HC Deb 07 December 1933 vol 283 cc1845-913

Considered in Committee under Standing Order No. 69.

[Sir DENNIS HERBERT in the Chair.]

Motion made, and Question proposed, That, with a view to giving effect to certain recommendations of the Royal Commission on Newfoundland referred to in an Address presented to His Majesty by the Legislative Council and the House of Assembly of Newfoundland, it is expedient—

  1. (a) to empower His Majesty by letters patent to revoke the existing letters patent by which the office of Governor of Newfoundland was constituted and the amending letters patent regarding the absence of the Governor from Newfoundland, and to make provision for the administration of Newfoundland on the basis of the said recommendations;
  2. (b) to authorise the making, so long as the administration of Newfoundland is vested in the Governor acting on the advice of a Commission of Government constituted in accordance with the recommendations aforesaid, of advances by way of grant or of loan out of moneys provided by Parliament to the Government of Newfoundland for any of the purposes of the administration of Newfoundland, including the expenses of the public services and the service of the public debt;
  3. (c) in the event of His Majesty being empowered as aforesaid, to authorise the Treasury to guarantee the principal of, and the interest on, any stock issued by the Government of Newfoundland under section two of an Act of the Legislature of Newfoundland entitled the Loan Act, 1033, and the payments to be made under section three of the said Act to the sinking fund to be established thereunder, and to charge on the Consolidated Fund any moneys required to fulfil any such guarantee;
  4. (d) to authorise the Treasury to issue out of the Consolidated Fund by way of temporary advance to the Government of Newfoundland any sums which that Government has power to borrow temporarily under the provisions of section two of the said Loan Act, 1933;
  5. (e) to amend section one of the Colonial Development Act, 1929, by omitting the words "for the Colonies "from subsection (1) of the said section one; and
  6. (f) to authorise the inclusion in any Act to give effect to the foregoing provisions of this Resolution of such incidental and consequential provisions in connection with the matters aforesaid as may be necessary or expedient."—King's Recommendation signified.)—[Mr. Chamberlain.]

3.52 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

The Committee may recollect that last month there was presented to the House a White Paper, No. 4479, in the form of a Memorandum by His Majesty's Government in the United Kingdom which acquainted the House with the view of the Government on the report of the Royal Commission on Newfoundland and also of their intention to present to the House proposals to follow on the acceptance by Newfoundland of the recommendations of that Commission. The present Resolution is the first stage of these proceedings. This will in due course be followed by a Bill which will raise a number of extremely interesting and important questions affecting, not only the people of Newfoundland, but wider questions of Imperial relations. To-day we are concerned principally with financial matters, and I therefore intend to confine myself as closely as possible to the financial aspects of these proposals, only touching upon the constitutional side as far as may be necessary to make the proposals clear.

In the autumn of 1922 it became apparent that the Dominion of Newfoundland would be unable to meet her obligations, and in order to tide over the interval, until further investigations could be made, the Government of this country, in conjunction with the Government of Canada, made a joint advance to meet the interest which became due in January, 1933, upon certain loans, our share of which was £166,570. Thereafter the Royal Commission was appointed under the chairmanship of Lord Amulree, and they went out to Newfoundland and made an exhaustive investigation on the spot of all the circumstances. The Committee will remember that the Commission comprised representatives of Canada and Newfoundland, in addition to the chairman appointed from this country. The time needed to make these investigations made it necessary for us again to face the situation when a further instalment became due last July, and, as the Government of Canada were unable to see their way to join with us again in a similar advance to that which we had made in the preceding January, the Government of the United Kingdom alone made the required advance. That came to £384,256, so that the total advanced by the United. Kingdom for those two instalments came to £550,826. Subsequently, we received the report of the Royal Commission which is in the hands of hon Members—a document which is perhaps one of the most remarkable and interesting ever drawn up in the history of this Empire. We feel under a great debt of obligation to the Chairman and to his colleagues for the great care and exhaustive manner in which they investigated these very involved matters.

They have made recommendations which are of a two-fold character and of far-reaching importance. I should like to emphasise that the two parts of the recommendations are not independent. They are bound up one with the other and must be taken as a whole. They involve a step which is unprecedented—the suspension for a time of the present status of the Dominion and the substitution for its present form of Government of a Governor in Commission. At the same time, in return for that, they involve the acceptance by His Majesty's Government in, the United Kingdom of financial responsibility for the affairs of the Dominion until such time as it becomes self-supporting again. Any hon. Member who has perused this document will agree with me that some of it makes very painful reading. The Commission have been extremely plain spoken in their account of the circumstances which have brought about the present condition of Newfoundland, and I do not wish, at any rate now, to dwell upon it, but only to say that their account shows that the country has been the victim of a vicious and corrupt political system and that in their view it is absolutely essential, if the financial position of the island is to be restored, that it should for a time have a rest from party politics. I think that perhaps it is only right to add that the present Government of Newfoundland has made most strenuous and praiseworthy efforts to bring about a better state of affairs. It is thereafter all the more significant that that Government has endorsed the recommendations of the Royal Commission and has entirely approved of the proposals which they make.

The Government of Newfoundland have now addressed His Majesty praying that new letters patent be issued for the period during which it is suggested that His Majesty's Government should take over responsibility for the island, and under the new Constitution, which is, of course, of a temporary character, legislative and executive powers will be vested, as I have said, in the Governor assisted by six commissioners. Three of these Commissioners will be appointed from Newfoundland and three from this country upon the advice of His Majesty's Ministers in the United Kingdom. The Government Departments will be gathered together into six groups, and one of the six Commissioners will take charge of each group. The decision of the Governor in Commission will be taken by a majority, the Governor being the chairman of the Commission. It is further provided that the higher appointments in the public service will be subject to approval by His Majesty's Government in the United Kingdom. Any new law approved by the Governor would be subject to disallowance by His Majesty on the advice of His Majesty's Ministers here, and the Committee will, therefore, see that a very full control has been assured to Parliament, especially as provision is made that there shall be no alteration in the form of government while we remain responsible without it being submitted and approved by this Parliament.

I think that I ought to make clear the financial scheme. The present public debt of Newfoundland, including certain temporary advances, amounts to £17,500,000 plus 9,000,000 Canadian dollars. The addition of these two items, taking the present rate of exchnage, is in the neighbourhood of £19,000,000. The yearly interest amounts to nearly £1,000,000, and that, as hon. Members may have noticed in the report of the Commission, amounts to no less than 65 per cent. of the total revenue of the Dominion. Some 30 per cent. of that debt was incurred before the War; 13 per cent. of it was for War purposes and the remaining 57 per cent. was a post-War debt, partly for schemes of capital expenditure on public works, and so on, which have not proved to be remunerative, but largely in order to meet the Budget deficits. It is a fact that there has been a deficit every year since the War, that deficit averaging about 2,000,000 dollars, and aggregating some 27,000,000 dollars—Canadian dollars, which is the currency of the island—and there has been a loan to meet the deficiencies in every one of the 12 years from 1920 to 1932.

I said that the present Government had made very commendable efforts to reduce expenditure, and to try to bring the expenditure of the country in line with its revenue, but although they have cut down expenditure by very large sums, they have, in the end, been beaten by the economic depression, and particularly by the disastrous fall in the prices obtained for their principal products, which are cod fish and wood pulp. The result has been that since 1929 there has been an increasing gap between revenue and expenditure, and in the current year the Royal Commission estimate that the deficit will be something of the order of 3,250,000 dollars. In summing up their main conclusions, the Royal Commission tell us that they feel that the debt of the country is out of all proportion to its capacity to pay. They express the opinion that the deficit is likely to continue in the neighbourhood of 3,000,000 dollars, that there is at the present time an imminent danger of the general collapse of the social and economic structure, and that even if trade should regain its normal dimensions, we must expect that equilibrium cannot be obtained without some relief from the burden of debt. The current expenditure since 1931 has been reduced by as much as 2,000,000 dollars, and I am bound to say that, on the report of the Royal Commission, I think we must draw the conclusion that the expenditure has now been reduced below the limit of efficiency in the country. The standard of life of the people has been brought down to a level which it is difficult to contemplate with anything like complacency, and it is probable that if the trade of the country is not to be entirely strangled, we must look forward to some reduction in the revenue.

In these circumstances, there seem to be only two alternatives open to His Majesty's Government—either they must respond to the invitation, to the request of Newfoundland that we would come to their aid, and that we would, in the absence of any possibility of assistance from any other quarter, take upon ourselves for a time the deficiencies which they are unable to meet, or we must contemplate that Newfoundland should default on its obligations. There are very strong objections of what I might call a sentimental character to the idea that Newfoundland should default. It is our proud boast that up to the present time no Empire Government, indeed, I believe, no Empire municipality even, has ever yet defaulted, and it would indeed be a sad and tragic thing if for the sake of a comparatively small country, when we compare it with the revenues of a great and wealthy land like our own, we should allow this magnificent record to be broken in upon now. In addition to that, we cannot forget that we have in Newfoundland not only our oldest colony, but that during the Great War the contribution which Newfoundland made to the Empire was in proportion to its population very high, and, if we take account of the casualties suffered, that it was a demonstration of the quality of the race of Newfoundland of which Newfoundland itself may well be proud. In the War, the Newfoundland contingent had the largest proportion of casualties of Any Dominion contingent overseas, and the highest possible tribute should be paid both to the seamen of the Royal Naval Reserve, who showed the utmost bravery in the most trying conditions, and also to the regiment which has well earned for itself the title "Royal."

Those objections to the course of refusing to come to the aid of Newfoundland, of standing on one side and seeing her suffer humiliation and loss by default, are very strong. But there are also very powerful reasons on the economic side why, in the interests of the Empire as a whole, we should endeavour to preserve Newfoundland's financial credit. Not only would default now completely shatter the credit of the country itself, and make it impossible for Newfoundland to raise money in the future for many years at any reasonable rate, but we might expect it would have considerable repercussions all over the Empire, and would at once begin to tarnish the name of those trustee securities which are trustee securities under the Colonial Stock Acts; that confidence which has hitherto been felt that it was safe to lend money to the British Empire would be injured, and it might be found that many other parts of the world which acknowledge allegiance to His Majesty would find themselves hampered in their financial arrangements in the future by the default of one of their members.

Therefore, the Government had little hesitation in making the decision as to what their course should be. They decided that they would accept the recommendations of the Royal Commission, that they would come to the aid of Newfoundland, and that they would accept financial responsibility, coupled with those alterations in the constitution which form an integral part of these recommendations, with the hope that they might help that country to overcome its difficulties, and gradually to work back again to a position in which it would be able to support itself. The Royal Commission did not themselves indicate the precise way in which the finances of the Dominions should be dealt with. What they suggested was that such arrangements should be made as may be deemed just and practicable, with a view to securing to Newfoundland a reduction in the present burden of the public debt. We have given very anxious consideration to that suggestion, the answer to which is by no means simple. We thought that it would be unfair to the taxpayer of the United Kingdom to take over the liability to make good both the principal and the interest on the present basis of the whole of the Newfoundland debt. A great part of that debt was borrowed in New York, and it was borrowed at rates which, if they did not reflect the gradually weakening position of Newfoundland, certainly did indicate the higher rate of bond interest in New York as compared with that prevailing in London, and, after investigating various alternative ideas, we came to the conclusion that the arrangement which would be most just and practicable would be one which gave to the borrowers the equivalent of 20s. in the pound on their principal, with interest at a reduced rate.

Accordingly, that is the proposal which I have to put before the Committee this afternoon, and, if it be accepted, the bulk of the creditors will not be paid in cash, but will receive stock of equal face value with their present holdings, backed by the Government of the United Kingdom, with interest at 3 per cent., which, we are advised, will produce a par value approximately equivalent to the nominal value of the stock. In the White Paper, No. 4481, which was put into the Vote Office last night, hon. Members will find in Appendix 3 a detailed statement of the public debt of Newfoundland. It will be seen that it amounts to a total of £17,464,776, and 8,954,750 Canadian dollars. There are a number of loans which are of different kinds, of different denominations, and bearing different rates of interest, and having different conditions attached to them. It will be seen by the footnotes that the holders of loans which are named (a), (b) and (c), the first three items, are to be offered the right to exchange in: D the new Guaranteed Loan. The various loans at the present time carry interest at rates varying from 3 to 62 per cent. The trustee securities will, in addition, have the option of retaining their existing holdings unchanged. The others, non-trustee securities, will not have that right. Item (d), pre-War loans in local currency, will be repaid in cash as it will be rather difficult to find the equivalent of a dollar security with dollars moving about as rapidly as they do in these days. Therefore they will be paid off; and so also will all the loans in the next item (e), which are specially secured. Two of the loans under item (e) are also in dollars. The last, the 4 per cent. sterling loan, is in sterling.


Where does the Government's £500,000 come in?


The £500,000 that we have already advanced is not in this. That is not a loan. Perhaps I may refer to that point later. These are the proposals, and hon. Members will see that a distinction is made in the treatment of the trustee securities as compared with the securities that are non-trustee. I have seen some suggestions that it is difficult to account for this distinction which, it is suggested, appears to indicate an action on the part of the Government towards trustee stocks in this particular case which is not extended to other trustee stocks such as railway stocks in this country, for example. That distinction arises out of the fact that these trustee securities are under the Colonial Stock Acts, and under the Act of 1900 and by virtue of that Act there is a Treasury Order, dated the 6th December, 1900, which contains the conditions under which loans of this character may be raised by Empire borrowers. I will read the relevant part of that Treasury Order: The Colonial Government shall place on record a formal expression of their opinion that any Colonial legislation which appears to the Imperial Government to alter any of the provisions affecting the stock to the injury of the stockholder or to involve a departure from the original contract in regard 'to the stock, would properly be disallowed. These trustee loans were issued by Newfoundland after they had given that expression of their opinion which they did in response to the Treasury Order, made under the authority of an Act of this House. We are now going to place ourselves in the position of the Colonial borrower. It would have been impossible for us altogether to override the conditions which we ourselves had demanded of the borrower, that is the Empire borrower. We have put ourselves in his place and we must therefore give our assent and our accord to the very conditions which we ourselves at a prevous time insisted upon. That is the explanation of the position in regard to these trustee stocks.

The effect of the proposals—if I may assume, as I think I probably may, that the holders of these trustee securities will not exchange but will retain their present rights under the new conditions, and assuming that the other stockholders who are offered the option to exchange, accept that option—will be that the annual interest on the loans will be reduced by £350,000 a year and the debt, apart from the Governmental debt, will amount to £2,000,000 of trustee securities and about £17,000,000 of new stock. The new stock will carry a sinking fund of 1 per cent., which will start not more than five years hence. The burden of that sinking fund will be an additional £170,000 a year, but we may hope that before it begins the financial condition of Newfoundland will be so much improved that that will not prove to be an excessive burden. Nevertheless, I think we must assume that it will be necessary for some years to come for this country to come to the assistance of Newfoundland and to make up deficits in her budget.

