bad time when the next election comes. That, however, does not matter so much as getting the figures of unemployment down.

May I reinforce the appeal made by the hon. Gentleman opposite that we must, if possible, stop this speculation in sterling. It is destroying confidence and no industrialist, no manufacturer can plan his industry if there is not confidence that sterling will be at some stable figure. The right hon. Gentleman the Chancellor of the Exchequer said quite frankly, and, as I think, very wisely, that he did not desire to see the pound forced up to a figure which would be injurious to industry, but if sterling is bounding up and down like a rubber ball, no industry can function, and certainly the unemployment problem will not get better. As the Government will have another year to consider this matter, may I suggest that they go outside the circle of the Bank of England for consultation and for advice? I would suggest to them that they should go to the managers or the chairmen of the great joint stock banks. I would ask the Chancellor of the Exchequer to take into counsel a gentleman very well known to the President of the Board of Trade, the Chairman of the Midland Bank, Mr. McKenna, who is one of the most distinguished economists. He was Chancellor of the Exchequer, and is now chairman of one of the most important banks.

I ask my right hon. Friend to take such men into his confidence and counsel and ask their advice, because I quite agree with what the hon. Gentleman opposite said, that the Bank of England has certainly not been infallible in the last few years. Those who direct it are animated by the very highest motives and are men of the highest character, but their judgment has not been entirely right. For one thing, they sponsored the American debt settlement. Mr. Mellon has told the world that that has become quite impracticable. Then they sponsored the going back to the Gold Standard in 1925. That, again, has proved to be impracticable. What really—I will not say alarms me, but is to me a source of regret, is that the Treasury are not able to keep the best officials. Some Treasury officials, instead of remaining at the Treasury, to give advice, have gone into the service of the Bank of England. I regret that very much— [Interruption.] In my judgment, the British Treasury is far more important even than the Bank of England, and that it should have the very best advice is of inestimable importance to this country. That is why it has been a matter of regret to me to see very eminent Treasury officials joining the Bank of England. I do not want to go into the matter of Treasury control, but it is very essential, and I hope that my right hon. Friend who is now Chancellor of the Exchequer will be at his post for a good many years. We have had a series of Chancellors of the Exchequer. I read in an interesting article —anything which comes from the pen of the right hon. Member for Epping (Mr. Churchill is always interesting— — When I went to the Treasury in November, 1924, I was the fifth Chancellor of the Exchequer to receive the seals in two years. I hope that my right hon. Friend's tenure of office will be much longer than that, but it is obvious that if you change your Chancellor of the Exchequer, you must have the finest officials to advise him, because a Chancellor of the Exchequer must naturally receive and accept the advice of his officials. I want to put this point rather strongly to my right hon. Friend the Chancellor of the Exchequer. I am sure that he and I disagree with Government control over industry, but there has been, from the benches opposite, a very strong plea put forward for the nationalisation of the Bank of England. I should hate to see it, but, unless we do get some reasoned defence, unless the Treasury can exercise intelligently some control over the Bank of England, there will be an irresistible demand for its public control. I do not want to see it, and I put forward these remarks with a real desire to help the Government. I do ask the Chancellor of the Exchequer to rely upon those who have great experience in finance rather than those advisers from the Bank of England whose advice in the past has been of a disastrous character.


It is very satisfactory for us on these benches to welcome so many Daniels come to judgment. The other day I was standing by the tape-machine when the financial information was coming through. A handful of Members, supporters of the Government stood around, and I was interested to observe their anxiety as to the danger from the appreciation of the pound. I could not help remarking that I thought they were the people who went to the country to save the pound, and now they were in terror lest they should be successful after all. We were the people who were going to bring the pound down, and now that they have got it down themselves, nothing pleases them better. They have no greater fear than that the pound should be brought back to parity. From our point of view, we welcome this gradual dawning of common sense on their part. The hon. Member for East Aberdeen (Mr. Boothby) has always taken a view with regard to this matter opposed to what is generally supposed to be the orthodox view of the bankers and the Bank of England. The hon. Member for Kidderminster (Mr. Wardlaw-Milne) is a new Daniel. The right hon. Member for South Molton (Mr. Lambert) pointed out very justly that we on this side had always been critical of the way in which this country's banking interests had been controlled, especially during the last 10 years.

We find reiterated from the benches opposed to us what we have been saying in season and out of season, that the whole policy of the City of London has not been in the interests of the productive industry of this country, and I think that the hon. Member for East Aberdeen was perfectly right when he said that a definite statement of policy is required of the Government. At the present moment the Government do not like to let their left hand know what their right hand is doing. I do not suggest who is the right hand or who is the left hand in this Government, but they do not seem to be the least upset, when, having taken in a crisis inadequate measures, they then proceed to counter them by something quite different in the sphere of the currency. We on this side maintain that the financial organisation of this country should not be left in the hands of a comparatively irresponsible body such as the Bank of England. I gather from letters in the public Press that the Court of the Bank of England never knows what is going to happen until Mr. Norman comes down and tells them about it. We have been told to-day that the Chancellor of the Exchequer does not know much about it, and that he has not much control. We suggest that he is the man to control, but he denies it. The same was done by his predecessor Lord Snowden, who was the most faithful follower the Bank ever had.

We on these benches have always opposed that view. We claim that the Government should have a plan with regard to the exchange, that they should have a plan with regard to the banks, and that they should use whatever forces they have at their command, and, if they have not forces enough, let them take powers to see that the finances of this country, the financial organisation and the banking system are used for the good of the productive farces of this country. I entirely agree with what the right hon. Member for South Molton said, that we have seen during the past year the interests of agriculture and the interests of industry in this country sacrificed to the rather narrow interests of the City of London,. I do not intend to go into any details on that point, but I would again stress the point that was made by the hon. Member for East Bristol (Sir S. Cripps) on Friday, namely, the danger, in our present position, of these fluctuations, especially those caused by the floods of short-term money. If this is a Government that is supposed to be riding the storm and not merely drifting, it should get at the helm and guide us in this matter.


I have listened with interest to the remarks just made from the Opposition Front Bench. The hon. Member who spoke attacked a number of my hon. Friends as "Daniels come to judgment." He said that they had attacked his party at the last General Election, because, if it came into office and the pound had gone down to a very small sum, that would be detrimental to the finances of this country.


The hon. Member will excuse me, but our suggestion was that you should control the Bank of England.


I rather gathered that the hon. Member's attack on us was that we are now going back on our original idea of attacking the Labour party as the party that would have a very bad effect on the credit of the country because they would let the pound go down, whereas now many hon. Members were in favour of the pound going down. I think I am not misrepresenting the hon. Gentleman when I say that. He agrees. Well, I think that our attitude was perfectly consistent. He knows that one of the proposals put forward by the Labour party at the last General Election was that we should mobilise our securities to support the pound. That was a most unsound financial proposal. I am sure the hon. Gentleman will agree with me.


It was done during the War.


Yes, it was done during the War, but when your backs are to the wall and you are fighting for your existence you do things that you will not do in peace.


