HC Deb 10 July 1933 vol 280 cc761-893

Motion made, and Question proposed, That a sum, not exceeding £124,278, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1934, for the Salaries and 'Expenses of the Department of His Majesty's Secretary of State for Foreign Affairs.

3.23 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

The Debate this afternoon has been arranged with a view to giving the Committee an opportunity of hearing something about the World Economic Conference and discussing the situation which has there arisen. It cannot be said that the proceedings of the Conference have been hidden from the public. As I walk though the hall in the Geological Museum, I encounter a large concourse of representatives of the Press, who are striving, with all their well-known industry and ingenuity, to collect every scrap of information about what is going on there, whether public or private, open or secret; and I very much doubt whether anything has gone on there which has escaped their sight or hearing and which has not found its way to the public. Therefore, I do not imagine that I can give the Committee very much information as to the facts of the position which is not already in the possession of hon. Members. But the historian may be just as much embarrassed by a wealth of material as he sometimes is by a scarcity, and I can quite imagine that, with all this plethora of detail about what has been going on, it may be rather difficult for those who are not themselves engaged in the work of the Conference to present to themselves a true picture either of what has taken place or as to what is likely to take place in the near future. So I suppose that what the Com- mittee would like to have from me would be a brief statement of how far we have got, what is the present position, what are the future prospects of the Conference, and perhaps some fresh indication, of the British attitude and policy.

The Conference started under auspicious conditions. An annotated Agenda had been very carefully prepared by a commission of experts, and their discussions revealed a very large measure of agreement among the different countries concerned, both as to the character of the problems which had to be faced and also as to the nature of the remedies which were called for. Of course, when it comes to methods, there were undoubtedly wide divergencies of opinion, but still, at the commencement of the Conference, the desire on the part of all the delegates to come to a satisfactory agreement with one another was so evident and their emphasis upon the unfortunate results which would follow if the Conference were not to be 'a success was so insistent and so repeated, that I think all of us felt good hopes that we should in the end arrive at some very useful and valuable conclusions.

The fact, of course, that the Government of the United States of America had decided some time previously to leave the Gold Standard had introduced 'a new factor. As a result of that decision, opinions were somewhat divided. Many people hoped and believed that it was the prelude to recovery, others again could not conceal their anxiety as to where it might lead, and in the uncertainty which undoubtedly prevailed some question was raised as to whether it would not be advisable to postpone the Conference until the skies were somewhat clearer. But there were many reasons against delay. The meeting of the Conference had already been postponed more than once, the condition of the world was such that everybody was extremely anxious that we should get through the business of discussing the possible way out, and the President of the United States himself, both in his conversations with my right hon. Friend the Prime Minister and in his message had made it clear that he himself was in favour of an early meeting of the Conference. In a message which he sent on the 16th May to the Sovereigns and Presidents of 54 nations participating in the General Disarmament Conference at Geneva And the World Monetary and Economic Conference in London, he said: The World Economic Conference will meet soon and must come to its conclusions quickly. The world cannot await deliberations long drawn out. The Conference must establish order in place of the present chaos by the stabilisation of currencies, the freeing of the flow of world trade, and international action to raise price levels. It must supplement individual domestic programmes or economic recovery by wise, considered international action. That statement, I think, was regarded as conclusive, and accordingly the conference met on the 12th June. Two days after it met, I made a statement of British policy on behalf of the United Kingdom delegation. That statement covered the whole field of the agenda of the conference. It laid down in fairly precise outline what were the views of His Majesty's Government and what were the proposals that they had to make for proceeding with the work of the conference. I think that I may say that the statement received very general approval in this country. It was unanimously supported by the Dominions. It also received the adhesion of a large number of foreign countries, and in general, I think, it may be said that it gave a definite lead to the conference. I might perhaps add that the original statement made in the Plenary Session by me was followed up by the drafting on the part of the United Kingdom delegation of a number of motions which put into resolution form the general ideas which I had sketched out and which were presented to the various committees and commissions which were subsequently set up.