I have already explained that in all probability we shall have to increase the expenditure of Newfoundland to some extent and we may suffer some loss of revenue. It would be rather absurd to begin the new arrangement by adding to the debt of Newfoundland and, therefore, for three years until 1936 we propose that whatever advances are necessary to make good the deficiencies in the Newfoundland budget shall be in the nature of a free gift from this country.


Has any estimate been made of the probable amount of the deficit next year?


After 1936, if further advances are necessary, they may be by loan or by gift. We have not decided that yet. It is a matter that can be discussed better when we know the conditions at that time. My Noble Friend asked me if I can give any sort of estimate of what this is going to mean. He will understand that anything that one says now must be subject to a good deal of reserve, because there are many features that we cannot be very certain about, but as near as I can see, including the £550,000 which we have already found in the last 12 months, and which we propose should be a free gift, I should imagine that up to December, 1936, the total liability of this country may amount to something from £1,500,000 to £2,000,000. In addition to that, since the new stock will be guaranteed, we have a contingent liability so long as we are responsible for the Newfoundland Government, but any sums which may be payable under that guarantee so long as we are in charge will be found out of moneys voted by this House and will be subject to Parliamentary sanction. They will not be drawn out of the Consolidated Fund.


Is that additional to the £1,500,000?


If there are any other payments they will be additional to the £1,500,000. The question may be asked what will be the position on redemption in 30 years time—the redemption of the new 3 per cent. stock. At that time the Sinking Fuhd should amount to something like 40 per cent. of the total principal and, of course, if we are still responsible at that time we must then make arrangements for renewal of the loans, but, if not, then ex hypothesi Newfoundland will be self-supporting. In that case we may hope that she may be able on her own credit to raise the necessary loans. For 1934, next year, I should say that the amount of the advance will probably be from £350,000 to £400,000.

I hope I have given a fairly clear account of these rather complicated proposals. The Committee will see that there is very complete Parliamentary control over the whole situation. Before I sit down the House may like to hear something as to the future prospects of the Dominion. We cannot expect that even after the reduction in the debt burden which we hope to achieve by these proposals, Newfoundland will be completely self-supporting; but, at the same time, we think that there is no reason why she should not in time become self-supporting. Her misfortunes are due to misgovernment and also to the fall in prices. Now, with efficient administration and with a prospect of better times generally in world trade altogether, I think that her future is not at all unhopeful. We must remember that Newfoundland is a country of great potential resources. Her chief industry is, of course, her fisheries. In some respects they are the best in the world. They have been somewhat abused, parts have been overfished and there has been no proper provision for scientific renewal of the stock. There. fore there is a great deal undoubtedly to be done in the way of organisation of the industry, lifting it from the present abominable truck system and developing research in methods of improvement.

Newfoundland contains two very large paper mills, one the most modern in the world, and I understand that there is room for a third. They are already holding their own, and any revival in the demand for pulp and paper should add very much to the resources of the country. Newfoundland contains also what I believe is the largest deposit of iron ore in the British Empire, which already employs 2,000 men. There, again, we are hopeful that further progress may take place. The Royal Commission in the course of their extremely interesting report have made various suggestions for the development of other industries, and particularly for the encouragement of the 'breeding of fur-bearing animals which, through defective management, have been almost exterminated in certain parts of the country. There is also a great possibility in the future for Newfoundland as a centre for transatlantic air services, which may become of considerable importance before very long. Finally, New- foundland has a great territory in Labrador which has been hardly explored at the present time and which certainly has great resources in timber, water power and probably in minerals. Although that will require surveys and the investment of capital, I have no doubt that some day or other Labrador will be a very material addition to the resources of the Dominion.

The Governor in Commission will no doubt he faced with very formidable difficulties, but to anybody with an imaginative and adventurous mind there are great opportunities of a singularly absorbing and fascinating character in the task which will be before him. He has to create a new State, to rehabilitate the ruined finances of the country, to develop her resources, to rebuild the political system of the country on a new basis, and to bring back to the people of Newfoundland some measure of material prosperity and contentment with their lot.


Can the right hon. Gentleman tell us whether the Governor will be in the same position as an ordinary Colonial Governor, or whether he will be partly under the Colonial Office and partly under the Treasury?


He will be neither, he will be under the Dominions Office. It must be understood that the plan we are suggesting to the Committee is not to be considered as a permanent arrangement, it is a temporary arrangement devised solely for the purpose of enabling Newfoundland to regain her former position, and it would, therefore, be inappropriate that Newfoundland should be transferred from the Dominions Office to another Department of the Government. These are the proposals, and I trust that the Committee will find them acceptable and that we shall be able to say that when our oldest Colony in her darkest hour came to tile Mother Country for help she had no reason to regret the step.


Before the right hon. Gentleman sits down can he add to his illuminating speech a reply to two questions? First, whether any steps will be taken to call to account those responsible for maladministration in the past, and, secondly, whether in the new régime provision will be made to give preferential treatments to the products of Great Britain?


Those are questions which can be more appropriately raised on the Second Reading of the Bill than on the Financial Resolution.

4.35 p.m.


We shall oppose this Financial Resolution and, as far as I know, we shall oppose the Second Reading of the Bill. We object to the way this matter is being rushed. Why should we be carried along so quickly in order to get it through Why could not we have had more time to consider a White Paper that has only been issued this morning, just a few hours before the Debate? I protest, first of all, against bringing important business of this character before the House without giving hon. Members some opportunity of considering it. We have just listened to an extraordinary speech from the Chancellor of the Exchequer. If I had not been in the House for some six or seven Parliaments I should have been astonished at such a speech, having in mind the speech he made last Monday on the Unemployment Bill and the conclusions at which he arrived with regard to the £115,000,000 owing to the fund by the unemployed. I shall call further attention to that matter. Let us understand this business quite clearly. The Labour party do not object to helping people who are prepared and willing to help themselves, but we do object to the British taxpayer being called upon to make good bankruptcy brought about by wrong doing. The following statement appears in the White Paper: His Majesty's Government in tile United Kingdom will undertake general responsibility, under the new constitution, for the finances of the Island,…including the debt services. It is proposed that any advances made during the period ending 31st December, 1936, shall be free grants. It is also laid down in the White Paper that we are to expect a supplementary Estimate in order to provide £225,000. That is all in this year; and for how many years we do not know we are to provide not less than £400,000 a year for Newfoundland. The Chancellor of the Exchequer appeared to be in some doubt as to whether any addition to that £400,000 would be a loan, but it is quite clear that the £400,000 is to come on to the Vote and will be a grant from this country. We have considered this matter on two previous occasions. We granted loans to Newfoundland in December and February, totalling £550,000; they are now to be regarded as grants. We are to provide before the 1st January next another £250,000; that is, we are to provide something like £800,000 this year for the investors in and moneylenders to Newfoundland. What is the position? There are less than £260,000 people in Newfoundland, and the British taxpayer is to be asked to contribute more than £3 per head for every man, woman and child in Newfoundland—and hon. Members opposite will vote for it.

In my opinion, it is a ramp, a shocking ramp, which could not be justified before the electors of this country if it were put fairly before them. The Chancellor of the Exchequer said that it would be tragic if we were to allow Newfoundland to crash when we could save her, and that the Government had little hesitation in deciding to come to her aid. How different when it comes to the unemployed in our own country ! Take the Chancellor of the Exchequer's statement on Monday last. He let it be understood very definitely that the people of this country could not come to the Treasury and ask for what they wanted. The whole House was demanding that the £115,000,000 owing to the fund should be wiped out, at all events that future contributors to the Insurance Fund should not be expected to make good what has been spent on bread and butter during the last 12 years. We did not ask for £3 from the British taxpayer, if we had it would have been, with 45,000,000 of people, a sum of £135,000,000. We only asked the Government to agree that the burden of the money spent on food and the necessaries of life during the last 12 years should be met by the taxpayers of this country. The right hon. Gentleman and his Government have no hesitation in asking the taxpayers of this country to make good the maladministration of governments over a long series of years over people thousands of miles away. It is not the duty of the British taxpayer to make good maladministration over a long period of years.

My hon. Friend the Member for Lime-house (Mr. Attlee) has described this Government as a Government for moneylenders. I should describe it as a Government for bandits; it is a bandit Government in the way in which it deals with questions of this sort. The moneylenders and the Stock Exchange can do just what they like with the people of this country. I have a paragraph here which appeared in the "Financial News "of the 23rd November, 1933. It says: The stocks of 3 per cent. and 3½ per cent., which stood at 71 and 82 on Tuesday, 21st November"— That is after the report of the Committee came out— are quoted at 94 and 96 on 23rd November. Do we understand that this country will have to make good that sort of thing? Have we to pay for the gambling that is going on in this matter? It should be made clear where we are, what our liabilities are going to be; and how far they can fleece us. It is quite clear what is going to happen in this business. I have read the Report of the Commission and I agree with the Chancellor of the Exchequer that it is-a remarkable report. It is one of the most interesting reports, I will put it that way, for there is something in it. One thing in it is that there are in Newfoundland four banks with 20,000,000 dollars and that large sums of money are being hoarded in the homes of Newfoundland. If we had the same amount in the banks of this country for the unemployed they would not be squealing about their poverty and their hunger, they would be able to get everything they desired. I think Newfoundland ought to have been called upon to make good this state of affairs from her own resources rather than ask the British taxpayer to do it.

The Chancellor of the Exchequer also referred to the economic prospects of Newfoundland with regard to the Empire. Newfoundland does not sell her goods to Great Britain. Her fish goes to all parts of the world but here, and the same thing applies to her iron ore, which goes to Germany and other parts of the Continent. They do not buy from here. The hon. Member for Moseley (Mr. Hannon) asked a question as to that. The Report says that half of what Newfoundland buys comes from Canada, one-third from the United States and one-sixth from this country. That is the position. There is no justification on those grounds for our contributing this sum of money. The people of Newfoundland are not taxed as our people are. Of their revenue 7½per cent. comes from Income Tax. They have no local rates anywhere. In that respect compare their position with that of the people of South Wales, Durham, or my own West Riding of Yorkshire. They have no rates to pay in Newfoundland, and we have to make good a position such as that. It is a position which, we know, has been brought about by greed, graft and corruption. That is the sort of thing that "sticks "with me and makes me hesitate in giving support to this Dominion or to any other Dominion.

There is no justification for our paying Newfoundland's debts by raising a loan of £17,500,000 and for taking the financial responsibility of a part of the Empire which ought to shoulder its own burdens. If Newfoundland had a Government such as 1 would wish them to have, a Government such as I think we usually have in this country—we do carry on business without much question as to maladministration and misappropriation of funds—this sort of thing might not have happened. Moreover, because of Newfoundland's position we are to see its Constitution destroyed. We are to see a form of government which is hardly Crown Colony government. I do not know whether it is a form of government similar to that in the South African Protectorate government as we understand it, and certainly it is not democratic Government. The British taxpayer has a pocket that can always be dipped into and he is expected to provide everything for everybody.


All over the world.


I agree with the Noble Lord. That is really the position. That is what the Government are doing on this occasion. I question very much whether there will be any more purity in the method that is suggested in the Commission's Report, as I understand it. I have read the report carefully, and I am not so sure that that is not going to be the position, because it is not proposed to eliminate private enterprise: the proposal is to try to build it up again. This is the most glaring experience I have ever known of the failure of private enter- prise. Private enterprise cannot restore Newfoundland. The Commission say in their report: Little can be expected of private enterprise in present circumstances. So our Government is invited to indicate a way out and to give Newfoundland a lead on the right road. We know that Canada does not want Newfoundland. Labrador is to be retained and we are to provide the means. While it may be possible to do something with regard to Labrador, if necessary, rather than come to the poverty-stricken taxpayers of this country to make good what has happened in Newfoundland, I see nothing to justify this House in giving support to the Financial Resolution, which is practically the Bill that will be introduced in a few hours and is to be discussed in a day or two. I hope that the House will give fair consideration to the Bill and will have regard to our own needs before providing money in this particular way.

I have been in Newfoundland. I went there with a Parliamentary delegation some years ago. It is a beautiful country. It has wonderful scenery, there are delightful lakes and rivers, and the people are amongst the most kindly and generous. The mass of the people are very poor indeed but they are hospitable, and I was grateful, and am grateful, for any kindness received from anyone or in any way. But that does not justify me in supporting wrongdoing wherever it happens to be. The Newfoundlanders are hardy, as will be found in the paragraph dealing with the fishing industry; they are brave, as will be found in the paragraphs referring to what they did during the War. They have wonderful resources and they have not a bad climate during some parts of the year. If things were taken in hand, if a tax upon undeveloped land was imposed, as it ought to be, if the resources of the country were used by the people and the proceeds went to the people instead of to a new body of plunderers similar to those that they have had for a generation, I believe there would be a possibility of reorganisation in Newfoundland and that the position could be restored.

Why have not the British Government considered the idea of providing this money as a loan and not as a grant from the British taxpayer? There is need of grants for the millions of people who are unemployed and in poverty in this country. If the Empire can be held together only by supporting Governments similar to those which have existed in Newfoundland, which have been run, as the report says, on greed, graft, selfishness and corruption, then the Empire is not worth any expenditure by this country. I say that as one who is very interested in the Empire, and very sincere in a desire to help all those who are willing to help themselves. But I am not prepared to go as far as is suggested in this case. There is to be no recoupment whatever to the British taxpayer. All is to go to the bondholders. We do not know how many years it is to continue. It may continue for 10 or 30 years. We are told that a report will be presented to this House every year. So I suppose we shall have some opportunity of raising the matter again.

I am satisfied that in the way we are going on we are endeavouring to smash Vile Empire. There is Ireland, a country which knows very well what it does not want but does not often know what it does want. That is a difficulty for us at the moment and in my opinion it ought never to have arisen. We have also difficulties with protectorates in South Africa. Now we have this difficulty in Newfoundland. Where is it going to end? Are any other Dominions to come and ask for similar consideration?

The Labour party believes it is all wrong, and that we should not bolster up private enterprise in this way after it has failed. We believe that the encouragement of this kind of action in Newfoundland is a policy that will smash the Empire. I know the Government have no particular policy. The Labour party has a policy with regard to the Empire. [HON. MEMBERS: "What is it?"] It can easily be obtained and referred to in this Debate, I advise hon. Members to get it. It was adopted at the Hastings Conference. I am as sure with regard to any part of the Empire as I am with regard to my own country that there is no solution except a Socialist solution. As I happen to be a Socialist and believe that Socialism is the only remedy for our own country's salvation, so I believe it is the only remedy for Newfoundland. It can be applied without calling on the British taxpayer. Let Newfoundland provide the means for its own restoration. It has the necessary resources.