That was what you told us.


Exactly, and we were justified in doing everything to extricate our country and our allies from a very serious position. The reason for which you do things in war provides the very argument why you should not do them in peace. Any appearance of mobilising our securities in order artificially to support the pound in time of peace would be to exhaust what little remains of our reserve and to bring our last state to a state worse than it has ever been before. I cannot believe that the hon. Gentleman wishes to attack any of my hon. Friends whom he now calls "Daniels come to judgment," because of what he thinks is their inconsistent attitude. I admit what the hon. Gentleman says when he directly advocates, not the improvement of the pound but the—


What does the hon. Member mean by improving the pound?


Restoring the pound to its old parity. What I meant was that the hon. Gentleman who spoke for the Opposition was quite correct. We agree upon the necessity for a restoration of the pound, and that that will take a considerable time. The hon. Member for East Aberdeen (Mr. Boothby) is aware that all our currency is based upon the pound sterling being equivalent to 123¼ grains of standard gold. It is not worth that to-day, but that was the basis of our currency and was the Gold Standard of this country from which, as he reminded us, we have now passed but to which many of us hope to return. There may be differences of opinion as to what is the right way to return.

Might I venture to express my amazement at what the Chancellor said in his speech last Friday when he, while keeping rather an open mind on the subject, talked in a vague manner of mixing gold with something? He did not seem to have a very clear and definite idea as to what constitutes the Gold Standard. I think the hon. Member for East Aberdeen will agree with me that the Gold standard is the basis of our currency. He might wish to get back to the old parity. If he does, then I am sure that, as an honest and upright man, he will admit that our currency notes were issued upon that basis. They were issued on the basis to which I have referred and were handed over to the Bank of England. The same basis existed up to September of last year.


Does the hon. Gentleman forget that, in addition to £150,000,000 or thereabouts covered by gold in the past, we had a fiduciary issue of £260,000,000, and that the exchange to gold of all this money would never have been possible?


The fiduciary issue is subject to the same law In the Act under which provision was made for a fiduciary issue of £260,000,000, the hon. Member will find, if he will do me the honour to read it, that there is a specific Section which gives the holder of a currency note the right to go to the Bank of England in business hours and obtain gold. That provision was carried on in the Act which transferred the control of the currency from the Treasury to the Bank of England. Under that Act we were operating last September when we went off the Gold Standard.


May I ask the hon. Member one question? On what principle of justice or equity does he justify the repayment of a debt in a currency worth rather more than twice the currency in which it was borrowed, in terms of commodities?


That is a very fair point. I do not dispute it. It is very difficult in this matter to repay on just the same basis as that upon which you borrow. I can only reply to the question by recalling the period when we were off the Gold Standard during the War. During that period of financing the War the creditors of the State, the note-holders and currency-holders, were penalised. We all remember that we had to pay large, advance prices for our clothes, that the cost of living went up, and that the purchasing power of the pound -went down to about 10s. or 12s. I think the question of the hon. Gentleman is a fair one for him to put, but it is impossible to answer it. At that time we went forward in faith, and we are going forward in faith now. Many of us have hope that we will be able to restore the old parity, but other hon. Members say that that is impossible. They say that that would penalise trade.

The hon. Member for Kidderminster (Mr. Wardlaw-Milne) made a very moderate speech. He undoubtedly believes that the effect of trying to restore the pound has a penalising effect upon our export trade. Will he allow me to say that I think that that point is very much exaggerated? Many people, when we went; off the Gold Standard expected that that would give great impetus to our export trade, and that it would be equivalent to a tariff, but it has a penalising effect upon our imports and therefore the fall in our aggregate trade by this so-called advantage is very much exaggerated. I believe that there is little if any advantage in a depreciated currency. To the spinners of Lancashire importing raw cotton, obviously it would be an advantage to have a pound that was worth 4.86 dollars, so that they could purchase for every pound 4.86 dollars' worth of cotton, rather than a pound which had depreciated and could only purchase 3.70 dollars' worth.


Is the hon. Member aware that only about one-tenth of the total cost of finished cotton is represented by the purchase of the raw material, and that the other nine-tenths is represented by the cost of manufacture?


That may be. I think if you consult many spinners and other importers they will tell you that to-day they are being penalised in the importation of their commodities, foodstuffs and raw materials. They undoubtedly have to suffer. If this were an advantage, why let us worry at all? Why not let the pound go to a shilling? Why worry about maintaining our credit or maintaining a standard? I can assure my hon. Friends that if they will give, as no doubt many have given, close study to this problem, they will agree-with me that the idea that a depreciated currency is an advantage to a country is exaggerated, and that it is only a temporary advantage. A seller with goods on his shelves does get an advantage. This Bill is apparently to counteract these fluctuations by giving power to the Treasury to interfere with exchange operations. I am very glad that the Government has now dropped those powers. I think they are bad powers to have and I hope they will not use them. They have given us to understand that it is not their intention to do so, and therefore we may hope that this Bill will be a dead letter as far as action is concerned.

I would like to offer one or two observations before I close on what the Chancellor of the Exchequer said he thought would be the future gold standard of this country. I was amazed when in his speech he spoke so lightly of mixing his standards. I hope there is no possibility—and here I do not intend to afflict the House with a dissertation on the evils of bimetallism—of perhaps mixing it with silver or some other commodity. I think that will be just the last stroke in depreciating our credit and putting us in a worse mess than we are in to-day. He did finally come down on the side of the Gold Standard. We rejoice that he has arrived there, and I hope that he will stay there, and that he will not for one moment give further support to the idea of a mixed or bimetallic standard. I believe that for our credit it is better to wait until the pound has improved.

I would ask the hon. Member for East Aberdeen whether the advantage of restoring the pound has not been immediately felt in a lessening of the loss from which we had to suffer when we repaid those credits which cost this country £17,500,000 That was a very serious loss. We are not making millions so easily or so readily that we can afford that. Had we waited a little till the pound had improved still more, I think I am right in stating that the loss would have been much less. The Treasury estimated that if we went back to parity in the repayment of our debt to the United States, this country would save £336,000,000. There are many other advantages, but the so-called advantages of working on a depreciated exchange and thereby stimulating our export trade I believe to be grossly exaggerated. The only way to increase both export and import trades is to restore a sound state of finances in this country and to get back in time to the old parity.

4.30 p.m.