My right hon. Friend the Prime Minister, in his capacity as President of the conference, realised from the beginning that with a gathering of this magnitude it was very necessary to speed up the work of the conference. It would have been impossible to keep together for an indefinite period delegates from so many countries, many of them holding positions of responsibility and only leaving their work at home because of the paramount importance of the international work that they had to 'do, and the only way to get practical results from the conference was to push along its work at the highest possible speed. No one has a greater experience or knowledge of how to deal with inter- national conferences than my right hon. Friend, and he was so successful in his efforts that only three days were devoted to the general discussion in the Plenary Session—an altogether unprecedented example of rapidity in the preliminary work of great international conferences. On the fourth day the conference decided to split itself up into two main commissions or, as we should say, two committees. To these commissions were allocated the two important divisions of our work—economic on the one side, and monetary and financial the other. In turn, these two commissions when they met divided up their work into a series of items which were assigned to sub-commissions or sub-committees to deal with.

The Economic Commission appointed four sub-commissions or sub-committees. One was to deal with commercial policy, under which head would conic subjects such as tariffs, quotas, prohibitions and controls, and, in fact, the various kinds of restrictions on trade which have reduced international trade to such small proportions. The second sub-committee was appointed to deal with organisation of production and marketing, a highly important subject in which this country has taken an extremely active and, I may say, a leading part. The third sub-committee was appointed td deal with State subsidies, both direct and indirect; and the last one dealt with what I may call indirect protectionism, which comprised such questions as marks of origin, phytopathological subjects, and similar matters. The Monetary and Financial Commission appointed only two sub-committees. The first was given the task of considering what immediate measures were called for for the relief of the situation, while to the second was allotted the task of considering the more permanent measures which might follow and which would lead to the establishment of an agreed international monetary standard. This second subcommittee again appointed two sub-subcommittees, one to deal with silver and the other to deal with certain technical subjects having relation particularly to the functions of central banks. All these various committees, sub-committees, and sub-sub-committees, together with other smaller bodies with which I need not trouble the Committee, were at work actually in the second week of the Conference; and I think I may say that up to the end of last month the President of the Conference saw no reason why the work of the Conference should not be finished, as he originally expected it would be finished, by the end of July.

But at a comparatively early stage of our proceedings another question began to loom up, and it gradually acquired a greater and greater gravity until, by the end of the week before last, it actually brought some of the work of the Conference to a temporary halt. This was the question of stabilisation. As to the desirability of some permanent stabilisation and ultimate stabilisation, I do not think there could have been any difference of opinion among the delegates. The quotation which I have already read from the message of the President of the United States shows what an important place it took in his mind only a short time ago, and indeed, I think, it is obvious to everybody that it is impossible to conceive of a complete return to the normal functioning of trade and commerce in the world unless we can have an international monetary standard which is acceptable to and accepted by all the nations of the world.

Some of the countries represented at the Conference, and in particular those still on the Gold Standard, went further than the question of ultimate stabilisation. They felt that it would be extremely difficult for them to be discussing a good many of the subjects which were upon the agenda of the Conference at a time when the strongest currency in the world was in a condition of instability and undergoing rapid and perhaps even violent changes from day to day. The Committee will remember that an invitation was sent out by the Government of the United States, just before the Conference, to all nations to enter into a tariff truce during the period of the Conference. The reason for that move is very obvious. We were to discuss tariffs, among other things, as part of the policy of the nations, and it would be extremely inconvenient, not to say embarrassing, to have various countries raising, or possibly raising, their tariffs, or part of their tariffs, at the very time when an attempt was being made to get the nations to join in some common agreement for the lowering of tariffs. The countries I have referred to felt that if a truce was required for tariffs, equally a truce was required in the movement of exchanges during the proceedings of the Conference, in order that the Conference might pursue its deliberations in a proper atmosphere of calm and tranquillity of mind. By the 511 July the Tariff Truce had been agreed to by no fewer than 59 out of the nations at the Conference, subject to certain reservations and safeguards, but no such truce was arrived at in connection with the temporary stabilisation of exchanges.

An attempt was made, and in fact was in process of discussion before the Conference met, by the central banks of France, the United States and this country to come to sonic temporary arrangement which would have maintained some approximate stability of exchanges while the Conference was going on. The banks did actually come to an agreement among themselves, but in order to give effect to it a confirmation by the Governments concerned was necessary, and when, after the-proposal had been submitted to the American President, a reply was received to the effect that the American Government did not consider temporary stabilisation as timely at the present moment, a somewhat serious situation arose. The American delegation at the Conference informed us that this question did not come within the instructions which had been given to them, and accordingly the only thing to do was to consider it in the course of private conversations. Those conversations were held with the help of the President of the Conference, and the gold countries pressed for this. They said: "If we cannot have any agreement for temporary stabilisation can we not agree upon some sort of joint declaration, a declaration made not merely by the countries on gold but also subscribed to by the principal countries off gold, which will show that there is a desire on the part of all the signatories to avoid anything in the nature of a competitive depreciation of currency, and, while the Conference is going on, do something to restore confidence, which has been to some extent shaken?"