Will the hon. Gentleman help us by defining how Socialism applies in this case?


The hon. and gallant Member has heard what I have said with regard to the resources of Newfoundland. There is to be a discussion in this House in a fortnight's time, when the hon. and gallant Gentleman will hear how Socialism is going to be applied, as we have heard it on many occasions before.

5.0 p.m.


I cannot imagine a more unpleasant task for a Chancellor of the Exchequer who has been trying to nurse the country's resources than moving a Financial Resolution of this nature. The hon. Member for Rothwell (Mr. Lunn) in the very first sentences which he uttered raised what appears to be the real issue at stake here. He said that we had no responsibility towards Newfoundland. I admit that we have no direct, legal responsibility that could be enforced, but Newfoundland is a member of the British Commonwealth of Nations and, looking at the matter in that aspect, and having regard to the consequences that would follow if Newfoundland were allowed to default on her obligations, I think it must be agreed that we have a very great responsibility and one which extends far beyond our own borders and far beyond the borders of Newfoundland. Once we admit that responsibility we can approach the question from a very different angle from that of the hon. Member for Rothwell.

For a good many years the people of this country have been listening with apprehension to rumours and reports that have been coming across the water as to what was happening in Newfoundland and the matter was forcibly brought to the notice of the House when we were asked to make the advances which are now being granted, to help the country out of its difficulties. Then we come to the appointment of the Royal Commission and I take this opportunity of adding my tribute to those already paid to the remarkable work of that Commission. The care, thoroughness, skill and courage with which they have investigated all the circumstances and conditions of Newfoundland and placed their conclusions before the country are in every way admirable. But, I fear their report makes distressing reading. Summarised it ie a story of corruption, of bad finance, of unbalanced budgets, and of economic collapse, following on bad seasons, in an ill-organised industry upon which the whole country depended, namely the great industry of fishing.

The result has been complete political and economic breakdown and the question now is: What is to be done? If we do not go to the assistance of Newfoundland nobody else will do so, and there will be default. That default would not merely hurt the bondholders—who seem so to arouse the anger of the hon. Member for Rothwell—but would have serious consequences for all the inhabitants of Newfoudland whose economic condition is none too good at the present time. As regards the actual financial proposals put up by the Commissioners and now before us for consideratian, I can only say, having given them what study I have been able to give them, that they seem to me to be very skilfully drawn. I will not go beyond that. The matter is very complicated and we have to deal, as the Chancellor of the Exchequer pointed out, with special creations of trustee stock with dollar notes and with sterling notes and, over a, period of years, with the revenues of the country which are quite unable to meet the services of those loans. If we are to go to the rescue of the country it is obvious that we shall have to shoulder that burden, unpleasant as it may be—and it is not pleasant to have to face that situation, especially as we know that a great deal of the burden is due to maladministration and misgovernment. I spoke just now of the condition of the people themselves. It used to be said Delirant reges, plectuntur Achivi which rendered into modern political terms may be said to mean that when political leaderi, make a mess of things it is the people who suffer. It is indeed the people who have suffered in Newfoundland. There are three factors which ought to be taken into consideration when we look at the position which has been arrived at in that country. One is the factor of the political corruption which seems to have spread right through the body politic. We must also remember that taxation in that country is almost entirely indirect. There is practically no direct taxation and, as has already been pointed out, there are no rates. The combination of those factors has led the people to regard the Treasury as a sort of purse of Fortunatus that can be dipped into whenever they want anything. So much has this been the case that even for local requirements, such as small road making or bridge building schemes, it has been the practice to go to the Treasury. They expect the Treasury to pay for the doing of work which they ought to do themselves. When that resource fails, unless the British taxpayer goes to their assistance, I am afraid there is starvation in front of the people of the island.

Hon. Members have doubtlessread the report, and I do not wish to weary them by quoting the paragraphs dealing with such matters as the Truck Act, that abominable Act which is summarised in paragraph 307. That manner of doing business leaves the fisherman constantly in debt and, when bad seasons come, it is impossible for the person who supplies the money to get any work done by the fisherman or for the fisherman to get any return for the work which he does. It leaves him entirely without resources and, incidentally, it reminds me very much of the state of affairs which existed in the bad old days in my own county, when the wretched fisherman was always in debt to the merchant who supplied him with the necessaries for carrying on his industry. The absence of cash is a most serious matter in Newfoundland at the present time. They are reduced almost to a system of barter-and barter under great difficulties. The average income of a teacher in a country district in Newfoundland is about £60, and that teacher is probably the best-off person in the district. People may own their houses and little bits of gardens, and they may be able to cut their own firewood and so forth, but they have no money at all with which to purchase other requirements. The result is a state of almost unbelievable destitution. The people, over a great part of the island, are under-clothed, under-fed, and have not proper medical services. Physical deterioration is setting in and disease is spreading. That is the condition to which the island has been reduced, and these conditions affect the men and the sons of the men whose deeds during the Great War are spoken of in the report. Hon. Members will forgive me if I quote from pages 40 and 41: The seamen of Newfoundland had long been known in the Navy as efficient and resourceful, but the end of the War left them with a greatly enhanced reputation. They readily undertook almost impossible boarding operations in wild seas which others would not face. Nothing but praise was accorded by the Fleet. Then again at Gallipoli they did well, and in the action at Beaumont Hamel on 1st January, 1916, we learn: The regiment was set to take the village in face of a murderous fire. They went into action 753 strong and only 68 answered the roll call next day. Those are the men to whose assistance we are asked to go and I, for one, frankly admit that I am far more ready to go to the assistance of those men than I was to vote for the loan to help Austria some time ago. The proposal that the Government of the island should be put in commission means, of course, a complete suspension of responsible government and I think we may take it as a test of the dire straits to which the Colony has been reduced that the people are willing and ready to give up that prized possession of responsible government in order to obtain the assistance of the old country. The Chancellor of the Exchequer did not attempt to say and it is of course impossible to say how long it will be before we see the Colony on its own feet again but we hope it may be soon. There are great possibilities of development. The island is very imperfectly developed. Labrador is not developed, and I cannot understand why the hon. Member for Bothwell should say that it is impossible to develop it by private enterprise. The whole Empire has been developed by private enterprise.


That is where we get the corruption which we are dealing with now.


The people of Newfoundland have turned to the old country for aid and if I am asked whether we can refuse that aid I would say "No, we cannot." What we can say is and what we ought to say, is that if we give this aid freely to our oldest Colony to prevent it defaulting and to help it to stand on its own feet, we expect the people of the island whole-heartedly to assist in that task and to bring to it the same courage and tenacity which they showed at Gallipoli and in France.

5.13 p.m.


I think the Committee as a whole can only come to the same conclusion as the hon. Member for Orkney and Shetland (Sir R. Hamilton) namely that we must support the Government in undertaking the very serious financial and political responsibilities involved in their decision regarding Newfoundland. I am sorry that the hon. Member for Rothwell (Mr. Lunn) shows so little sympathy either for the unhappy people of Newfoundland or for the politicians to whose action their present plight is at any rate in part due. As far as the people are concerned, nothing that my hon. Friend the Member for Orkney and Shetland has just said exaggerates the suffering and starvation of which the great majority of the fishing folk of Newfoundland are victims at this moment.


That also applies to South Wales.


The money which they are drawing to-day in Newfoundland amounts to one-eighth of what is being paid to our unemployed, and whereas it has been suggested here that our present dole is not enough to keep people in good health, according to the standard set by the British Medical Association, I venture to say that not one-third of the fishermen of Newfoundland are able to live at anything like that standard at the present time. We are face to face with the fact that a population of our own fellow subjects who gallantly played their part in the Great War are now subject to miseries of which we in this country have no idea. When I come to the severity of the hon. Member for Rothwell towards the politicians, I must point out to him that, after all, what they have done in Newfoundland is what politicians always tend to do with an ignorant electorate. They gave easy promises, they set out to catch votes, they readily paid doles, and when the hon. Member for Rothwell objected in principle to this House being called upon to "make good the bankruptcy that has come from political maladministration," if I were to make a party point, I would suggest that that was the very purpose for which the National Government were brought into existence in this country a couple of years ago.


Is the right hon. Gentleman thinking of the Enclosure Acts, when advantage was taken of the people's ignorance?


I am thinking of the course of government which brought this country to the verge of bankruptcy two years ago. On the same lines, to a large extent, Newfoundland will have to be set right in the near future. I would add, as some mitigation of the mistakes and follies of the Newfoundland Government in recent years, that we must make some allowance for the terrible tide of adversity which has overwhelmed them, which must overwhelm a country living almost entirely on primary production and mainly on one crop, at a time when all world prices have been almost cut in two. I will give the House one figure from the Commission's Report. The average price that Newfoundland got for the product of her cod fisheries, her main source of livelihood, for the years 1928–30 inclusive was nearly 12,000,000 dollars, but for the last two years the average price was 5,000,000 dollars for a 10 per cent. less output—half the revenue of the country swept away. It does not require too excessive waste or too excessive improvidence, even in a small democratic community, to make the position impossible when you are confronted with such a situation as that. I would add, therefore, that whatever else happens in Newfoundland, the general monetary position must be borne in view. If we look upon the Empire as a whole, it is not only Newfoundland; there is many another colony that is suffering in almost the same way, and in some cases it has had to be supported by the Imperial Government. We are confronted by a problem in the Br fish Empire that is not unlike that which. President Roosevelt is facing in the United States to-day, and I think we shall, need to follow, not necessarily exactly his methods, but something of his courage in dealing with it.

Certainly it is a very heavy financial and political responsibility that we are undertaking. The question is, In what spirit are we going to undertake it, and what is the purpose that we are now setting before us? After all, there are two ways in which we can face this problem. One is that our Commissioners should thriftily, cautiously, timidly nurse back Newfoundland into bare solvency, and then hand it over, substantially the same place, to the same people, a country living under substantially the same conditions, and faced with the certainty sooner or later that it will slide back into disaster. There is not the human material, there is not the organisation to-day, which could enable that colony to make use of its resources. The other alternative is that we shall deliberately set before ourselves the task which the commission envisage when they talk of a constructive forward policy; the task of rebuilding Newfoundland from the foundation, of lifting that little country, with its splendid stock of people and its great resources, on to a new plane of economic life. That is a task which they alone can never carry out, but which, with the capital, the ability, and the directing power of this country, they can achieve.

It is not the first time that we have done this sort of thing. My mind goes back some 30 years to the conclusion of the South African War, when my right hon. Friend's father and Lord Milner had to undertake a task which in many respects resembled the task that we are undertaking in Newfoundland to-day. Over a vast territory you had every farm destroyed, every dam for water broken, all the cattle swept away, the whole life of the country reduced to chaos. You had 40,000 refugees, prisoners, and others brought back and dumped on to an empty country. Moreover, they were people who had no real agricultural tradition. There was no effective agricultural life, beyond mere squatting, in the Transvaal. Lord Milner had to face, first, the task of feeding those people, rationing them for a year or two, educating their children, and then creating from the very foundations a new life for the country, creating an effective agricultural department, a research department, agricultural training colleges, importing fresh stock to raise the whole standard of the cattle and the plants of that country, introducing an effective forestry department, an irrigation department—in fact, recreating the whole productive life of that country from its very foundations. He had to create a new Civil Service—the conditions in the Transvaal before the South African War were not very dissimilar from those of Newfoundland—he had to provide a, system of education, and for all these purposes he had to bring in new blood.

He brought in, first of all, a wonderful team of enthusiastic, keen, young men with driving power. "The kindergarten," they were sometimes contemptuously called at first, but South Africa has long ago abandoned any attitude of contempt for the young men whom Lord Milner brought into that country. More than that, he insisted upon a widely-spread scheme of land settlement, not with the idea of displacing the Boer settlers, not with the belief that you could really bring out an immense number of settlers, but in order to bring in new blood, new ideas, a new spirit of progress in agriculture. For all that work his master key was the revenue provided by the mining industry, and, secondly, as an essential temporary measure, a substantial loan of £6,000,000 or £7,000,000 for reconstruction.

All those conditions apply in Newfoundland to-day. You have a population, scattered around its thousand miles of coastline, of which a very large part are practically starving to-day. Whatever else we have to do, we have to see that somewhow or other those people are fed. That is one of the first tasks that the Commission have to face. Their standard of health from the point of view of medical care is appalling, apart from the wonderful work done by Sir Wilfred Grenfell in Labrador. You have to provide education, an immensely difficult task. Just as we gave education in the camps, in the Transvaal, at the end of the South African war, we may have to bring children together to some central points or boarding schools in Newfoundland in order to educate them. There is a tremendous task to be carried out there. The foundation of it all, the master key, which in South Africa was gold, in Newfoundland is the fisheries. That is made abundantly clear in the report, and undoubtedly the fisheries will want further reorganisation. The vicious system of truck must be got rid of You have to improve the whole character of the fishing boats, the catch, the method of dealing with it, the provision of bait, and a hundred and one things, and you have, behind all that, to have effective research. I am glad to think that I had something, at any rate, to do with the establishment of the fishery research station under the Empire Marketing Board, which is already yielding such wonderful results, as indeed the work of the Empire Marketing Board has been yielding everywhere, and would still be yielding if it had not been unfortunately cut down.

It is not only on fisheries, however, that Newfoundland must rely in future. You want research in many other directions as well. Here is a country which is probably rich in minerals. One of the first tasks before the Commissioners is to provide an effective geological survey. One of the next tasks is to provide an effective soil survey, so that we may know what the agricultural possibilities of the colony are. The Commissioners say—and from what I have seen I can readily confirm it—that the emptiest part of Newfoundland, the West coast, is fertile, and from what I have seen I should say that the Humber Valley and the Bay of Islands are at any rate as good as any of the fertile agricultural country in the neighbourhood of Oslo, in Norway, and could in the same way support an agricultural population.

But the existing population have very limited ideas, all based on fishing. The existing political system has never yet envisaged agriculture, except as a small allotment business in the spare time of men whose only idea is fishing. You have to create an agricultural department, you have to bring in the right type of cattle, sheep, and goats, you have to carry out Sir Wilfred Grenfell's splendid work in connection with reindeer in the North of Labrador, for reasons which are so admirably put in the Report, owing to the absolute failure of the Government to support him in his work. You have to do an immense number of things, and for that purpose you must bring in new blood, as you did in South Africa. I hope that not only my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for the Dominions will choose for these three Commissioners three of the ablest and most energetic, far-sighted men they can, but that they will attach to them a small band of young men with knowledge, with vision, and with a real determination to con- secrate themselves to the development of that colony.