The hon. Member who has just sat down will never learn anything. I only intervene to ask a particular question. This is a Bill for the management of the currency. On the Second Reading we had a marvellously clear indication from the Chancellor of the Exchequer as to what he wanted. He said that sooner or later: We shall find that we have got to link our currency, our sterling, once again to a metallic basis. He went on to say: For the time being our currency is a managed currency. I think the sort of index which the hon. and learned Gentleman"— the hon. and learned Gentleman for East Bristol (Sir S. Cripps)— had in mind is probably the sort of thing that one would naturally look to for the purpose."—[OFFICIAL REPORT, 11th March, 1932; col. 2157, Vol. 262.] I turn to the speech of the hon. and learned Member for East Bristol (Sir S. Cripps). Here is the suggestion with which the Chancellor of the Exchequer agrees: I suggest to the right hon. Gentleman that the proper objective of the Government and the Bank of England should be to get the sterling stabilised on wholesale prices, which should gradually be brought back, over a period of time, to something like the 1929 level.—[OFFICIAL REPORT, 11th March, 1932; col. 2130, Vol. 262.] The really important item resulting from the Debate on Friday was that proposal of the hon. and learned Member for East Bristol and its qualified acceptance by the Chancellor of the Exchequer. The Chancellor of the Exchequer was quite as clear as any Chancellor has a right to be in face of the speculation in sterling which is going on now. But what we have a right to ask is, if his idea is more or less in accord with the suggestion made from the Opposition Benches, and, I may add made from any other sources as well, for Sir Charles Harris was advocating it, and it was also advocated further hack in the Macmillan Committee's Report. If that is the intention of the Chancellor of the Exchequer, if he sees the pound gradually stabilising on the basis of the 1929 wholesale prices, what is he going to do about it. Here is the machinery in his hands in this Bill—inadequate machinery, but, coupled with his power over the Bank of England in the consultations which are now so frequent, he could, if he chose to do so, bring about the object which he stated that he had in view. If he does nothing, the credit of this country will continue to languish, the situation will continue to be uncertain, and speculation and fluctuation in the pound will continue. We do not want that period to be unduly drawn out.

It is certainly the business of the Chancellor of the Exchequer and of the Government, if they see the goal in view, to lay their plans for arriving at that goal. The pound has got to fall if we are to get back to the wholesale prices of 1929. The 1929 prices were higher than they are to-day. Therefore, to stabilise at those prices the pound will have to fall by an amount which is calculable, in order to bring back the wholesale prices of 1929. Here in this Bill is the machinery; here is the power to manage the currency. Are the Government going to manage it in the direction of a stabilisation on that basis or not? I think that practically everyone is agreed, with the exception of the hon. Member for East Edinburgh (Mr. D. Mason), everyone with any connection with trade or industry, that it is desirable to get the pound stabilised, and that it is desirable, if possible, to stabilise on the wholesale price basis.


I am in favour of the pound being stabilised.


But not at that value.




Most people are in favour of it being stabilised, and on the basis of the wholesale prices of 1929 rather than on the dollar parity. If we have reason to believe that the Treasury sees that that is the best course, what is the Treasury going to do about it? I join with the hon. Member for Eastern Aberdeen (Mr. Boothby) in saying to the Government, "Whatever is your policy, for goodness sake stick to it and do something to bring it about. Do not let things drift indefinitely." We had an extremely bad experience during last week of the rise in the price of sterling, a rise which hits our export trade and benefits merely the speculators in sterling. If we are to stop that there must be a definite and consistently carried out policy on the part of the Government.

That policy can be carried out in a number of ways. It can be carried out, in the first place, by dropping the Bank Rate, so that we no longer attract short-term money to this country. It can be carried out, secondly, by encouraging loans of British capital abroad, by not regarding as unpatriotic the investment of British capital abroad, but regarding it as an assistance in the definite policy of the Government. It can be carried out by dropping the tariff and relying solely on the fall in the value of the pound to balance trade, to restrict imports and expand exports. It can be brought about by not balancing the Budget, though I do not care to mention that. If you do not balance the Budget the pound will fall. But I suggest that if you try to bring the result about by bimetallism, by bringing in silver, if you are to go into the market to sell sterling and buy silver, no doubt that will send down the value of sterling, but that would merely mean a novel method of spending money, not balancing the Budget and not getting any value for the watering of the currency. There are those ways of bringing down the pound, of arriving at your new stabilised value, based on the wholesale prices of 1929.

The Government ought to be considering and making up their minds how they are going to arrive at the result. If they do not want to stabilise on this basis, if they are afraid of the bankers, if they are afraid of the influence of the moneylenders upon the situation, let them say frankly that that is so, and we shall know where we are. But they have now given us a broad hint that in the view of the Chancellor of the Exchequer it is desirable to stabilise on a lower level. They must make their plans to get to that lower level, so as to do it with the greatest possible advantage to this country, for it can be done in foolish ways as well as wise ones. Having made their plans they should carry them through, and let us get back to a currency stabilised on something better than gold, if possible, at a lower metallic value for the sovereign. Let us be quite certain that it will not be done accidentally. It must be done by the conscious intention of the Government working towards that end. Therefore I beg the Financial Secretary to the Treasury not to give any answer to-day as to how he will bring it about, but to set up an inquiry in the Treasury as to how best it can be done, if indeed that is the intention of the Treasury. If it is not the intention of the Treasury, let us be told as soon as possible that it is not the intention. Do not leave it to the speculator to ruin industry, with the Government assisting by not being able to make up their minds as to what they want to do.


The proposals of the right hon. Gentleman who has just spoken are not, I think, as certain as he believes of having the result which he desires. He stated that speculators would be discouraged by a reduction of the Bank Rate. As a matter of fact when the speculation of a few days ago was being carried out it was quite obvious that the difference between spot and forward exchange was quite sufficient to justify any speculator, in putting through his transaction quite irrespective of the rate of interest, that he would obtain in this country better prices on Treasury Bills, and even if the Government had put down the Bank Rate and Treasury Bills had been issued at a lower figure than those of last week, that would have been of practically no importance to the foreign speculator who was sending his money here.

The desires of the right hon. Member for Newcastle-under-Lyme (Colonel Wedgwood) and of the hon. Member for Limehouse (Mr. Attlee) are not quite the same. I could not follow the argument of the hon. Member for Limehouse when he referred to the policy of the late Labour Government, because if the late Labour Government had it in their minds that they were quite prepared to see the country go off gold, I do not understand why that Government provisionally agreed to "cuts" and a number of other recommendations which, it is true, their arguments did not appear to support but which it was publicly stated they were quite prepared to agree to under certain conditions. The general impression at any rate was that, at that time, the Labour Government were very anxious to try to prevent the country going off gold, and if the policy of the Labour party is now altered it cannot be said that the policy that they support to-day was the policy of the late Labour Government.

The hon. Member for Eastern Aberdeen (Mr. Boothby) referred to the action of the Governor of the Bank of England in not reducing the Bank Rate as rapidly as many would have wished. There is one aspect of that question which has to be borne in mind. Looking at the position at home it would have seemed to those of us who have not the special knowledge that the Bank of England has, that the Bank Rate might certainly have been reduced more rapidly, but it has to be remembered that the Bank Rate has a second function, that it acts to a certain extent as a warning to the banking and financial world as to the policy that they should pursue; and when the Governor and the Directors of the Bank of England were going to put down the Bank Rate they had to face the fact that it would be regarded in financial circles and in the business community as a certain indication that the Bank of England were feeling happier not only about the home position but about the position abroad. When we remember the position on the Continent of Europe and look at the problem from that standpoint, we can find some justification for the delay in reducing the Bank Rate as rapidly as some who look at the matter purely from the condition at home would have liked.