We had long and somewhat difficult negotiations over the declaration. There was a good deal of give-and-take on all sides, and eventually we did arrive once more at an agreement, and a document was drawn up, which has since been made public and which no doubt every Member of this Committee has seen, which received a sort of provisional approval over here, and which we hoped might be confirmed by the authorities elsewhere. That declaration, I must say, seemed to me to be a pretty innocuous document. There were a few general principles, but so far as any operative part of it was concerned it was practically confined to a declaration that the respective Governments would do what they could to check speculation in the exchanges. No doubt the importance of that declaration must not be underrated, because the effect of speculation upon the movements of the exchanges is very marked, and very much accentuates the movements both up and down, and no doubt what the gold countries felt was not only that the actual operation of checking this speculation would, in fact, limit the extent to which it took place, but that a public statement, signed by the Government of the United States, and that of the United Kingdom, as well as the Governments of the gold countries, would show that there was certain harmony of thought between them, and would serve as a warning to speculators which very likely might prevent them from trying to carry on their operations.

That declaration was also rejected by the American President in a statement and message to the American Delegation which, again, has been made public. I do not think that it would serve any useful purpose for me to make any comment either upon the manner or the matter of that statement, but there is no doubt that its effect not only upon the delegations of the gold countries, but upon public opinion in those countries was very profound and very disturbing. They felt that not only had the President indicated that he attached little or no importance to any reactions which his domestic or internal policy might have upon other countries, but also that he seemed to suggest that he was thinking of an ultimate international monetary standard of a kind which was not likely to command confidence in those countries. Such a pronouncement, coming from such a quarter, seemed to their representatives to make it impossible for them usefully to discuss any longer at the Conference either those questions which had been referred to the Monetary and Financial Commission, or those questions which dealt with tariffs, prohibitions, and other weapons which could be used as a means of defence against a depreciated foreign currency, which had been referred to the Economic Commission.

The United Kingdom delegates, faced with these facts, had to decide what their attitude should be. For that purpose they consulted, not for the first time, with the representatives of the British Dominions, and there appeared to be two alternatives. It was quite clear that some of the work of the Conference was unaffected by these events, and could in any case be usefully proceeded with and carried to a conclusion. The other parts of the work could only be carried on—if they could be carried on at all—by a section, instead of by the whole, of the nations meeting in the Conference. The two alternatives which seemed to be open to us were either to adjourn the Conference to a more favourable season, leaving, in the meantime, the Bureau, or organising committee of the Conference in being, as a body to which any work which could still be carried on could still be reported, or, as the second alternative, to continue the Conference, but to limit, as far as might be found necessary, the work of certain organs of the Conference. It might seem that from the practical point of view there "was not a great deal of difference between those alternatives, but from a psychological point of view it seemed to us that there was a great difference. We had brought a large number of statesmen from all parts of the world, and some of them had travelled many thousands of miles in order to be present at this gathering. If the Conference was going to adjourn to some indefinite date in the future, it would fill them all with disappointment and with discouragement, and perhaps it might be impossible to get them to return.

Seeing that we were going to continue some part of the work of the Conference, it did not appear to us that it would be proper that the results of that work should be reported to a minor body, an organism within the Conference, but it seemed to us that any results which could be arrived at ought to be reported to the Conference itself and to receive, if possible, the confirmation of the whole body of the delegates. Therefore we, after discussing the matter, as I have said, with representatives of the British Dominions and India, came unanimously to the conclusion that the second of those alternatives was the one which we must support and advocate. On the other hand, the countries on the Gold Standard, while they professed that they did not in any way claim to prevent other countries from discussing monetary matters, did not feel that they should discuss this subject themselves, representing that any participation by them in discussion of certain other subjects before the Conference, so long as the position of the exchanges was so unstable and was fluctuating so violently from day to day, would have a very disturbing effect in their own countries and that their markets were very much upset by it. While they hoped that the condition in which we found ourselves was only a temporary one, they felt that it would be much better to wait until it had stabilised itself, when we might perhaps take up this question again.