More than that, I hope that in one way or another something will be done to bring in new settlers. Ion will never get the agricultural development of that country if you leave it to the present people, with their limited outlook and with no stimulus from neighbours of a more go-ahead type. You may get some of them from Scotland, where the conditions are somewhat similar, and you may get others from Norway or Denmark-very good settlers they make, too. You want to bring into Newfoundland new blood, with a new outlook, and -if you do that, I believe the development of that country in the next few years may be something far greater than any of us have hitherto imagined. There again you will not be able to do it without a substantial loan. It is perfectly true that money has been wasted and squandered in the past on mistaken development, but that is no reason why you should not raise fresh money now and administer it for sound development. Indeed, without that, I do not believe you will ever get that development of the country that you must have, and from that point of view I hope my right hon. Friend the Chancellor of the Exchequer will be generous.

I am not sure, in passing, whether the money that has been and is to be given as a gift might not possibly have been put to a contingent or deferred loan, if our policy of development really enables the land to prosper, but I will not quarrel with my right hon. Friend on that point. In any case I hope he will put capital expenditure into Newfoundland and make it a different country from what it is to-day. My right hon. Friend will remember very well that when his father undertook a somewhat similar great responsibility in municipal affairs in the city of Birmingham, he said: In 12 months' time, by God's grace, the city won't know itself. If we take this business of Newfoundland in the right spirit and with the right men, I believe that in five years' time Britain's oldest Colony will not know herself. She will be no longer her oldest Colony, but in effect her youngest and one of her most promising Dominions. She has in addition to her own territory, assets of immense potential value in the 110,000 square miles of Labrador territory, which contain vast resources of timber, enormous water power, and, in all human probability, vast mineral deposits. Labrador is a continuation of that pre-Cambrian rock shield of Northern Canada which is one of the most highly mineralised regions of the earth's surface and cne of the chief sources of Canada's wealth to-day. There is no reason why the Labrador section of Newfoundland should not also contain immense resources if it is developed. It may well be that the recommendation of the commission for a chartered company will be a most practical solution in view of the tremendous task already imposed on the Imperial Government in dealing with Newfoundland itself.

I entirely agree with my right hon. Friend when he said that this was an absorbing and fascinating task which we have taken in hand. It is a unique opportunity for the people of this country and for this country's leadership in the affairs of the British Empire. I confess 1 sometimes get rather tired when I hear it said on every hand that this country since the Conference of 1926 and the Statute of Westminster has abdicated its leadership of the Empire. It has done no such thing. The abdication of certain theoretical controls which have long ceased to be exercised, or which could not be exercised, is no reason for our abdicating our natural position as the leader, the power house, and the inspiring and driving force, from the point of view of human ability and effectiveness, of the British Empire. Therefore, I hope that we shall undertake this responsibility, heavy as it is, not merely as a matter of duty, but in a spirit of confidence and hope, confidence in ourselves and hope in the future of Newfoundland—in the spirit of words used long ago in this House— elevating our minds to the greatness of that trust to which the order of Providence has called us.

5.33 p.m.


I do not propose to delay the Committee on this stage of the Newfoundland problem. I will keep what I have to say for the Second Reading of the Bill, because I think that what I want to say can be more properly said at that stage; and I presume the Dominions Secretary himself will be in charge on that occasion, and I should prefer to deal with him rather than with the Chancellor of the Exchequer. The Chancellor of the Exchequer put the matter before us to-day in a very able way, but when the right hon. Gentleman, or the right hon. Gentleman the Member for Sparkbrook (Mr. Amery), or the hon. and gallant Gentleman who spoke for the Liberal party, bring in the sentimental plea in support of a case, I always get very dubious about the basic strength of their case, because all of them are very ready to rush in and wipe aside with a lordly wave of their hands the sentimental appeal when it comes from another quarter of the House. In this matter the Government are allowing their hearts, if I may be allowed to use the term, to run away with their heads, if again I may be allowed to use the term.

What is the cold proposition that is put before us? The cold business proposition is that we should assume the responsibility for a debt of £20,000,000 for creating which we have had no responsibility. The business assumption lying behind it is that some 60,000 wealth producers in a not too good corner of the globe—that is the reasonable estimate in a total population of 200,000; if I take just over one-third of that population as being wealth producers and the others as dependent wives and children, it is not an underestimate.


The population is 285,000; the figure is in the Blue Book.


I say over 200,000. I will call it a little under 300,000, and I still say that 60,000 or 70,000 wealth producers is a reasonable estimate of the working population. I would say it is an underestimate if we assume that families are on the same scale as in this country, but the probability is that they will be larger. We are making this business arrangement on the assumption that these 60,000 or 70,000 wealth producers can, out of a relatively difficult soil and undeveloped resources, produce their own needs, their system of local administration, and the interest and principal on £20,000,000. I do not think that that is a sound business proposition. The assumption on which this loan is based is that Newfoundland can be made a regular El Dorado, that people can be persuaded to rush for this island when as a matter of plain fact, everyone who has watched the movement of populations here and in every part of the British Empire knows that the tendency is for populations to move away from the primary industries, away from the remote parts into the big aggregations of population rather than 'for the big aggregation to move out into the more undeveloped parts of the world.

I cannot see any justification for assuming that, because we have taken on the burden of a loan of £20,000,000, there will be a wild rush of emigrants to Newfoundland, to a land which has a most disagreeable winter, and where they can only find as employment all the most laborious, arduous and dangerous kinds of work. The fishing industry at any time is a way of life which is surrounded not merely by toilsome labour, irksome physical conditions, but by great dangers. I can find no justification in assuming that there is going to be any great increase in population, nor for assuming that there will be a great influx of capitalists into Newfoundland looking for fields of exploitation. The right hon. Gentleman the Member for Sparkbrook says that they will develop their agriculture. May I ask what they are to grow? Our Minister of Agriculture is busily engaged in trying to increase our food production so that we will not have to import so much in the way of food as we formerly did, but we cannot import anythng like the fraction of the grain that Canada produces, or of the fruit that California or Australia or South Africa produce. Why tell the poor Newfoundlanders that there is a market for their agricultural produce?


In their own Island. At present they import almost everything they need.


It says in the Report: Each man is quite capable of building his house; the sea supplies him with food, both to eat and to sell; his little plot of land provides him with vegetables; the country side each summer is alive with wild fruits; and an occasional rabbit or duck adds variety to his fare. Therefore, according to the Report, he is not importing all his food.


The hon. Member will see a table of imports which supports the case of my right hon. Friend.


I know that, but the total volume of those food products that are imported do not make the basis for a great development of the agricultural life of Newfoundland. This fairy dream of the government for Newfoundland will be a necessity if the loan is not to become a grant just as the two temporary loans became; I was told in the House by the Dominions Secretary that they were loans, and I do not like the way in which these loans are turned in this White Paper into grants. The present loan will be turned into a grant unless—and the House in passing this Resolution ought to realise this—Newfoundland is turned into a highly successful wealth-producing island, which its past record gives us no reason for believing. We are to-day assuming the whole burden for the interest and the capital of the £20,000,000 involved. In order to do that, what are we doing? We are suspending local democratic government. Mark you, there is very little that is definite about this corruption in this Report. There are phrases all through about the corruption of local politicians and local politics, but there is nothing in the way of a definite charge; but if there has been corruption in the local politics, I would ask the Secretary for Dominion Affairs this question. The key point in Newfoundland government was the Governor—to a greater extent than in the case of the Governor in many of the Dominions, because he sat in the centre of the Cabinet. He had the position given him by the Crown here, but, in addition, he had a power almost similar to the power of a Prime Minister in this country. The Secretary for the Dominions shakes his head. I am merely basing myself on the Report. He is described as the Chairman of the Council, at which he presided. We have been sending Governors out there ever since there was a Newfoundland, and he has been in the centre of governmental control while all this corruption and all this debt raising has been going on.


If the hon. Member will look rather more carefully at the report he will see that the Governor presides at meetings of the Executive Council or Cabinet, but the work of the Council, however, is largely done by a committee or council consisting of members of the executive meeting under the chairmanship of the Prime Minister. So the ordinary work is done by a body over which the Prime Minister presides.


In another sentence it says that the minutes of the committee are formally approved by the Executive Council, presided over by the Governor.




Well, surely!


Let us assume that he has been what the right hon. Member for Spark brook suggests, merely, a figure head in doing his work. As chairman of the present Executive Council of 12 he could not prevent corruption in Newfoundland, and he could not bring about the stimulation of its industrial development. Now, as chairman of a council of six, he is to do all the things he could not do as chairman of a council of 12. I ask the Dominions Secretary whether the Governor under whose control this corruption has reached its peak point, and this disastrous condition of the Dominion's finances, is to remain as Governor in the new era of conservative finance and industrial, agricultural and fishery development. I am afraid that I do not keep myself au fait with the various Governors to the extent which I ought, because on more than one occasion I have had to deal as a Member of this House with situations in Dominions and Colonies where the Governor was a key person, but I am led to believe that the Governor is in this instance a retired Admiral of the British Navy. The right hon. Gentleman does not contradict that, so I assume that it is correct—that he has the breezy spirit of the quarter deck such as is bred in our bones. I do not know of anything in the training a man gets in the Royal Navy that fits him for handling a problem which is essentially financial and political, and therefore I want to know whether it is proposed that under the new scheme of government in Newfoundland the present Governor shall continue to be the Governor under the new conditions.

As I said when I rose, I do not intend to go into the matter fully at this stage, because I think the Second Reading of the Bill will be a more appropriate occasion to do so, but I consider the proposal now being put before us is a hasty and ill-thought out one. I ought to say here that on more than one occasion I com- plained of the dilatory nature of the Commission's procedure. I thought that too much time was being taken up. Having regard to the very careful report that has been furnished and to the nature of the report, I must withdraw the reflections I cast at that time on the Chairman of the Commission. But I change my attack now, and I say that if the report was too slow in coming, the decisions of the Government on the report have been made much too hurriedly, and I am inclined to think that under the pressure of other very awkward questions with which they have had to deal the Cabinet as a whole have allowed the Dominions Secretary to have too much of his own way in this matter. He has taken what appears at the first blush the line of least resistance. It seemed the easiest and quickest way of preventing Newfoundland's insolvency, but if it is, as I think examination shows it to be not a prevention of insolvency but a postponement of insolvency, the hurry is not to our advantage. It would be far better if the Government took back these proposals and considered whether there were not better and more business like ways of not defaulting on the existing debt—of course I know it would be foolish to suggest that to the present Government—by redeeming that debt at its market value, to which it would fall very speedily if it were known among the investors of the world that the British Government did not propose to assume responsibility for it for all time. I say that is business, and this is sheer, silly sentimentality. The Government should come forward here with some proposal not for relieving bondholders and investors but for relieving the distress of the toiling men and women of that Dominion, whose labour and whose War services have been so well described by various speakers. Let them come forward with a proposal for relieving the distress of those people, the real population of Newfoundland, and I am sure that no part of the Opposition will put any difficulties in the way of such proposal being carried through.

5.55 p.m.

Lieut.-Colonel SPENDER-CLAY

The hon. Member for Bridgeton (Mr. Maxton) always appeals to the ear of the House, but he does not always appeal to its head. He has told us that what he has said is in the nature of a preliminary skirmish, and that he has reserved his grand attack on the Dominions Secretary for the Second Reading of the Bill. I have listened with interest to the whole Debate, and especially to the speech of the Chancellor of the Exchequer, and I wish that I could concur in the proposals he has made for assisting the people of Newfoundland in their difficulties. I think the majority of Members in the Committee are agreed that some assistance should be given to the people of Newfoundland in their tragic condition, but I cannot agree with the proposals which the right hon. Gentleman puts forward. I would like to say that I agree with him that we owe a great debt of gratitude, as is recognised also by the hon. Member for Bridgeton, to the Royal Commission which produced this very illuminating report, and I suggest to the hon. Member for Bridgeton, in all humility, that it would be a good plan for him to read it a little closer before he attacks the Secretary for Dominion Affairs at a later date. It is a wonderful report, but at the same time a tragic report. It is sad to think that a self-reliant people, hitherto strongly individualistic, should by reason of a Government filled with a false optimism and through corruption which is almost, I should think, without parallel in the history of the Empire—in addition of course to the world depression—be reduced to the state in which we find them to-day.

It is only because I believe that the proposals of the Government, so far from clearing up the situation will aggravate the situation and not benefit the people of Newfoundland in the way we would like, that I must put forward objections to the scheme. The first objection is that it establishes a precedent which might be extremely dangerous. I was surprised to hear the Chancellor of the Exchequer lay down as a sort of thesis that could not be denied that under no circumstances should a trustee security default on its interest, no matter how badly the Dominion country may have been governed.


The hon. and gallant Member is now putting words into my mouth which I did not say.

Lieut.-Colonel SPENDER-CLAY

Then, of course, I withdraw my statement. I listened attentively to the right hon. Gentleman, but I am very glad to hear that he did not say that. I will take as an example what might have happened if Australia had had the precedent of Newfoundland before it. It is conceivable that in the dark days two or three years ago Australia might have expected assistance towards paying interest on her loans. If the various parts of the British Dominions feel that when in difficulties they can come to us and get gifts or grants-in-aid, we are establishing a rather dangerous state of affairs. The people of Australia, by their grit and determination to succeed, got over the greater part of their difficulties, and I feel that would not have been the case if they had had before them the precedent of Newfoundland.

The second objection is one to which I attach greater weight, and it is this: While an emergency exists, Newfoundland may acquiesce in what is ordained by the Commission appointed by the Secretary of State for the Dominions, and as long as the emergency lasts there will be no difficulty. As soon as the reforms are instituted, and it is apparent that the democratic form of government has disappeared altogether and the Commission begin to tread on the toes of the vested interests, there will be difficulties. When the Commissioners start purging the Civil Service, establishing a system of credit fishing and altering the inefficient marketing scheme which is at present in existence, the whole weight of public opinion will be against the Commissioners, who are made dictators over people who have hitherto been democratically governed.

My warning to the Government is that, in a year or so, the name of the United Kingdom will be mud in that country. Far from assisting in the proper development of the country, we are taking away their democratic government, which will end in disaster. Whether we like it or not, the drastic burden which has to be borne is going to affect practically the whole population of Newfoundland, from the highest trader to the poorest inhabitant. People do not like to he interfered with, especially by another Government, and that is the chief reason why I oppose these proposals.