Regarding the statement made by the Chancellor of the Exchequer on Friday, there is one point on which I would like to lay special stress, and I hope that whoever is to reply for the Government will kindly explain a little more fully what the Chancellor of the Exchequer really meant in some of the concluding words of his speech. Reference has been made to the expressions used by the Chancellor, in which he seemed to indicate that to a very considerable extent he agrees with what is undoubtedly the view of business men in this country as to the extreme importance of not having too rapid a rise, or at present any rise, in the price of sterling. I gathered that in his very cautious words the Chancellor of the Exchequer gave a certain measure of support to that opinion. I wish to say how important I feel it is that the Government should fully appreciate how very strong is the industrial view as to the importance of this question.

The hon. Member for East Edinburgh (Mr. D. Mason) said that he thought that the depreciation in sterling was not so great an advantage to the export trade as many had made out. With so many other countries going off the Gold Standard, I agree-with him that the advantage has not been as great as might have been anticipated when this country first went off gold. I believe that the correct view of the matter is that so long as the rise in home prices does not correspond with the depreciation which is taking place in money, there is a distinct advantage to the export trade. It is an advantage, however, which ultimately disappears when home prices rise to such an extent as to wipe out the benefit which was enjoyed during the earlier stages. I am certain that the industrial world very fully appreciates the importance of this consideration to-day.

That is why I wish that the Chancellor of the Exchequer could have found it possible to have been a little more definite in his statement on Friday. He said that the Government were not coming to any definite conclusion as to what future policy would be, in regard to a return to the Gold Standard. That is a statement with which, personally, I entirely agree. But the Chancellor of the Exchequer seemed to give his support to the idea of trying to retain the present value of sterling at the level at which it has been lately. The only thing which causes some doubt to arise in my mind, in that connection, is his reference to the fact that the Macmillan Committee recommended that control of monetary policy should remain in the hands of the Bank of England.

I would point out to the Financial Secretary to the Treasury who will, I presume, reply on this Debate, that there are two points on which the Chancellor's position seems to be unsound. The first is that you cannot say to the Bank of England, "Decide this question; we leave it entirely in your hands." Why is that so? Because, although the Bank of England may have been capable of carrying out the recommendations of the Cunliffe Committee, ultimately, if this country was going back to gold, whoever outside the Government was carrying out that policy would have to come to the Government and ask the Government to put through a Measure in order to give effect to whatever had been decided upon. Ultimately it would be necessary to come to the Government if any attitude was being taken up other than that of leaving things as they are. The Government cannot possibly divest itself of the ultimate responsibility in this matter. The second point is: How are you going to keep your exchange fairly stable? One way would be to have a currency reserve by which, either the Bank of England or the Government would hold francs and dollars which they had purchased against the time when they wished to influence the exchange in certain directions. I should like to know if action of that kind is to be taken, who would take it, and who would be responsible if a loss were occasioned by a policy of that kind? If a loss is occasioned, will the Bank of England hear the loss? If the Bank is not going to bear the loss, then the Government would have to bear the loss, and I venture to assert that you cannot possibly hand over entirely to the Bank of England the responsibility for incurring a loss for which the Government afterwards will become liable.

It seems to me that the Chancellor of the Exchequer in his speech possibly went rather farther than he intended to go. He seemed to give the impression that he was placing the responsibility in regard to this problem in the hands of the Bank of England. We have to bear in mind that, in the City of London we are influenced very largely by financial considerations, and it is important that the industrial aspect of the question should be constantly kept before those who are going to institute a national policy in regard to the future of sterling, whether it is the Governor of the Bank of England or the Chancellor of the Exchequer. That is why I hope that the Financial Secretary will make it clear that the Government fully appreciate the importance which the industrial community attach to having no rapid rise in the pound. I hope that the right hon. Gentleman will be able to assure them that such is the definite idea of the Government and that, whoever carries it out, the view of the Government will be very strongly expressed that that is the policy which they wish to see carried out at the present time.


; This Bill which appeared at first to be a simple and non-contentious Measure has provoked a great deal of controversy. On Friday I heard 10 or 11 speeches upon it and no two of them agreed. To-day we have had some seven speeches which have shown the same differences of opinion as to what this Bill means and what its results will be. It is very important that this subject should be discussed thoroughly on the Floor of the House of Commons and I think that we are entitled to some lead from the Government on this question. Fluctuations in currency have a great effect on business and industry and on what people are to expect as a result of the present situation. Unless we have some direction from the Government those who are looking forward to greater stability will be placed in a very awkward position. In view of the importance of this question to our trade a little more time ought to have been given to the discussion of this Bill. I was very much surprised to find the Third Reading of this Bill being taken immediately after the Committee stage. I expected that much more time would be given to it, especially after the differences of opinion which have appeared in regard to it. The House was certainly entitled to have had a. longer time in which to weigh up the opinions expresesd in the Debate of Friday.

I entered the House on Friday not expecting any discussion on the Bill at all because its title "Financial Emergency Enactments (Continuance) Bill" seemed to indicate that it vas something which might be taken without any discussion and which certainly would not arouse any feeling such as it actually did arouse.

The Chancellor of the Exchequer in dealing with it on Friday smiled his usual smile, as much as to say, "I can take matters very easily because these speeches cancel each other out." But the right hon. Gentleman did say that this country, in his opinion, must ultimately be linked up to some metallic basis. He stopped at that; he did not tell us exactly what he meant, and I think we are entitled to have something more on that subject from whoever replies to-day. Are the Government prepared to let things drift on until, all over the world, there is some kind of settlement, or is this country going to give a lead in these matters of currency and finance? What are the Government going to do to obtain a settled currency and establish our financial position? These are very important questions to many thousands of people who are waiting for some lead and some guidance from the Government.

We on these benches believe that as regard these matters we should not be in the hands of the Bank of England all the time. We believe that the Bank of England might to be nationalised, that the nation ought to take control of it and that fluctuations of currency and the present methods of control in money matters have gone as far as they ought to go. We ask the Government to-day, are they prepared to continue in the present state of uncertainty, or are they prepared to give definite answers to the questions which have been put by the various speakers on this Bill? Those of us who are wondering what the policy of the Government is going to be will then be able to decide on our own line of action. We have not decided to oppose this Bill, but I think, after all that has been said in these discussions, and in the absence of any definite statement from the Government, we are entitled to say that we are not altogether satisfied. Unless the Government are prepared to tell us exactly where they stand on these matters, I am going to ask hon. Members on these benches to go to a Division on the Bill.

Lieut.-Colonel HENEAGE

I wish to raise a rather different aspect of this Bill. Up to the present we have been concerned with questions of currency, but there is another side to this subject and one which very much affects agricul- ture. I refer to the question of exploitation. I hope that the President of the Board of Trade will not always base his case in these matters on the published prices of livestock which appear in certain periodicals, because to a certain extent these published prices are rather in the nature of fairy tales. People who sell stock, when they make inquiries are usually unable to find anybody who has actually received these high prices. In Lincolnshire where there is a very useful sheep-breeding district, we have had very bad prices lately, and I wish to ask the Government whether they are doing anything to find out. the cause of the difference between the prices which are received by the producers of stock and the prices which are paid for British mutton in London.