My third objection is that it is not at all clear what sums are loans and what are gifts. There is, of course, £17,500,000, which is the amount of loans that are to be recognised as trustee securities. It is a little difficult to appreciate exactly why these are chosen as trustee securities, and why we should discriminate between one form of security and another. I hope that before the Debate closes, the Financial Secretary to the Treasury will give us a dear answer as to what we are going to advance on loan, what is guaranteed and what is to be provided in the way of gifts. I cannot help agreeing with a number of the things which have been said by hon. Members opposite. We are piling up financial obligations on this country. It is always Great Britain that has to pay. There come bad times in the West Indies or a hurricane. Great Britain provides a grant-in-aid. There is a corrupt form of government; Great Britain has to step in and provide large sums of money by way of gifts, in order to put the country on its feet again.

I feel very strongly on this. While recognising the extraordinary gallantry of the people of Newfoundland in the War and their highly individualistic character in every direction, we should not forget that 50 per cent. of the imports into Newfoundland come from Canada, and that the majority of exports from Newfoundland are sent abroad in Norwegian boats. That is a small point, but I regret that Canada has not seen her way to come in also and help. It is only fair to recognise that the present Government in Newfoundland have undertaken a heroic task in meeting the difficulties; they have faced up to a situation, without the need having been imposed upon them from abroad. They have cut services to the bone to such an extent that, undoubtedly, fresh money will have to be provided. I do not want merely to criticise the Government's proposals without making alternative suggestions. It is very easy to criticise almost anything in this House, but it is extremely difficult to put forward alternative proposals.

With all humility I want to put forward one or two suggestions for the consideration of this Committee. The Chancellor of the Exchequer said that it was unthinkable that a British Possession should default. I say that we are defaulting. If they ask the bondholders if they are will- ing to have their dividend reduced to 3 per cent., the Government, I maintain, are actually defaulting. I suggest that defaulting is not necessary. As a temporary measure, one could quite well take a token payment. We have heard of token payments before, and we pay a token payment to America at the present time. Why should Newfoundland not make a token payment of 1 per cent., or a of 1 per cent., to show her desire to resume payment? As things get better in Newfoundland, the conversion loan can be brought forward. A conversion loan would get over all the difficulties without defaulting, as I maintain is taking place at the present time.

Under the conditions which exist in Newfoundland to-day, it is only right that we should provide expert advisers to assist the Dominion Government in such matters as the social services, the organisation of the Civil Service and the development of national resources and marketing. I believe that advisers ought to be appointed, and likewise a Secretary of State ought to be attached to the Government. During the period that the advisers are in Newfoundland, grants-in-aid, at a low rate of interest, should be at the disposal of the Dominion Parliament for as long as they carry out the advice of the expert advisers. By so doing we should be governing by and through the Dominion Parliament, instead of allowing the Dominion to be governed arbitrarily by Commissioners appointed by a creditor nation.

I believe that this is a feasible proposition, and that there would be far more chance of co-operation between the people of Newfoundland and the Government, than under the scheme which is now proposed. As the result of the proposals put forward by the Government, the people of Newfoundland will be led to look upon themselves as poor relations, and that is a state of affairs which nobody likes, either as a country or as an individual. I dislike the idea of setting up an autocracy. The end of-democratic government is not yet reached. I dislike the idea of the Dominion Government giving up the position of a Dominion and surrendering its self-respect. It must do that, to the Government appointed by this country. It will not be in the interests of this country, because we shall not maintain the relations which have hither- to existed between the two countries. For that reason, I find myself greatly opposed to the Government.

6.11 p.m.


I venture to intervene for a few moments, not as one who has any knowledge of Newfoundland, but having had experience of developing more or less primitive countries. Development, unless undertaken on proper lines, will get a poor result, and all steps should be taken to prevent that from the commencement. It is an axiom that development, to be economic under modern conditions, must be planned. That is to say, it should follow a programme, the extent of which is in conformity with a general plan of development for the whole territory. One of the main factors in Colonial development to-day is that of the market available for the produce of the territory. It is not sufficient to be assured that labour and capital are available for any potential production. Those are the economic principles, which, as we have seen, the Secretary of State is now applying to the development of the Colonies.

Neglect of the aspect of markets has led to a great deal of uneconomic development throughout the Empire. It must be recognised that a rapid expansion is now impossible in most countries. It was once possible, without deep study and coordination, to undertake works and developments with the knowledge that they were unlikely to result in serious financial disaster. A reference to the Report will show that a great deal of uneconomic development has taken place in Newfoundland. We ought to be cheered to read in paragraph 633 of the Report that it was desired to obtain advice from experts on various subjects such as forestry, agriculture, geology, communications, education, public health and presumably also in trade and markets. The Commission's Report states, on page 223, and in the same pararaph to which I have referred, that, following the expert reports: we consider that the new administration should aim at the formation of a plan, extending over a period of years, which will not merely consolidate the progress achieved under its direction but will lay the foundations for the gradual building up of an economic structure. In the practical working out of this recommendation, a point which is often overlooked is the necessity for coordinating those expert reports in the form of a general economic programme for the country. In a specific case, in my own experience, the reports and programmes, submitted by the public health and education authorities, were worked out in all their implications. We found that they would have absorbed most of the revenue available to the country.

Again, in mast of these more or less primitive countries it is found that the roads and the railways are under separate departments, and I think that that is the case in Newfoundland. The tendency has been to construct the roads along the convenient alignments of the railways, so that they are in competition with the railways instead of being laid out as feeders, and the result is that the railways become a heavy burden on the Government. An example of what appears to be uneconomic development of this sort is shown on Plan No. 4, attached to the Report. That is a plan of the roads, and it shows that it is proposed to construct a road from Corner Brook to St. Georges, running alongside the railway for about 40 miles. Unless there is some exceptional traffic circumstance, which the report does not indicate, the making of this isolated piece of road would certainly result in a further impoverishment of the railway. This, of course, may appear a small item, but I estimate that the capital expenditure involved would be between £300,000 and £500,000, and that maintenance charges would be between £5,000 and £10,000 a year. That is something considerable in a small country. I have ventured to call attention to this matter because the report does not seem to make at all clear the necessity for a wide co-ordination in preparing the development plan and programme which the Commission recommend.

6.17 p.m.


It seems to me to be obvious from this Debate that there are questions which require to be answered by the Government. Although I speak from the point of view of one who is going to support the Government on the Resolution, certain very important questions have been raised, not, if I may say so, from a wholly party point of view, from both sides of the House. I do not agree with the criticism put forward by one hon. Member who spoke from below the Gangway opposite, that this proposal has been rushed through. I think, in view of the nature of the report which has been made by the very competent Commission who went out to Newfoundland, that it was necessary that action should be taken; but I hope that my right hon. Friend the Chancellor of the Exchequer will not think it impertinent if I say that in his speech he did not, perhaps, deal as fully as was desirable with all the aspects that arise in connection with this matter.

There is the question whether, if you go to the succour of Newfoundland, that is to be taken as a precedent for going to the succour of any similar Colony or Dominion. Of course, although in status Newfoundland is a Dominion, in point of economic value it is more equivalent to a Colony. I do not suggest that the Government should give this answer now, but, in putting this proposal before the Committee, they should, if I may say 30 to them, be very clear in their own mind that what they are doing may be taken as a precedent by future governments in similar circumstances. That is the first consideration which I would put forward. In the second place, I wish to say that I heard with a good deal of sympathy the remark of the hon. Member for Rothwell (Mr. Lunn), that Great Britain was providing money for every sort of object all over the world. That is indeed very true. Whether it be in the case of the League of Nations, or whatever it is, it is always Great Britain that is called upon to pay, although Great Britain is the most heavily taxed country of any. Therefore, while I do not in any way oppose the charge which we shall put upon the taxpayer in this Resolution, do think that the Committee, before parting with the subject, should be very careful to see that what is laid down in the Resolution is in the best interests alike of the taxpayers of this country and of Newfoundland.

The hon. Member for Bridgeton (Mr. Maxton) made a statement which, I think, will find a sympathetic echo in the heart of everyone in the House when he said that, if you are going to incur this financial liability, the interests which you have to consider primarily are those of the people of Newfoundland—that the wage- earners of Newfoundland are far more important than any of those who have lent money to Newfoundland. I am not competent to discuss the matter which was raised by my right hon. and gallant Friend the Member for Tonbridge (Lieut.-Colonel Spender-Clay), when he referred to certain suggestions which he said were not necessary from the strictly financial point of view, but obviously first and foremost we have to consider the interests of those hard-pressed people in Newfoundland who are either wage-earners or at any rate are living by their own efforts, though they may not receive daily wages. In addition, and here I follow entirely the line of my right hon. Friend the Member for Sparkbrook (Mr. Amery)—we have to consider also the interests of the people of this country. If it be true that there is room for very considerable economic development in Newfoundland, that economic development should be carried out on the basis of, firstly, the interests of the people of Newfoundland, and, secondly, the interests of the people of this country. I say quite frankly that those who are paying the piper should call the tune, and that is why I said I had some sympathy with the hon. Member for Rothwell when he said that we were always called upon to pay.

I do not want to appear in the guise—a most objectionable one—of the candid friend, but no doubt the Government will recognise that, at a time when they are finding it very hard to provide money for many things in this country, they will have to answer a case on the platform and elsewhere on this Resolution, and they ought to be extremely careful that they have a good case. One of the things that they will be asked is: "Is it really necessary that you should incur this very considerable obligation? Could not the actual financial obligation resting upon the shoulders of the taxpayers of this country be reduced in some way? "I suggest to the Financial Secretary to the Treasury, who, I understand is going to reply, that two things should be made clear from the outset. The first is that we are entitled to be repaid out of the revenues of Newfoundland the money which we actually loan as soon as those revenues are in a position to repay it without placing an undue burden upon the hard-pressed people of Newfoundland; and the second is that the money should be loaned on a long-term policy of economic development. As my right hon. Friend the Member for Sparkbrook said, it is no use saying that, immediately the country is in a fairly good financial state, we are going to hand back the Government to the very people who have mismanaged it for the last 25 years. I do not think that any politician who has been a Member of the Newfoundland Legislature would, if he were present in this House, say that he could stand in a white sheet as regards this matter. It is a terrible story of more than a generation of gross mismanagement, to call it by no other name, and, if we are going to undertake this heavy responsibility And create a precedent, we have to be assured that the Government is not going to be handed back to those people until conditions have vitally changed. I think it is most necessary that the scheme of development should be carried out on the lines indicated by my hon. Friend the Member for Tradeston (Dr. McLean), who has had so much experience in other parts of the Empire.

Another question to which I desire to refer is that of the form that this development should take. The Chancellor of the Exchequer did not deal very fully with that question, and no doubt quite rightly; it would perhaps be better dealt with on the Second Reading of the Bill. It is clear, however, to those who, like myself, have closely studied the admirable report of the commission, that there is room for very considerable development in a number of directions. First of all, there is the question of the export trade in canned salmon and things of that kind. Some of the money which we are going to be responsible for loaning or giving might be used in trying to develop, not necessarily through Government action, but through organisations for which the Government is responsible, trade of that kind. In the second place, there is the question of agricultural development. Much of the agricultural land in Newfoundland is just as suitable for cropping as a great many areas of the Highlands and Islands. It is true, as the hon. Member for Bridgeton pointed out, that the general tendency is for people to leave the more isolated parts of this country and of the Empire. That is true of Scotland. People leave the Highlands and Islands and come South or emigrate. But it is not true of Newfoundland to-day. In fact, the Report shows, on the contrary, that, so difficult are conditions on the American Continent, in Canada and the United States, that people have actually come back to Newfoundland, which, having an enormous birth-rate, is in a different position from Scotland in that the increase of population is very large. Is it not possible to settle some of these people on the land? My right hon. Friend referred to the fertility of the soil in some parts of the island. I have some pictures which he has lent me, taken by Sir Wilfred Grenfell, of the land which he has developed in the North of Newfoundland; and, judging from these pictures, very fine crops and stock can be produced in those parts. I hope that there will be development of this kind

Then there is the question of the export of ore to Great Britain. That is a matter which could be dealt with through the agency of Government organisation. Again, there is the organisation of the fur industry, which is alluded to in the Report; and, of course, there is also the question of paper. In this regard I think a tribute is due—it has not been given in the Debate so far—to what are commonly known as the Harmsworth interests, to the late Lord Northcliffe and the present Lord Rothermere, for the magnificent development which has been carried out by the Anglo-Newfoundland Development Company, where the conditions of the workmen are far superior to anything that has been known in Newfoundland, and probably as good as any on the whole American continent. Is it not possible to budget for development of that kind? There is another question which is referred to in the Report, but which has not been mentioned this afternoon, and that is as to whether some of this development might not take place in connection with recruitment in Newfoundland for the Royal Navy. Newfoundland has always been a great recruiting place for the Navy, and its Royal Naval Reserve gave a magnificent account of itself in the War. The Report suggests that steps should be taken to re-open that recruitment, and that one of His Majesty's ships should be sent there. I hope that all these questions are being taken into consideration.

I have no objection to the Dominions Office being responsible for the supervision of this—I do not quite know what to call it, whether it will be a Colony or what it will be; let us call it an Empire country. It must be recognised, however, that the Dominions Office has not the same expert knowledge as the Colonial Office, which deals with a number of territories all over the world which are in the sort of stage of development in which Newfoundland is. I imagine that this proposal is not going to be considered merely as a mechanical device for restoring the finances of Newfoundland; I hope it will be regarded as a device for developing the country.

I have only one further thing to say in supporting the Resolution, and that is as to the reason why, apart from anything else, it is so important that we should have regard to the potential development of the country. Every time I travel in Europe, as I do fairly often, I am convinced that there is a growing resentment in European countries at the way in which Great Britain and the Empire sprawl over half the world, and do not develop 10 per cent. of the resources which they own. How are any of us to give an answer to this question which has constantly been put to me and, no doubt, to others by foreign friends? Here are we, confined in our little country, with no chance of emigration, because the United States will not have us, while the British sprawl over half the earth and do nothing to develop it. It is not easy to give a short answer to that question, nor is it easy to give a short answer to the unemployed than in South Wales mentioned in a recent Debate who has no chance of getting work in his own district. What are you doing with all these great Dominions and what are the Dominions doing? Here we have a chance, not a big one, but we have a country that is undoubtedly capable of expansion. I believe we could within the next three or four years, if times improve, find profitable employment for the existing population and eventually we could get a small migration into the country. If it were only 5,000 or 10,000 a year it would help, and anyone who went from this country could not go to a part of the Empire more thoroughly British in sentiment. For 400 years these people have battled against the elements in a way worthy to compare with the magnificent record of the fishermen and seamen of this country. I hope the Government will approach this matter in a large spirit, and with a determination to make a success of this scheme, which can be made a success if approached in the right manner.