Recently producers in Lincolnshire were getting for hogs and wethers—I may remark incidentally that in this connection hogs are sheep—an average of about 4½d. dead weight, while in London the price of British mutton was about 1s. 4½d. That is a very considerable discrepancy. I should like, at the same time, to point out that on the average the price of sheep has fallen 40 per cent. compared with last year. If hon. Members will inquire from their wives I think they will find that the price of British mutton has not fallen 40 per cent. in the present year. There appears to be a. certain amount of misapprehension as to what are the correct figures for wholesale prices. I do not think that the market prices published are sufficiently accurate for this reason. One or two markets in one or two districts are taken and not an average over many markets which are selling the same commodities. There is, for instance, Louth market, which is the largest in Lincolnshire and one of the largest in England. I do not think that the prices at that market are taken into consideration. For that reason, there would appear to be something wrong with regard to the relation between these wholesale prices and the retail prices in London, and I ask the Government to look into the matter. As far as I can see the producer is being "done down," but the consumer is not benefiting. There is too great a discrepancy between what the Lincolnshire producer is getting for his hogs and his wethers and what the London consumer is paying for mutton. This applies also to bacon and other things, and it is a serious point which should be given earnest consideration by the Government.

5.0 p.m.


I congratulate the hon. and gallant Member for Louth (Lieut.-Colonel Heneage) on bringing us back to our muttons. Up to now we have been debating questions of currency, but the hon. and gallant Member has raised a subject which is of more interest to his constituency which apparently mostly consists of sheep. I, on the other hand, represent men in the East End of London who work at the docks and who are greatly concerned with any currency policy which affects exports. They find that the dice is loaded against them and that the financial policy adopted by the Government has had the consequential effect that large numbers of them have been automatically thrown out of work. According to the figures of the Board of Trade, which cannot He, during February there was a drop in exports which has had a serious effect on the district which I represent to the best of my ability. I do not pretend to understand all about finance. I have known more about the lack of it in the course of my career. We find in the docks to-day a larger number of men signing on the Employment Exchanges, even though the means test is in operation, than before the present Government came into office, mainly because these people depend on the sending of goods out of this country, and goods cannot be sent out, because the trade is not there. We heard a great deal of talk a short time ago about dumping into this country, but that dumping has been conspicuous by its absence from the East End of London. The dockers would be glad to see the stuff dumped here, so as to give them a chance of unloading and delivering it, but it has not been dumped.

Now they have this second thing against them, that the increase in the value of the pound has not meant any advantage to them. It may be an advantage to those who gamble in gold and who deal in metals, but all this gambling in gold has simply meant less employment to those who want employment, and they have suffered as a consequence of the gamble. Generally, the workers do suffer as a result of gambling, particularly when it is gambling in the things that matter from the standpoint of the life of the workers. Have the Government a policy in this matter? Have they decided upon a policy? The name given to the Bank of England is an insult to the people of England. It is not the Bank of England; it is a private corporation, guaranteed by the nation. That is all it is, and it is not controlled. We have been told in this House that the Chancellor of the Exchequer, who is our greatest financial authority in this House, has no control. Is he an office boy to the Chairman of the Governors? Are we to be told in this House that Parliament has no right to say what we shall do or shall not do? All that we have to do is to foot the bill, and if they get into trouble, we have to give them a moratorium. In my opinion, we ought to give them a crematorium.

We are told that we know nothing about finance. We certainly have had Members speaking here to-day who do know something about it, and a great deal more than I do. I would not dare to enter into a competition with their knowledge on that subject, but if a country finds itself in financial difficulties, as we have done, and if we have only one financial authority to appeal to, surely we have some right, when we are going to shoulder the responsibility, to ask that authority to meet us at least fifty-fifty. Are they meeting us now? Does the reduction in the Bank Rate assist us? Does the gambling in gold assist the trade of this country 7 If the reduction in the Bank Rate has been a means of assistance, if it is going to increase trade and give us an opportunity of employment, well and good, but if, on the other hand, we are going to have, as a consequence of the reduction in the Bank Rate, an influx of gambling and speculation, and it takes away all the value of the increased productivity and opportunity to pay, then I say that what we have lost on the swings we have not gained on the roundabouts, and we are down and out as a consequence of the policy pursued by those in other places to take advantage of our position.

I happened to be across the water a short time ago, in Amsterdam and Rotterdam. I did not go there at my own expense, I can tell you, and I was not over there as a German spy, but I went as a delegate of my trade union to a conference, and I found that Dutchmen were gambling in British sterling, and doing very well out of it. They were able to make big profits at the expense of the people of this country in the matter of the difference between the value of our gold and their guilder. We have nothing to do with this gambling, and if the Government are not going to take steps to prevent it and to give us the opportunity of utilising our position —because, after all, we are a great exporting country still, in spite of the slump—if they do not help to save the situation by giving our finance something like parity in the world, then we shall suffer very materially.

I do not pretend, as I say, to know a great deal about finance, but I know that if a country is going to handicap itself it will not prosper. We were told that if we saved the pound we should save the world. Well, we have saved the world, but lost ourselves. Now it is going up. and they say we are going down. The more the pound goes up, the more we go down. What about the story told at the General Election? "Save the pound, O my people." Now the pound has been saved, and the people have been lost, and although you have put people on the means test, 130,000 of them, you have more unemployed to-day, admittedly, on the Employment Exchanges than before you started to save the pound. You have saved nothing except your own faces for the time being, and you will not save them for long. Shortly, yon will be left with nothing but your eyes to weep with. Hon. Members opposite can smile like cherubim. It is the saving grace of our new statesmen; their smile is the only thing that helps them through their career.

I only ask them to lay down a policy in this matter of finance. They were out to save the pound, out to save the world, but they have not saved themselves yet. We have a right to ask, although we are a small minority, what is their financial policy. Platitudes will not help; we want to know definitely, Are they prepared to allow themselves to be gerrymandered by international financiers? We have had a magnificent example of it to-day. I was very sorry to read in the paper that Mr. Kreuger had committed suicide. He was one of the instruments of international finance. He was one of the people who had the sense to commit suicide before the final issue. I do not want to weep over the graves of men who are not dead yet, but I want to say that that is proving to us what is. happening through international gambling, not in money—money does not matter—but in the lives of the people. That is what they are gambling in, and in order to stop it we ask, What is the Government's policy in finance? Are they going to lay down some policy which Great Britain will pursue?