6.32 p.m.


I take it that I, like other Members, will have to give some reply to the question which will undoubtedly be asked of all of us who address public meetings: why we cast the vote that we are about to cast. If we are frank, we shall have to say to the people who are pressing us that it was stated by the Chancellor of the Exchequer that a debt approximating to £20,000,000 has been run up in a Dominion to which we owe very little except perhaps that it is our oldest Dominion and that during the War its small population contributed as large a share as any other Dominion or any other nation engaged in the War. The debt has been created by what the Chancellor described as vicious and corrupt political practices, and it is due to a set of people, again quoting the Chancellor, who live in various parts of the world including, of course, Great Britain. These foreign financiers who from time to time came to the aid of the Government that desired to borrow the money presumably made no adequate inquiries in regard to the securities offered to them and, as a consequence, they found out nothing of the corrupt practices which had been going on over a long period of years. The time came when discoveries were made which told all the world that the securities that they accepted were of very little value. To quote again from the statement of the Chancellor, either we had to come to their relief or they must default. I am asking, therefore, why should we alone come to their relief. I have often heard it said that we are one of a group of countries which have come together and call themselves the British Empire, and that we are all co-equal within the Empire, but at all times apparently, when anything goes wrong and when some financial provision has to be made for some other part of the Empire, the Mother Country has to look after her children and has to pay.

I have not heard any adequate reason why the people of this country, who are more heavily taxed than those of any other part of the Dominions, are alone to come to the assistance of one of the smaller Dominions when a financial crisis arises. I do not think I can give any answer, and I do not think any hon. Member could give any answer which would satisfy any reasonable person as to why we alone must meet the defaulters. The Chancellor told us something of the liabilities, but not very much. He was very guarded. The Dominions Secretary told us a little time ago, when the loans were being made that the Chancellor mentioned, that they were nothing but loans, but a few months later he comes back and says, through the Chancellor, "They are not loans, they are gifts," and in fact we have to give these people the money that we lent them a few years ago. If we are to judge by that experience, is there any real meaning why the whole of this £20,000,000 will not have to be treated as a gift? I think we ought to say to the people who ask us these questions that it is a gift and that we will settle the whole thing by paying it up and, at any rate, we shall have this to our credit, that we shall not have to continue to charge interest year by year if we pay off the whole of it in a lump sum under the best conditions that we can make with the people to whom the money is to be paid. But, after all, why should we pay it at all? No one on this side and I do not think anyone on the other side would raise the slightest objection if a loan was raised, the interest to be paid year by year, or a lump sum was paid to the people of Newfoundland to enable them to get over their temporary difficulties and to keep a reasonable standard of living for the people there. But that is not what we are asked to do. We are asked to come to the aid of a number of financiers in all parts of the world who incurred a bad debt. I have not heard anyone tell us why we should do that.

The only reason is that offered by the right hon. Gentleman the Member for Sparkbrook (Mr. Amery). I was wondering if he was speaking with his tongue in his cheek when he got so enthusiastic about those noble fellows who came during the War and only 60 or 80 went back out of 800 or 900. You can parallel that in hundreds of instances among our unemployed here. You can parallel it in almost any of the regiments in our own Army, and in certain parts of the country, at any rate, they are just as badly off as they are in Newfoundland. If we raise the condition of these people we are told it is sob-stuff. It is the ordinary sympathy of any ordinary person towards his fellows. If these people are as distressed as the right hon. Gentleman says they are—I have no personal knowledge of it, but I accept his word—I agree that we ought to come to their aid, but how much of this money is going to them? Will their condition three or six months from now, as a consequence of our voting for this Motion, be one whit better than it was, say, six or 12 months ago? Everyone knows that it will not be any different at all. They will still have to struggle on. They will still have the poor, mean existence that they have probably had during the greater part of their lives, and the £20,000,000 loan that we are guaranteeing will riot in any way aid them except to continue the hard struggle that they have to get their ordinary living at any time.

What are we going to get out of this? I have not heard a suggestion from anyone as to any kind of repayment that is to come to this country. I can imagine the Prime Minister, if this matter had arisen four years ago, telling us, it was a very fine opportunity for giving effect to the Socialist theories that he believed in then. I can imagine him saying, "If we have to put money into this country to develop its resources, to pay its debts or to meet its responsibilities, we ought to have something in return, and certainly, if the country is to be developed, it ought to be developed by capital from this country, and any return from the investment of that capital ought to come back to the nation which is responsible for its payment. The Prime Minister would not, of course, take that position now. I can imagine the Chancellor of the Exchequer, if the Government of Newfoundland had been a Labour instead of a Tory Government, telling us a great deal about the essential corruption of Labour Governments. I have been wondering what would have happened. I remember what did happen when we were discussing Poplar and West Ham. The population of West Ham is probably greater than the population of Newfoundland, and the people concerned in that instance were not strangers, largely foreigners, but our own people, many of them suffering just as intensely as any one is suffering in Newfoundland to-day. There was no corruption in West Ham.

It was suggested that there were practices which should not have taken place, but no one suggested corruption.

Nobody in this country will get anything as a result of the £20,000,000 which is to be given away. Nobody in this country will be one whit better off in consequence of having voted for it, but every taxpayer in the country will be considerably worse off in consequence. I am convinced that if the people of Newfoundland were in difficulties, and it meant the saving of the people from hardship, the £20,000,000 would not be voted, and the Government guarantee would not be given. But the bondholders—perhaps a good few of them are in this House—must not be allowed to lose their money. Their money must be guaranteed. The people in this House who are themselves bondholders and their friends will make this guarantee to their fellow-bondholders. It is done every day. It was done in the case of Austria. It is to be done now in the case of Newfoundland, and it will be done in every case where the interests of the bondholders are at stake. The remarkable thing about it is that you get away with it so often, and that the people of this country tolerate it. They, no doubt, tolerate it because, generally speaking, they do not care. They are not very much interested; they are a bit sick of things. They are tired of politics, and tired of their penury and privation. I hope that it will he considered the duty of everybody in this House and of every decent person in society to inform all the people of this country that their money is being given away, not for the purpose of saving the starving people of Newfoundland, but for the purpose of preserving the interests of the people who have invested money there. I shall take every opportunity of pointing out what the Noble Lord the Member for Horsham (Earl Winterton) has pointed out, namely, that it is nearly time the National Government and all other Governments took a little more interest in their own people at home, and a little less interest in the people of other countries.


I hope that the hon. Member will not attribute a remark in that sense to me. That was not what I said: that was not the effect of it.


I do not think that I am misrepresenting the Noble Lord when I say that he said that the Government were very interested in looking after the interests of people in other parts of the world instead of looking after our own interests.


No, I did not say that. I said that the British Government sent money all over the world. That was all I said. I did not say "this Government."


The Noble Lord gave me, and, I think, everybody else, the impression that when they sent money all over the world it was for some purpose. Perhaps he will be good enough now to tell the House the purpose. I am merely assuming—and I think rightly—that the purpose in this case is to help people most of whom, probably, are foreigners. It is nothing to the credit of this Government, or to this House, if certain people, acting criminally, lose their money and the loss of that money has to be borne by somebody, that we should impose upon our taxpayers the obligation of meeting that loss, so that certain people, many of them perhaps as criminal as those held to be responsible in Newfoundland, should be guaranteed against any loss at all. I am glad of the opportunity to vote against this Motion and of being able to tell the people generally-in the country that it is a ramp on the part of the Government, an interested Government, a Government representing, in this country and in other countries, the bondholders and the interest-mongers generally, to see that as far as possible their class is guaranteed against loss. At the same time they cannot afford anything like the same treatment for the unfortunate people in this country whom they ought to help.

6.50 p.m.


I do not agree with very much of the speech of the hon. Member for West Walthamstow (Mr. McEntee), but I agree most cordially with him in one thing. I want, if we-make a loan, to see the money repaid. Therefore, I want the Government's policy to be a success and Newfoundland to become a prosperous country. I should like to emphasise a point which was made by my Noble Friend the Member for Horsham (Earl Winterton) and by my right hon. Friend the Member for Sparkbrook (Mr. Amery), and which is referred to in the Royal Commission's Report. I most sincerely hope that His Majesty's Government will not be content with merely putting the finances of Newfoundland straight and remodelling and reforming its political system, but that it will go further and encourage real development. Hon. Members opposite take a gloomy view of the future prospects of our policy. I think that its failure or success depends not upon the bare lines of the Bill but wholly upon the spirit in which it is applied.

There is one particular point which I may be allowed to bring to the notice of His Majesty's Government, one particular form of development—the need of encouraging the formation of that scientific apparatus without which true development is impossible. We all say, it is a platitude, that the future of most parts of the British Empire depends upon the proper use of applied science. That I believe to be profoundly true, but Newfoundland, our oldest Colony, unfortunately, has never been in a position herself to provide that apparatus. Her eggs have been in far too few baskets. Her society has been too undifferentiated and undiversified. She has simply not been in the position to create the kind of development machinery which is far more important in the long run than political institutions. Take, for example, her fisheries, the main means of her livelihood. It was only, I think, last year that, under the auspices of the Empire Marketing Board, a marine biological station was established in Newfoundland. I do not believe that there is any finer race in the world, hardier and more courageous than the Newfoundland fishermen, as anyone knows who has been there, or who saw that wonderful Newfoundland contingent in the Battle of the Somme. But they have never had a chance of having modern science applied to their main industry. Their methods are still hopelessly out-of-date. The same thing is true of other interests. The agricultural potentialities, and the pastoral and mineral potentialities of the land have never been properly studied, although I was very glad to hear the tribute paid by my Noble Friend that its forest wealth has been admirably developed by private companies. A large part of Newfoundland is still to-day unknown. I under- stand that a larger proportion of the island is unsurveyed and unmapped than of the continent of Africa.

The reason why I have risen is to emphasise and to remind the Government of what I believe to be a very valuable precedent, and one to which my right hon. Friend the Member for Spark-brook has also referred. After the South African War, the Transvaal and the Orange River Colonies, so far as their rural parts were concerned, were practically in the position of Newfoundland to-day. They bad an undiversified society, and they were simply not capable of providing themselves with proper apparatus for development. Lord Milner, with whom at that time I was associated—I was one of what my right hon. Friend called "his young men"—alas ! to-day no longer young; I did not even belong to the kindergarten but to an earlier vintage called the Creche—took a very wise and far-sighted view. He realised that both the risks and the handicaps and potentialities of South African farming were practically unknown. So he collected experts up and down the whole globe, from Britain, from America, and from other parts of the Empire, experts in different forms of agriculture, bacteriologists, experts on pasture, on fruit, on tobacco and on irrigation. There was a tremendous row. We were accused by the urban interests, especially the goldmining interests, of squandering money, and the rural population, for whom these things were done, being stubborn Conservatives, regarded the whole thing as folly. But very soon the wisdom of that policy was proved. Presently came the great epidemic of East Coast fever, and but for these scientific departments the whole cattle stock of the Boer farming population would have been absolutely destroyed. I remember General Botha telling me just before the Great War that the Boer farmer would give up anything rather than those scientific departments which he had begun by doubting, but which he had learnt by experience to be of profound practical value.

6.58 p.m.


I care not whether the hon. and learned Gentleman the Member for the Scottish Universities (Mr. Buchan) belonged to the Cr´che or the Kindergarten, but I am sure that most of us who have read his novels will agree that he has arrived somewhere now. Much as I admire his efforts in disclosing to our view the stirring past, I find them much more safe as a guide than I find his speeches in this House. The Chancellor of the Exchequer in introducing this subject said, and, I think, rightly, that the two aspects of this problem to which the White Paper directed our attention, namely, the constitutional and the financial, are so inter-related that we cannot very well divorce the one from the other. I should like on that account to make some observations upon the constitutional side which is raised for us on account of the Resolution which we are considering. There is a matter of very great substance involved in this constitutional change. We are a people who believe in democratic government, and when we are required on any grounds to agree to the removal of the forms of democratic government, we can only endorse such a proposal if the arguments in its favour are overwhelming.

Not only are we as a party devoted to democratic sentiment, but there is no doubt truth in the assertion that the people of Newfoundland themselves would attach the very greatest possible importance to the fact that they had been hitherto a self-governing Dominion. Whether they should have been a Dominion at all is another matter. It may seem to he a foolish thing to call a country a governing Dominion when it only consists of some 280,000 population. But they have been a self-governing Dominion. Now there is a suggestion that in the future the Governor should, as it were, go into Commission and be assisted by some six commissioners, three British and three Newfoundland. In place of the democratic form of government that has prevailed hitherto, there is undoubtedly to be a form of government exercising, so far as the people of Newfoundland are concerned, absolute authority, and that absolute authority will last for a period of years —no one knows quite how long. Self-government is given up completely, and suggest to the right hon. Gentleman that it is a tremendous set-back to the principle of democratic government within the Commonwealth to put forward a proposition of this sort at this time of the day.

I cannot believe that the Government would deny that underlying this proposal is the assertion that self-government as we have known it in Newfoundland has completely broken down. I am not quite sure that I should agree with that as a simple proposition. There have undoubtedly been failures—tragic failures—and for directing our attention to them I associate myself with those who have paid deserved tribute to the Commission who have presented this very courageous document for our appraisal. But the question is: has this failure arisen on the part of the people themselves? Is it fair to tell the people, "There has been failure within your country on the part of the Government, and because of that failure we are going to withhold from you for a certain time all the functions of self-government?" That is a big proposition to put forward, and before you invite the people of Newfoundland even to contemplate it you must prove that the failure arises not from the Governor, not from the legislature, but from some inherent failure in the people themselves. I submit that that takes some proving.

Before, however, I come to that point I want to return to the point which was put, quite properly, by the hon. Member for Bridgeton (Mr. Maxton). What about the Governors of the past and their share in this matter? From time to tune Governors living in Newfoundland, acting on behalf of this Government, have been in constant touch with the Government of Great Britain. Have they never informed the Government of Great Britain of this state of deterioration in the public services? Has no Governor at all called the British Government's attention to this gross mismanagement? Have they been entirely dumb all these years? If so, it is about time that someone was called to book for failure to draw attention to the dreadful deterioration which has obviously taken place.


The late Under-Secretary for the Dominions the hon. Member for Rothwell (Mr. Lunn) must have forgotten that there was an investigation by a Government into Newfoundland a number of years ago.


I will come to that presently, if I may, except that I should like to say that I am not acquainted with the terms of any findings that arose in consequence of that inquiry.


I am sure you are not.