During the War we did certain things. Cannot we do in peace what we did in War? Cannot we say that the interests of the nation come before the interests of any section of it? You call yourselves a National Government. If you are, why not say that, in so far as finance can assist us out of our difficulties, everybody, the Bank of England included, will have to toe the line? But no; we have to study the sectional interests. This bank, whether public or private, has to be put first. I put the interests of the common people before all your interests. The working class are the only class that are not a class; they are the nation. All other classes live on them. Who pays the bill? At the finish, it is poor old Phil Garlic. The parson prays for all, the lawyer pleads for all, the soldier fights for all, the worker pays for all. We ask the Government to tell us, What is their policy to help the people get a better chance of living? Unemployment is increasing, in spite of all the subterfuges that have been adopted to reduce the numbers on the Employment Exchanges, and to transfer them to the local authorities and public assistance committees. You are still in the same position, and, therefore, we ask, What policy have the Government got? Mere platitudes will not help us. We want a definite declaration of principle and policy in this question.


Nearly every speech, whether from experts or from non-experts, has agreed on one principle, and that is that we should very much like to have a fixed pound, but my trouble is that, although all the wise men that we have heard, young and old, have told us different things, some of the young ones, and some of the so-called business people, seem to think that business is bound to be prosperous so long as the pound has fallen and that when it fell in the autumn there were certain natural advantages to business in this country. We had a, very interesting speech from the hon. Member for East Edinburgh (Mr. D. Mason), who wished to see the pound go back to its pre-war value. He apparently is another form of expert, but there is no doubt that, whoever is right, if you carry out their desires to their extreme, you could not do better than by just going slowly.

If the pound really went down very many shillings, to 10s., or to 5s., there would be hopeless chaos in this country, yet, at the mime time, certain exporters for a time would be able to profit, in the same way as certain financial interests are bound to profit if the pound goes up, as it has been doing in the last few days. It has always seemed to me, as one who is not tied to either school, that the only way to look at the question of stabilising the pound is that money as a whole is simply the means for weighing goods. If you try to play about with the weighing machine in a shop, until you are found out, you can get on very well and make a considerable profit, but if every other shop in the district also gives false weights you lose the benefit, in exactly the same way as when other nations came off the pound the benefit that we got from going off the pound ourselves was practically cancelled. You can carry the analogy further and show how it works in almost every trade, but that is not my purpose.

Although every one of us would like to get some stabilised policy laid down by the Government, it is hopeless, in the face of international finance, to imagine that one Government can lay down the financial position for the whole of the world. I think you will have to have international agreements before you can come to any stability of this kind. I do not propose to go into the great questions, such as debts, which are affected, but it is really hopeless—and not only hopeless, but unreasonable—to come to the Government to-day and demand that they should lay down a policy of fixing the pound once and for all in some way that will command universal confidence for ever and ever. We should all like to get that, and to see the pound fixed, but I do not think it is humanly possible to do it. I would like to say a word of warning to the Government. A speech made the other day by the hon. and learned Member for East Bristol (Sir S. Cripps) has been quoted over and over again. In that speech he asked for prices to be stabilised on the 1929 level by an anti-deflation policy or if one would prefer to call it so, a slight inflation."— [OFFICIAL REPORT, 11th March, 1932; col. 2130, Vol. 262.] I hope that the Government, whatever else they do, will not try deliberately either to inflate or deflate the pound. The more the Government keeps out of international finance and finance in this country the better it will be for the nation. Let the people who understand these things settle these questions, and let not the Government imagine that they must keep in close contact and that kind of thing, as they have done hitherto. I do not want them to take the advice of the hon. Member for East Aberdeen (Mr. Boothby), who has given us so much instruction on this matter. He knows something about herrings, but, with all his wisdom, I hope that the Government will not take his advice on finance, because with less responsible people on the Front Government Bench—


Does the hon. Gentleman think that the bankers in the past have shown themselves to be right all the way through?


No, I am saying that even the hon. Gentleman is not always perfect, and that the people least likely to be perfect are the Government, which is continually changing and going into this question from different political angles. We must keep the Government out of these matters, and let the people who have spent their whole lives in finance deal with them.


I want to reply to a remark made by the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood). He mentioned that the lowering of the Bank Rate would have the effect of making London not so attractive for foreign money. It is curious that last week, when the Bank Rate was reduced, it was intended to have an opposite effect. The tendency for money to come to London was not due to the higher rate; it was due to difficulties and want of confidence on the Continent. The reduction of the Bank Rate was offered as a gesture that the Bank of England had more confidence and hope in the credit and future of this country, and it was that factor which attracted Continental money, so it had an effect opposite that which the hon. and gallant Gentleman seemed to think that it would have.

Much has been said in criticism of the Bank of England. I hold no brief for that wonderful institution, but I agree to a great extent with the remark that has just fallen from the hon. Member for Torquay (Mr. C. Williams). Government control of the Bank of England would be a disaster to this country, because it is most important that the control of the finances of the country in their technical operations should be absolutely free from all political influence. The Bank of England has had during the last 10 years to take the most momentous decisions at the most critical times. [HON. MEMBERS: "All wrong!"] They are not the only experts whose forecasts have not been carried out. In 1921 a body of international experts met at Brussels and decided that Germany should pay £6,600,000,000 in 30 annual instalments, and, in the light of the happenings since, that decision of experts has been shown to be almost farcical. Hon. Members opposite say that the Bank of England have made great mistakes. What is the result of their policy, however? To-day, after all our troubles, the credit of this country stands higher than it ever stood before in English history. It is coming back, and the whole world now is trying to return to sterling.

I would ask the House to consider what is the position of the banks in this country. It is liquid and sound, and has the full confidence of the people. In America last year over 2,000 banks failed, and about 1,500,000,000 dollars in deposits were lost by depositors. What is the position in this country? Working men from villages, old ladies, people who know nothing about finance have ingrained in them so much confidence in the credit of this country and the way that that credit is managed by the Bank of England, that they are bringing out their hordes of gold and their gold ornaments, and handing them over the counter in exchange for pieces of paper which bear the im- print of the Bank of England. The hon. Member for Limehouse (Mr. Attlee) made a remark about this country coming off the Gold Standard, and spoke of the way that we on this side of the House did everything to keep the country on to the Gold Standard. The Government of the day were absolutely right to strain every nerve to honour our obligations and to keep us on the Gold Standard, but we were forced off through no fault of our own. The demands of America and France to take gold, not as mere balances of trade but as a commodity for hoarding purposes, compelled us to abandon the Gold Standard, and we were perfectly right to stop on it as long as we possibly could.

The point has arisen to-day about fixing the pound at some stable point. I would reinforce that by saying that it is of the utmost importance that the Government should, as soon as possible, give a lead to the world as to the monetary policy of this country, because that will be a deciding factor in the prosperity or the failure of Europe and the world during the next few years. It is important that we should see to what extent the financial state of middle Europe and the Lausanne Conference will affect the exchange during the next few months because it will be a great mistake to fix the pound at a point at which we are not able to maintain it. Before we can fix the pound at a suitable point, we must realise the position of the Bank of England. If it could control the finances of the world, its task would be simple, but there are great forces outside its control, and all it can hope to do is to control our finances and our exchange and currency operations so that they will give a lead to other countries which, if they are wise, they will follow as much as possible. I hope that the leading financiers of other countries, especially of France and America, will read something of this Debate and realise our difficulties, because until they do so, and until they learn to be better neighbours among the nations of the world, we cannot hope to win more material prosperity and to find a way out of the world's problems. The mere taking of the powers under this Bill will obviate the using of them, and although I think That the Bill is wise, I believe that the credit of the country is so on the upgrade, and that these powers will never have to be used.