I would, however, say that if it be true that previous Governments or this Government have been made acquainted with the steady deterioration in the governmental machinery of Newfoundland, then clearly the responsibility upon this Government to consider with circumspection any suggestion of floating a new loan was all the greater on that account. If in the face of that evidence our Government allowed loans to be floated deliberately and knowingly, that is, with the knowledge of maladministration in their possession, their responsibility is very great.

Turning to the responsibility of the legislators, we are not now considering the operations of a Labour Government; we are not even considering the operations of people who have Labour sympathies. I may remind hon. Members who are opposed to self-government for India that we are not even discussing the failure of Indians. We are discussing the failure of people of our own flesh and blood. I say quite deliberately to the right hon. Gentleman that there is ample evidence in this Report to justify us in asking what judicial action is being taken in regard to these people who have been so shamefully negligent of their obvious duties Warren Hastings was impeached by this House on far less evidence than would be available in the case of some of these people. I will make another observation which does not concern the Government at all: the religious denominations of that country deserve the severest censure for their share in this business. Those who stand for moral principles in private life ought not to be absolved from being expected to stand for decent principles in public government as well. But, seeing that the right hon. Gentleman himself at the beginning of this year appointed this Commission to inquire into this matter—and I think I am right in saying that a. request was also made by the Legislature of Newfoundland after the general election for an inquiry—in any case, seeing that an inquiry had to be embarked on, how comes it that our own Government allow another loan to be made to these people after the inquiry has been set up?

It is not fair to suggest to these people as a whole that they have failed. There has been failure, but it has been mainly on the part of people who have been officially responsible for the governance of that country. Moreover, I ought to say in partial defence even of the legislators, as well as of the people, that all the trouble is not theirs. They have undoubtedly been confronted with disasters on account of the failure of Nature herself. But they have not learnt their lesson from experience at all; they have just gone on as though nothing bad happened in any way. I ask the right hon. Gentleman whether, supposing that we take the action which is suggested to-night and that the new Commission lasts for 10, 15 or 20 years—call is x years—what guarantee is there that at the determination of that period the people of Newfoundland will be any more deady to conduct government efficiently than they are now? In the meantime they will have no experience of government: it will all be withdrawn from them. They will not even have local government, but will have the machinery of government completely removed from them for a given period of time.

Secondly, will not our action in putting in a Government of our own tend somewhat to increase the measure of their reliance upon us? They will tend to say, "Never mind, if we get into a hole the Home Government will get us out of it; they will put in a Commission, as they did in 1933." It is therefore a bad thing for them that for a given period they should be entirely removed from the scene of actual self-government. Lastly, you ought even during this period, however long it may be, to continue as closely as possible the actual association of the people with whoever may be responsible for the Government during this interregnum, be it short or long. But to cut them off completely is an exceedingly bad stroke of business. I will leave this side of the argument with the remark that for our part we take the strongest possible exception to this retrogressive action in this matter of Dominion self-government.

A word or two about the financial side. Some surprise was felt—why it should have been, I do not know—at the strength with which the hon. Member for Rothwell (Mr. Lunn) spoke from our side during the discussion. We have come to the conclusion that the time has 'come to cry a halt to this habit of lending or giving money from time to time to various parts of the British Dominions. I have no objection to having a business relationship with them; I am prepared to work with them as heartily as possible, but we ought not to allow them to come to the conclusion that it is our job from time to time to get them out of the difficulties which they themselves have created. We take heavy responsibility for these people already. Enormous responsibilities are taken financially to safeguard them in the matter of defence; that is not a small contribution in itself. We have extended vast loans to various parts of the Empire and in various ways, and that is a heavy responsibility.


What Government loans?


The right hon. Gentleman knows that from time to time we have given financial assistance, sometimes by grant and sometimes by loan.


Tell me one instance. It is important to know to what Dominions we have given a loan.


The right hon. Gentleman knows that there is a Colonial Development Fund through which we extend assistance in one way or another to this or other parts of the Empire. That is fact which everybody knows. There must be a time when we must cry a halt to this habit. We have had some rather curious instances of financial aid given to various parts of the Empire since the War. Let me mention one or two just to remind the right hon. Gentleman, who, I see, is not interested in the matter, though possibly he will listen to me. Take the case of ' Nauru. An agreement was entered into between the late Lord Milner and Mr. Hughes in regard to Nauru phosphates. That has gone on for years. We invested vast sums of money there. It is true that we get 6 per cent. return on our money, but our purpose was not to get a return on our money but to get phosphates, and we do not get one cart, load. We cannot get our money back. It is locked up there. That is one instance, and there are others. The Empire Marketing Board gave money in one form or another. That may be defensible from some points of view, but there must be a point at which we must cry a, halt and make it clear to these people that it is impossible for us to continue bearing the burdens, when we ourselves are in the middle of great financial distress.

In regard to this particular proposal we are told that the alternatives are either default or the method proposed in the White Paper. I admit that there is overwhelming evidence of grave breakdown, but it is not strictly true, as the right hon. Gentleman suggested, that these people are all as poverty-stricken as he implied. I know that there is great poverty, and I regretfully admit it and that these people are very hard-hit. But let us face facts. The report of the Royal Commission tells us that they have on deposit in the banks at this moment 26,000,000 dollars, and they will not touch one penny of it, because of the tradition in their home circles that once a parent has invested so much money in the bank it is almost more than he dare do, because of the strength of the tradition, to withdraw it. He must leave it to his children. I should like to think that my people in South Wales and in my constituency had 26,000,000 dollars, or the equivalent of that sum. I should like to think that my people will have on an average 100 dollars per head in the bank. If they had, the Government would quickly apply the means test in this country to make them disgorge as soon as possible.

The people in Newfoundland pay no rates, but in my part of the country the rates are 20s., 22s., 24s. and 26s. in the pound. The Newfoundland people can acquire for themselves various resources, as the hon. Member for Bridgeton pointed out, from the countryside around them. Not only so but the Joint Committee of the Legislative Assembly reported in 1880 upon the very substantial natural resources of the island. They were then anxious to have a railway built. We have been told that democracy, almost inevitably, is associated with misgovernment. Can the hon. Member who made that statement recall to me any example of democratic government presenting such a disgraceful story as the story of the Reid contract in 1894?


Surely that was democratic Government?


It was an example of plain and unashamed Imperialistic exploitation, and nothing more. Land was given away; 5,000 acres of land were given to the contractor for every mile of railway he completed, and the result was that he finished up with over 2,000,000 acres of land to his own credit and in his own possession. Land has been given away until now there is scarcely any land available for the Government anywhere inside the three miles limit all round the coast.

Hon. Members know that the responsibility for much of the chaos in Newfoundland to-day, grave as it is, is not due directly to the people of Newfoundland but to the people who have utilised the machinery of government for their self-aggrandisement. Take the loans themselves. On page 43 of the Royal Commission's Report we find this story: The last 12 years, during none of which was the budget balanced, were characterised by an outflow of public funds on a scale as ruinous as it was unprecedented, fostered by a continuous stream of willing lenders. This constant stream of willing lenders now find themselves in difficulties, and they bring the hat to us and invite us of our generosity, and in a kindly way, to make a contribution to rescue them from their difficulty. Take the loans, excepting our own Government contributions, that have been made recently. They have been through Canadian banks—four of them. We are told in the report of the Commission that not 5 per cent. of the public debt is owned by the people in Newfoundland. The whole purpose, therefore, of the Government's proposal is to come to the aid of people who own 95 per cent. of the public debt of Newfoundland, and who live outside the island. Why should we do that? It is the Canadian banks that are involved. Why cannot Canada do something? Why cannot the countries that own the bondholders make a contribution? Why must we, if I may adopt common parlance, hold the baby? It is because we have encouraged these people, not deliberately, not intentionally, but by our previous generosity, to imagine that in the long run Britain would come to the rescue.

I cannot see that an adequate case has been made out for our shouldering this burden. Our own unemployed are as badly hit as large numbers of these people, and I cannot believe that there is an adequate case for foisting this financial burden upon our own poverty-stricken people, for that is what it will amount to. When the Budget comes along next year there will be a demand for a reduction of Income Tax, and, on the other hand, there will be a demand for more indirect taxation, and in that way the ordinary man will be called upon to pay. I cannot see why anyone in this country should be called upon to pay a debt which those responsible, with their eyes open, have allowed the Newfoundland people to incur. I do not know what view the Canadian Government will take regarding Labrador. In a report of a discussion which took place in the Newfoundland Legislature the question of Labrador was raised, and someone suggested that Labrador might be sold to Canada for 110,000,000 dollars, but the Prime Minister of Newfoundland said that if Labrador belonged to him he would not sell it for 200,000,000 dollars. Clearly, Newfoundland is not going to be able to develop Labrador; she cannot develop her own resources because she is so poverty-stricken. Therefore, we ought to ask Newfoundland to see whether the Labrador territory could not be sold to the Canadian Government so as to relieve us from being called upon to come to the rescue in the distressing financial situation in which Newfoundland finds herself.

I think I speak for every Member of my party when I say that we have the strongest possible objection to the principle involved in the Bill. We object to taking away the right of self-government from the Newfoundland people, that is to say, we object to the constitutional policy involved, and we must strongly object to the financial implications contained in the Resolution.

7.26 p.m.


I see in the hon. Member who has just sat down, unlike the hon. and learned Member for East Bristol (Sir S. Cripps) who sits beside him, a sound defender of constitutional principles, but from the remarks that he has made one gathers that he would desire to repudiate the New- foundland national debt. I am not in the least surprised at that, because that would be a small item in the hon. Gentleman's programme, which, as we are reminded in Budget Debates, would repudiate the whole of the British national debt as well. Perhaps the wisest and truest statement made in the course of the discussion came from the Noble Lord the Member for Horsham (Earl Winterton) when he said that the case which the Government would have to meet in regard to this matter was not the case presented here but the case that will be presented on the public platforms.

Having listened to the hon. Member for the Rothwell Division (Mr. Lunn) and the hon. Member for Caerphilly (Mr. M. Jones), I have no doubt that the electorate will be told that His Majesty's Government are depriving the taxpayers and the unemployed in this country of resources which are vital to them in order to scatter them over the length and breadth of the globe. In these circumstances, it is just as well to appreciate what the true facts are. Normally speaking, we hear hon. Members opposite express sympathy with all who suffer, in whatever part of the world they may be, but when they are invited to translate their sympathy into reality we always find some difficulty in the way.


Have the bondholders suffered?


They are to lose 30 per cent. of their incomes. The country should appreciate exactly the nature of the problem with which we are asked to deal. The Royal Commission tells us that: As a result of three successive seasons in which the fishery yielded no return, the winter of 1932–33 found the people living in conditions of great hardship and distress. Privation was general, clothing could not be replenished, credit was restricted and hardly anywhere did the standard rise above a bare subsistence. Lack of nourishing food was undermining the health and stamina, cases of beri-beri, a disease caused by inferior diet, and of malnutrition were gradually increasing, and were to be found in numerous settlements. The general attitude of the people was one of bewilderment and hopelessness. The Commission also tell us that no less than 70,000 persons, or 25 per cent. of the population, were in receipt of public relief, which in view of the meagre resources of the island only amounts to 7s. per month. These are the people who are appealing for assistance; and we are told by the hon. Member for Rothwell and the hon. Member for Caerphilly that assistance ought not to be forthcoming. Interruption. The hon. Member for Rothwell told us that he did not object to helping people who were ready to help themselves; the implication being that, apparently, these people are not willing to help themselves and that these evils are the results of their own wrongdoing. Let us see the extent to which these people have tried to help themselves. Reductions in the salaries of the Civil Service and Government employés have been increased from 25 per cent. to 27½ per cent., and are now on such a severe scale that it may be doubted whether they can continue much longer without causing hardship and distress. Their resources arc becoming exhausted and no margin is left for the renewal of clothing and other necessities, and it is clear that a continuance of reductions on the present scale must make for conditions which will detract from efficiency and so militate against the best interests of the country. Salaries of Ministers of the Crown have been reduced by 33 per cent., salaries of judges by 20 per cent.; pensions have been reduced from 30 to 45 per cent., and War pensions have been reduced by an average of 20 per cent. The grant for education has been cut in half, the expenditure on public charities has been reduced by 30 per cent. and so has the expenditure on marine fisheries, agriculture, mines and Customs administration. Expenditure on roads and bridges has fallen to 25 per cent. of the amount spent two years ago, while the expenditure on posts and telegraphs has been reduced by one-half.

These are the people in reference to whom the hon. Member for Rothwell says that he has no objection to helping people who help themselves. What further sacrifices are they expected to make before achieving the standard of the hon. Member 4 He also said that the Government were rushing this matter. He knows that it has a long history/. He knows the steps we have taken to advise and assist the Newfoundland Government. We sent out a Royal Commission to report upon the conditions, and their report has been for some time in the hands of hon. Members. Now he says that the matter is being rushed. Does he realise, looking to the immediate future, that in the view of the Royal Commission: Taking the island as a whole there is no doubt that … the next six months will be months of intense hardship and privation. The progressive effect of such conditions on a people already tried to breaking point, under-nourished, without adequate clothing and easy victims to disease, cannot but arouse the most serious apprehensions. Perhaps in these circumstances the hon. Member will consent to hasten a little. He is reluctant, he says, to come to their assistance. Why? Because the evils of which we speak come, he says, from private enterprise; it is private enterprise which has brought Newfoundland to its present pass. It is not private enterprise; it is public enterprise: The yearly deficits between 1920–32 were met from the proceeds of dollar loans. … It will suffice to record here that they served the object not merely of enabling the Government of the day to liquidate its annual deficit on current account, but also of providing it with funds with which to embark on costly schemes of capital expenditure. Among the projects so financed may be instanced the construction of a dry dock to replace that built in 1882, the taking over and improvement of the railway"— A public enterprise— the expansion of the telegraph and telephone services"— Public enterprise— and the provision of steamers for coastal services. Again public enterprise— Unfortunately none of these projects has proved directly remunerative. An ambitious scheme of highroad construction, originally designed to attract tourists to the island, but afterwards diverted from as main purpose, was similarly financed from loan funds, and proved a costly experiment, while the expenditure incurred in the construction of numerous public works and buildings throughout the country served merely to increase the mounting national debt. I make that quotation to remove once and for all from the hon. Member's mind the idea that this failure has been caused by private enterprise. On the contrary. He may also learn that there are dangers in the system of government which he advocates. If I have established that the need is urgent and is one such as might properly be dealt with, the question arises as to whether we should best meet it by going to the roots of the difficulty. The roots of the difficulty the Royal Commission tells us are the National Debt, which they say must be reduced. The Newfoundland people do not desire to be the first people in the British Empire to default in their obligations. There is a moral aspect of the matter, and there is also the aspect of self-interest. The hon. Member seemed to think that it does not matter if you allow a repudiation of national obligations. If lion. Members opposite would only read the report of the Royal Commission they would see the serious disasters which would ensue and which would fall with great effect on the banks and the traders of the country.