We have had an interesting Debate, although I must say that it does not inspire me with any desire to see the currency of this country managed by the House of Commons. Though in the multitude of counsellors there is safety, yet, if all the counsels are different, there is the danger that while the doctors differ, the patient may die. The House of Commons has very rightly desired to review the position in which the country finds itself, and in the course of that review some questions have been put to the Government as to the course of the Government's future policy. It seems to me that all the critics were summed up by the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme (Colonel Wedgwood) who, after begging the Government to say what their policy was, begged them with equal fervour to make no declaration on the subject at the present time. I think that those critics who have been most vociferous in their demand for an exposition of the Government's policy will be the most vehement in their support of the hon. and gallant Gentleman.

Let me ask the House to come back to the Measure which is, after all, what we are discussing to-day. It is called the Financial Emergency Enactments (Contitnuance) Bill, and, on the face of it, it bears a declaration by the Government that the state of financial emergency which may require action by the Government is continuing. If all that were necessary to end the emergency were a few vigorous speeches, a few resounding thumps upon this Box, a few ukases issued by the House of Commons or somebody else to the international bankers of the world—if we could get out of our emergency so easily, the emergency would have been passed, and there would have been no need for any such measure as this. We are dealing with a situation which has rapidly changed. We have to follow events, and not to lead them. We do not control the whole world. We do not always control even the opinions which we held the day before yesterday. I was interested to hear the hon. Member for East Aberdeen (Mr. Boothby) make a vehement denun- ciation of the policy of returning to the Gold Standard, which he did so much by voice and vote to support when it was being put through by the Chancellor of the Exchequer to whom he was Parliamentary Private Secretary.


I must protest against that. He went back to the Gold Standard before I got to him.

5.30 p.m.


The hon. Member for East Aberdeen was not then Parliamentary Private Secretary to the right hon. Gentleman, but subsequently to those rash actions he went to his aid. He cannot escape from the accusation by the statement he has made, for even after the right hon. Member for Epping (Mr. Churchill) had exposed the policy of the return to the Gold Standard in all its horror, the hon. Member for East Aberdeen rushed to his aid, and for years thereafter upheld his flagging hand and urged him to greater and greater feats of financial endurance. The Bill states that it is desirable to continue in force certain enactments passed in connection with the financial emergency. That is all the power which the Bill seeks to give to the Government, and to read into it the wide, sweeping suggestions which have been made from various parts of the House is to read into it something which has not been done hitherto and which it is not the intention of the Government, if it can possibly be avoided, to do in the future. Only one Order was made under the Act passed on 21st September. That was the Order of 22nd September, and it dealt, as it could alone deal, with the purchase of foreign exchange by British subjects or persons at present resident in the United Kingdom.

It is quite hopeless for us to expect that under this Bill we can give the Government the power, as suggested by the hon. Member for Silvertown (Mr. J. Jones) in a singularly clear and lucid speech, to control dealings in Amsterdam, or Rotterdam, or other cities which he visits in the course of his trade union activities. It is not within the power of the British Treasury to issue Orders controlling markets in Amsterdam or Rotterdam; and if it were in their power to do so, I think the hon. Member for Silver-town would quickly complain that we were in some way or other interfering with the livelihood of the working class in those two important ports. We are asking for certain powers which were given to the Government last autumn to deal with a state of emergency to be continued because that state of emergency still exists, and because we believe the actions of the Government since that emergency arose have been such as to impart confidence to this House and the country. The proof of the pudding is in the eating of it. Let me bring the House back to the remarkable statement which the Parliamentary Secretary to the Board of Trade was able to make when commending the Second Reading of this Bill to the House last Friday. He was able to say: Bread is on the Food Council scale—a scale which was settled several years ago. The prices of margarine, of eggs, and of milk are exactly the same as they were in September last. Tea, if anything, has slightly diminished in cost, and meat is cheaper than it was. The price of butter from New Zealand is less than it was, and bacon, which was 11½d. per 1b. at the time we abandoned the Gold Standard, is now 9¾d. Further, it may be noticed that the average wholesale prices in this country remain lower than at any time in the year 1930, and the food prices are lower than the average of 1930, by no less than 10 per cent.''—[OFFICIAL REPORT, 11th March, 1932; col. 2125, Vol. 262.] He was able to confirm those statements to-day by the further statement that although food wholesale prices have risen from 111.8 in February, 1931, to 114.2 in February, 1932—and that, I am sure, will be a subject for congratulation to the hon. Member for East Aberdeen—the retail food index has fallen from 36 to 31 between the same dates. That shows that not merely is no exploitation of the public and no profiteering taking place, but that the gap between the wholesaler and the retailer has actually narrowed during the period which is under review. Therefore, from every point of view, the action of the Government has been wise and fraught with the utmost advantage to the ordinary consuming public of this country, and profiteering, which was one of the dangers these enactments were intended to restrain, has not, in fact, taken place.

As for the general policy of the Government, the number of insured persons in employment, which was 9,316,000 in January, 1931, was 9,366,000 in January, 1932. In February, 1931, there there 9,326,000 in employment, and in February, 1932, 9,403,000. I do not say these figures can be counted on as being exactly illustrative, or that one would wish to analyse them to the last decimal place, but they certainly do indicate that the condition of employment has improved and has not grown worse within the last year, and that many of the gloomy prognostications launched so freely from all parts of the House when the crisis of September arose have not, in fact, been fulfilled in actual experience; and actual experience is the only verdict to which we can appeal. Every canon of economics, and, I might also say, every axiom of mathematics, has been challenged, and many of them have been disproved, by the events through which we have passed during the last 12 months. We no longer bow to the authority of the financial experts. Even poor, unhappy, discredited, orthodox people are beginning to lift their heads once more, and think that, perhaps, they are not such fools as was made out by the bright young people in the past. They dare to hope that even orthodoxy will eventually become respectable. In such a paradox as the situation presented to us the powers we are asking the House to renew were not extravagantly or unwisely used, and with that knowledge we ask the House to continue those powers for 12 months to come.


May I put one question to the right hon. and gallant Gentleman? He has stated, very ingeniously, that we are asking him for a declaration on the long-term position. The real question which has been asked is, Will he carry out the pledge given by the Chancellor of the Exchequer when the Act to which this Bill refers was introduced in September, which was that the Government would circumscribe or limit fluctuations in exchange? What he is really asked is whether he intends to carry out that promise.


If I may have the leave of the House to reply to the question, I say that not only do we intend to do so, but that we have in fact done it, and the proof is the remarkable stability of prices during the past month. The pledge was repeated, and, if anything, emphasised, by the declaration of the Chancellor of the Exchequer last Friday, when he said that, whatever his ultimate object, his immediate object was to prevent fluctuations of exchange.