We desire to assist Newfoundland to meet her national debt interest. That debt is divided into three parts. The debt which is secured on specified assets, which we desire to release for the benefit of the island, will be liquidated in cash. With regard to the other obligations, whether trustee or non-trustee, there is an alternative, either to retain the present security or exchange it for another British Government security. Some of the securities are expressed in pounds or dollars at a specified rate of exchange, and securities will be liquidated in that form. We give a security worth up to 20s. in the pound in exchange for those loans. The hon. and gallant Member thought that it would be better to allow Newfoundland to default—

Lieut.-Colonel SPENDER-CLAY

I did not say that. I said that they should take a token payment.


A token payment would, of course, he default if. …

Lieut.-Colonel SPENDER-CLAY

The hon. Member has not asked these people whether they are prepared to accept conversion.


If you make a token payment which is not agreed to by the bondholders, that is default. The hon. Member for Bridgeton (Mr. Maxton) wishes to adopt a far more ingenious scheme, as far as I understand it, of allowing the bonds to fall on to the market and then buy them up. That would not be a very reputable proceeding. If you are coming to the assistance of a debtor country it is better to come properly at once, and openly, and say to all the creditors that we will pay them 20s. in the £—and we are offering to the creditors in these transactions the equivalent of up to 20s. in the pound. The right hon. and gallant Member for Tonbridge (Lieut.-Colonel Spender-Clay) seemed to think there was something improper in the distinction drawn between the holders of trustee securities and the holders of deferred securities. He cannot have listened to the Chancellor of the Exchequer, who explained how that position arises. There is no question of trying to obtain an advantage for trustee security holders. The matter arises in this way. There is a condition which governs the issue of trustee securities under the Colonial Stock Act, and, in view of that condition, which the Chancellor of the Exchequer read to the Committee, we cannot properly acquiesce in an arrangement by which the Newfoundland Government should deliberately depart from the terms of the original contract in regard to this trustee stock, more especially as we should ourselves, once the new form of Government has been set up, be responsible for giving effect to such a change in the terms of the contract. It is plain that we could not have adopted any position except that which we have, and I am sure the words of my right hon. Friend the Chancellor of the Exchequer will make it completely plain to the right hon. and gallant Member when he re-reads them.

The Chancellor of the Exchequer dealt with the financial aspects of this matter in great detail, and I need not go over them again. He told the Committee candidly exactly what obligations this country was assuming until 1936, and what the saving would be on the new conversion loan we are about to issue. There remains the deficit which we shall have to meet year after year. It can only be met by an improvement in the conditions in the island, and the observations and suggestions made by the right hon. Member for Sparkbrook (Mr. Amery), the Noble Lord the right hon. Member for Horsham and the hon. Member for Orkney and Shetland (Sir R. Hamilton) will receive every sympathy by a Government which intends to improve to the best of its ability the resources of Newfoundland, which are undoubtedly great. It is partly for that reason that one of the paragraphs in the Financial Resolution brings Newfound- land within the scope of the Colonial Development Act. In that connection I must point out to the hon. Member for Caerphilly, who complained of the Colonial Development Act, that it was introduced by his Government and that the Second Reading of the Bill was actually moved by the hon. Member who now sits alongside him. We agree that the deficit can only be corrected by an improvement in the resources of the island. The hon. Member for Caerphilly said that if we do improve the resources of the island we are depriving Newfoundland of its political liberty, and that that is a tremendous setback to a State. The islanders are wise enough to have their own views upon that matter, and the Royal Commission expresses them: The people of Newfoundland are fully content that the island should be known as Britain's oldest colony,' and constitutional niceties, which in any case are held to be of small importance compared with the necessity of rescuing the country from its present dangers, make no appeal to them. Distasteful though it may be, they are prepared to petition the King for a revision of the terms of government. Constitutional niceties do not concern them as much as they concern hon. Gentlemen opposite. For forms of government let fools contest, Whate'er is best administer'd is best.


In presenting this matter to the House the Financial Secretary puts 1936 as the limit of our financial responsibility. I did not understand that from the speech of the Chancellor of the Exchequer. Is the position not in fact that we are assuming complete responsibility for the service of this loan for all time?


I think the hon. Member has misunderstood me. We are talking of two different matters. The British Government guarantee the new loan which is to be issued. It is, of course, a guarantee until the loan matures. But we are making certain grants of money which are upon a voluntary basis and are not to be added to the debt. Those sums at any rate will be voluntary until the year 1936.


The only good thing, the only difference which arises in 1936, is that the continuation will then be considered. The year 1936 therefore means nothing.


1936 is the date up to which we have already proposed that the sums we vote to meet deficiencies in Newfoundland's Budgets shall be considered as free gifts. Our responsibility does not end in 1936. What remains after that is a determination of the ques-

tion whether any future advances which may be necessary shall be gifts or loans.

Question put.

The House divided: Ayes 227; Noes, 38.

Division No. 12.] AYES. [7.48 p.m.
Acland, Rt. Hon. Sir Francis Dyke Fielden, Edward Brocklehurst Milne, Charles
Acland-Troyte, Lieut.-Colonel Fleming, Edward Lascelles Molson, A. Hugh Elsdale
Adams, Samuel Vyvyan T. (Leeds, W.) Foot, Dingle (Dundee) Moore, Lt.-Col. Thomas C. R. (Ayr)
Agnew, Lieut.-Com. P. G. Foot, Isaac (Cornwall, Bodmin) Morris, Owen Temple (Cardiff, E.)
Albery, Irving James Fraser, Captain Ian Morris-Jones, Dr. J. H. (Denbigh)
Allen, Lt.-Col. Sir William (Armagh) Fuller, Captain A. G. Morrison, William Shepherd
Amery, Rt. Hon. Leopold C. M. S. Galbraith, James Francis Wallace Moss, Captain H. J.
Anstruther-Gray, W. J. Gillett, Sir George Masterman Muirhead, Lieut.-Colonel A. J.
Applin, Lieut.-Col. Reginald V. K. Gilmour, Lt.-Col. Rt. Hon. Sir John Munro, Patrick
Aske, Sir Robert William Glossop, C. W. H. Nall, Sir Joseph
Baillie, Sir Adrian W. M. Goff, Sir Park Nall-Cain, Hon. Ronald
Baldwin, Rt. Hon. Stanley Goldie, Noel B. Nicholson. Rt. Hn. W. G. (Petersf'ld)
Balniel, Lord Goodman, Colonel Albert W Nunn, William
Barclay-Harvey, C. M. Graham, Sir F. Fergus (C'mb'rl'd, N.) O'Donovan, Dr. William James
Beauchamp, Sir Brograve Campbell Grattan-Doyle, Sir Nicholas Palmer, Francis Noel
Beaumont, Hon. R.E.B. (Portsm'th,C.) Graves, Marjorie Pearson, William G,
Benn, Sir Arthur Shirley Greaves-Lord, Sir Walter Peat, Charles U.
Bernays, Robert Grenfell, E. C. (City of London) Penny, Sir George
Birchall, Major Sir John Dearman Gretton, Colonel Rt. Hon. John Percy, Lord Eustace
Blindell, James Grimston, R. V. Perkins, Walter R. D.
Borodale, Viscount Gritten, W. G. Howard Petherick, M.
Boulton, W. W. Guest, Capt. Rt. Hon. F. E. Pike, Cecil F.
Bowater, Col. Sir T. Vansittart Guinness, Thomas L. E. B. Procter, Major Henry Adam
Bower, Lieut.-Com. Robert Tatton Guy, J. C. Morrison Pybus, Percy John
Bowyer, Capt. Sir George E. W. Hamilton, Sir R. W.(Orkney & Zetl'nd) Raikes, Henry V. A. M.
Braithwaite, J. G. (Hillsborough) Hannon, Patrick Joseph Henry Ramsay, Capt. A. H. M. (Midlothian)
Briscoe, Capt. Richard George Hartland, George A. Ramsay, T. B. W. (Western Isles)
Broadbent, Colonel John Harvey, George (Lambeth, Kenningt'n) Rankin, Robert
Brocklebank, C. E. R. Headlam, Lieut.-Col. Cuthbert M. Rea, Walter Russell
Brown, Col. D. C. (N'th'l'd., Hexham) Heligers, Captain F. F. A. Reed, Arthur C. (Exeter)
Brown, Ernest (Leith) Holdsworth, Herbert Reid, William Allan (Derby)
Brown, Brig.-Gen.H.C.(Berks.,Newb'y) Hore-Belisha, Leslie Remer, John R.
Browne, Captain A. C. Hornby, Frank Rentoul, Sir Gervais S.
Buchan, John Horobin, Ian M. Rhys, Hon. Charles Arthur U.
Buchan-Hepburn, P. G. T. Hudson, Robert Spear (Southport) Rickards, George William
Burgin, Dr. Edward Leslie Hume, Sir George Hopwood Rosbotham, Sir Thomas
Burnett, John George Hunter, Dr. Joseph (Dumfries) Ross Taylor, Walter (Woodbridge)
Campbell, Sir Edward Taswell (Brmly) Hurd, Sir Percy Ruggles-Brise, Colonel E. A.
Caporn, Arthur Cecil Janner, Barnett Russell, Albert (Kirkcaldy)
Cayzer, Sir Charles (Chester, City) Jennings, Roland Russell, Alexander West (Tynemouth)
Chamberlain, Rt. Hon. N. (Edgbaston) Jesson, Major Thomas E. Russell, Hamer Field (Sheffield, B'tside)
Chapman, Sir Samuel (Edinburgh, S.) Joel, Dudley J. Barnato Russell, R. J. (Eddisbury)
Clayton, Sir Christopher Johnston, J. W. (Clackmannan) Salmon, Sir Isidore
Cobb, Sir Cyril Johnstone, Harcourt (S. Shields) Sandeman, Sir A. N. Stewart
Cochrane, Commander Hon. A. D. Ker, J. Campbell Sanderson, Sir Frank Barnard
Colfox, Major William Philip Knox, Sir Alfred Scone, Lord
Conant, R. J. E. Law, Sir Alfred Shakespeare, Geoffrey H.
Cook, Thomas A. Leckie, J. A. Shaw, Helen B. (Lanark, Bothwell)
Cooke, Douglas Leech, Dr. J. W. Shaw, Captain William T. (Forfar)
Copeland, Ida Leighton, Major B. E. P. Shepperson, Sir Ernest W.
Courtauld, Major John Sewell Levy, Thomas Shute, Colonel J. J.
Craddock, Sir Reginald Henry Lewis, Oswald Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Craven-Ellis, William Llewellin, Major John J. Skelton, Archibald Noel
Crooke, J. Smedley Llewellyn-Jones, Frederick Somervell, Sir Donald
Crookshank, Col. C. de Windt (Bootle) Lovat-Fraser, James Alexander Somerville, Annesley A. (Windsor)
Croom-Johnson, R. P. MacAndrew, Lieut.-Col. C. G.(Partick) Soper, Richard
Cruddas, Lieut.-Colonel Bernard MacDonald, Malcolm (Bassetlaw) Sotheron-Estcourt, Captain T. E.
Curry, A. C. MacDonald, Capt. P. D. (I. of W.) Southby, Commander Archibald R. J
Davies, Edward C. (Montgomery) McKie, John Hamilton Spears, Brigadier-General Edward L.
Denman, Hon. R. D. McLean, Major Sir Alan Stanley, Lord (Lancaster, Fylde)
Despencer-Robertson, Major J. A. F. McLean, Dr. W. H. (Tradeston) Stourton, Hon. John J.
Dickie, John P. Macmillan, Maurice Harold Strauss, Edward A.
Dugdale, Captain Thomas Lionel Magnay, Thomas Sueter, Rear-Admiral Murray F.
Duggan, Hubert John Mallalieu, Edward Lancelot Sugden, Sir Wilfrid Hart
Eden, Robert Anthony Mander, Geoffrey le M. Summersby, Charles H.
Edmondson, Major A. J. Manningham-Buller, Lt.-Col. Sir M Tate, Mavis Constance
Elmley, Viscount Margesson, Capt. Rt. Hon. H. D. R. Thomas, Rt. Hon. J. H. (Derby)
Emrys-Evans, P. V. Marsden, Commander Arthur Thomas, James P. L. (Hereford)
Erskine, Lord (Weston-super-Mare) Martin, Thomas B. Thomson, Sir Frederick Charles
Erskine-Bolst, Capt. C. C. (Blackpool) Mason, David M. (Edinburgh, E.) Thorp, Linton Theodore
Evans, Capt. Arthur (Cardiff, S.) Mayhew, Lieut.-Colonel John Todd, Capt. A. J. K. (B'wick-on-T.)
Evans, David Owen (Cardigan) Mills, Major J. D. (New Forest) Train, John
Tree, Ronald Whyte, Jardine Bell Wood, Sir Murdoch McKenzie (Banff)
Wallace, John (Dunfermline) Williams, Charles (Devon, Torquay)
Wedderburn, Henry James Scrymgeour Wilson, G. H. A. (Cambridge U.) TELLERS FOR THE AYES.
Wells, Sydney Richard Winterton, Rt. Hon. Earl Captain Austin Hudson and Mr. Womersley.
Whiteside, Borras Noel H. Withers, Sir John James.
Adams, D. M. (Poplar, South) Grundy, Thomas W. Parkinson, John Allen
Attlee, Clement Richard Hall, George H. (Merthyr Tydvil) Price, Gabriel
Batey, Joseph Jones, J. J. (West Ham, Silvertown) Salter, Dr. Alfred
Brown, C. W. E. (Notts., Mansfield) Jones, Morgan (Caerphilly) Smith, Tom (Normanton)
Cape, Thomas Lansbury, Rt. Hon. George Spender-Clay, Rt. Hon. Herbert H.
Cocks, Frederick Seymour Logan, David Gilbert Tinker, John Joseph
Cripps, Sir Stafford Lunn, William Williams, Edward John (Ogmore)
Dagger, George Macdonald, Gordon (Ince) Williams, Dr. John H. (Llanelly)
Davies, David L. (Pontypridd) McEntee, Valentine L. Williams, Thomas (York., Don Valley)
Davies, Rhys John (Westhoughton) McGovern, John Wilmot, John
Dobbie, William Mainwaring, William Henry
Edwards, Charles Maxton, James TELLERS FOR THE NOES.—
Graham, D. M. (Lanark, Hamilton) Milner, Major James Mr. John and Mr. Groves.
Grenfell, David Rees (Glamorgan) Owen, Major Goronwy

Resolution to be reported To-morrow.