We have had a very interesting discussion, though I am sorry to say that I heard only the latter part of it. When this country went back to the Gold Standard in 1925 I think I am safe in saying that very few Members of the House, if any—and I include the Chancellor of the Exchequer—knew very clearly what the Gold Standard is, and I doubt very much whether many Members of even the present House could pass an examination on it, or whether many of the economists, even the bankers, who write to the Press, could give a very lucid explanation of it. I do not know that our return to the Gold Standard in 1925 was such a very grave blunder as people, now wise after the event, think it was. The history of the country just after that event was very troubled. We must remember the colossal losses of 1926, the wrecking of trade, and the damage done to one of the trades which, above all others, was a means of national exchange for us. A blow was struck at the coal trade from which it has never recovered, and I question whether it will recover. It brought the use of oil fuel forward by nearly a generation, and those who bought supplies of coal from abroad were made to sign long term contracts, some of which have even yet not expired. It is all very well to say that the right hon. Member for Epping (Mr. Churchill) made a blander, and that the Government of 1925 were misled by the bankers and others, but who was to know that the Trades Union Congress would suffer from hydrophobia and bite the country in the way it did'? Nobody expected it. Those terrible events brought about dire losses and caused a great many of the events from the effects of which we are now suffering.

Picture the revived state of the country now! Think of the men who were on unemployment benefit just prior to the election, and of the fact that the country has now to some extent lifted up its head and has a feeling that the tide is just beginning to turn—because there is no doubt that is the general feeling, not only throughout the country, but throughout Europe and the world. I think the feeling of stability is far greater in Great Britain than it is in the United States. At all events, we feel that we at last have a Government that can govern, and that we are not ruled by the underworld. We have actually got control of our own affairs. I regard this Measure as one that is urgently necessary. We must give the Government these powers, but I humbly submit that it would be very dangerous for the Government to announce its intentions in advance, or even to indicate what it is going to do about stabilisation. That would be about as rash as if a man about to become a large investor intimated to the market that he proposed to make large purchases in certain investments, because other people would then buy in advance and he would be caught out on a rising market. The Government would do very much better to keep their counsel to themselves, and to proceed to deal day by day with the kaleidoscopic changes which are always taking place in the money market.

The reason for having gold as a standard of value is that of all the metals it is the least liable to sudden expansion. It keeps more or less stable. It is a very unfortunate phrase to speak of Great Britain "going off gold," because, as I indicated in a question the other day, that has resulted in simple people with little stores of sovereigns being ruthlessly exploited. I believe that in Egypt the Egyptians were spoiled by members of more astute races going round and telling them they had better sell their gold. In that way some of the fellaheen were deprived of their savings. The same thing happened in this country, though I do not think it occurred in Scotland, as the Chancellor of the Exchequer suggested, because the Scottish people know the value of money too well. When we went off the Gold Standard the price of gold materially appreciated, and it has been as high as £6 6s. an ounce for fine gold instead of the usual price of £4 4s. This has brought about intense activity in the search for gold in all the auriferous areas of the world where it i3 thought likely that gold may be found. Other industries have fallen back, and men who are out of work in Africa and in Rhodesia have got their kits together and gone out into the wilderness to seek gold, and I believe they are finding it. There are rumours of big "strikes" in various places, and nothing will help the finances of this country or of, the Empire and the world more than additional discoveries of gold. We should never have been able to continue so long as a Free Trade country if it had not been for the discoveries of gold in California in the 'forties and of the later discoveries in Australia and South Africa. There have been no great discoveries of gold since the South African discovery, the amount found in Canada making no material increase to the capital sum of gold which the world needs for its currency purposes. I believe that if the Government would leave sterling alone, though not letting it appreciate too far, and leave the price of gold at its present value, there would be important discoveries of gold.

There is another point which I was glad to hear the Chancellor of the Exchequer mention in his speech on Friday. He suggested that there was a possibility of taking some other metal into the currency. All my life I have been a bimetalist, and I never thought there was enough gold in the world to satisfy currency purposes. I do not think that there is anything that would bring back prosperity to this country more quickly than a return to silver. For it is in the East that the trade recovery will first come about. I know that a great deal of shipping is now being chartered for the East, and one of the largest of our shipping concerns has been chartering additional ships for its Eastern trade. If some time ago we had taken silver into our currency, we should have derived far greater advantages from the enormous resources of China and India, and those countries would have become some of our best customers. I do not think we ought to impose the Gold Standard on those poor countries, and thus make their precious metals comparatively worthless in the markets of the world.

I ask the Government to take into their most serious consideration the question of taking silver into the currency as a means of exchange. If they do that, they will satisfy India, and Mr. Gandhi will never be heard of again. It would do away with disorder in China, which is very largely due to the extreme poverty of the Chinese people. If we remonetise silver again, and allow these poor people to have a chance, I can assure the House that the whole trade of this country and the trade of Europe would revive, and we should increase our trade with the world. On some questions the bankers were wrong early in the War. They had the "business as usual" mind in War time. At the time of the last great War loan they advised the offer of a very high interest. But the Government appealed to the Super-tax payers, and Mr. Bonar Law sent out an eloquent letter to which they made a wonderful response. That was because Mr. Bonar Law knew human nature, and if appeals of that kind had been made earlier in the War, probably we should have been able to borrow the money for the War at a much less figure. Conversion to a lower rate is something for which we hope as a result of the sound financial policy of the present Government. Nobody can deny that the vast mass of the people have far more faith in the present Government than any previous one for a long time because they believe that they are doing the right thing for the country. They did not bribe the people as did some of those before them.

Mr. DEPUTY-SPEAKER (Sir Dennis Herbert)

The hon. and learned Member is getting right outside the Third Reading of this Bill.


I believe that the present Government have the confidence of the people, and we can safely entrust them to find a solution of these problems. They have to face difficulties, and these difficulties will remain as long as war debts remain. From the first we took the right course in regard to War Loans, which are largely the causes of the difficulties of maintaining the Gold Standard. We offered to cancel all these debts, but as long as people will not take goods in settlement of War Debts and War Reparations, as long as they insist upon payment in gold, there will always be a danger of a recurrence of the present crisis.


Protection will not stop it.


At any rate, Protection will prevent other countries using this country as a dumping ground for their over-productions. As long as the War Reparations and War Debts continue, as long as we do not accept the policy enunciated by the late Lord Balfour, we shall have to go on paying off these debts in gold, and if the gold keeps piling up in other countries, then there is a danger of a recurrence of the crisis. Until all these questions are cleared up, it will be necessary for the Government to have the powers asked for in these emergency Measures. I believe that we have now turned the corner, and the country is going forward once again to a state of prosperity. Already we see a reduction in the number of the unemployed. I have also great hopes in regard to the fruits of the Ottawa Conference, and when all these fiscal reforms come to pass, our taxes are reduced, and our War Debts are settled, trade is more stable, labour less subject to interruption, and employers realise their duty to the workers, and the workers realise their duty to their employers, then we shall take a great step forward once again.