That is the present position in the conference. There is still this cleavage of opinion. I hope that although at present we have not been able to come to an agreement, we shall still find means of bridging over the difficulties which divide us, and that we shall arrive, in the course of the next day or so, at some measure of agreement between the two sides to this controversy. Looking back over the course, of events one cannot help feeling that if we had known beforehand what was going to happen, that might have made some difference to our view as to the desirability of calling the conference at the time when it was called. I do not think we could have foreseen beforehand that events would have taken this turn. There is no use in attempting to deny that, as matters have turned out, the work of the conference has received a very serious check. I hope that it is only a check.

In any case, the conference will continue to carry on its discussions upon certain very important lines of thought. The question, for instance, of the regulation of production and marketing is not affected by the instability of the exchanges. A very considerable amount of agreement has already been arrived at. A number of primary products have been scheduled for further discussion and if, in fact, it is found possible among the producing countries, in the case of those various commodities, to arrive at some agreement among themselves, there will be a very solid basis for presuming that we can raise the prices of those commodities to a satisfactory level and retain those prices when they have been reached.

Then, again, we need not fear, whatever happens, that the efforts which have been made to_ bring all those countries together will have been in vain. We have charted the ground, and we have identified the problems, and we have already come to a very considerable measure of understanding among ourselves as to the sort of way in which they have to be tackled. Even if some part of those problems cannot at the moment be brought to a conclusion, the situation is so fluid and is so obviously temporary in its nature, that it may well be that it may change again for the better even in the course of the next few weeks. Therefore I would say to the Committee that we need not too readily assume that this check has dealt a mortal blow at the chances of coming to an agreement upon these vital world-problems. We, ourselves, still remain of the opinion which we have held all along, and that is that the chief troubles from which the world is suffering to-day are international in their origin, and that they can only be solved by international action and agreement. The idea that any country can be sufficient unto itself, and that it can solve its own problems without reference to what is happening in the rest of the world, is, I am sure, one which would not bear the light of experience. It must be doomed to disappointment.

Since, for the moment, some of those rather difficult and abstruse questions which we had set ourselves to face cannot be the subject of an agreement, nevertheless it seems to me that there is still a great deal of work for the Conference to do in laying down general lines on which some permanent settlement can ultimately be arrived at, and that if we can, for instance, agree upon the conditions under which a return to the Gold Standard as an international monetary standard will be possible, then we shall have done work which probably could not have been clone if this Conference had not been called, but which will greatly facilitate a return to normal conditions at a later stage. The British policy remains what it has been from the beginning. We have made it clear that, in our view—and I may say that this is also very strongly the view of the British Dominions and India—the raising of the prices of wholesale commodities still remains the primary objective. We still believe that it is not possible to effect that raising of price level by monetary action alone, although, as we have always said, certain monetary factors must be present as an indispensable preliminary to that raising of the price level.

But the more you examine this problem the more you come back to the central fact, that at the bottom of the whole trouble lies the lack of confidence. It is only the restoration of confidence which will enable us to obtain the full benefit from the various measures we have taken to bring about that raising of the price level, and all our efforts must be devoted to the restoration and building up of that confidence. The depreciation of the dollar has undoubtedly brought into operation a very disturbing factor, but one must remember that that depreciation is to a very large extent an unnatural and artificial phenomenon. It is not built upon intrinsic economic and financial factors. It is chiefly the result of speculation, which began in Continental circles, and which has been followed up by American speculation, too, and in the opinion of a good many competent experts the conditions and the facts are such that it is quite possible that we may see a reversal of this process in the autumn when the various factors begin to work in the opposite direction.

Therefore, I would say to the Committee, it seems to me that at this time what we have got to do is to keep our heads and not to allow ourselves to be rushed by this temporarily disturbing factor into arriving at any hasty, ill-considered or rash conclusion. Things may not turn out as they seem at the moment. We may presently find a very material alteration in the situation. Let us, therefore, keep clearly before us what we have in mind as our own objective. Let us preserve, as we are preserving, the closest and most friendly contact with the representatives of all the countries who have come to this Conference. Let us not despair of even now arriving at results of a solid, substantial and practical value from the deliberations of this Conference, and let us be sure that, as time goes on, we do not miss any opportunity which may present itself to us of bringing once more together, I do not say all the nations who' are present at this Conference to-day, but the principal nations of the world in agreement as to the best means of making progress.

4.6 p.m.


I beg to move, to reduce the Vote by £100.

I think that everyone in the Committee will be grateful to the right hon. Gentleman for the very clear and specific statement he has made in reference to the facts. I am not quite sure at the moment whether the Conference as a whole is going on, and that the work it has to carry through is the sort of work about which we have seen statements in the Press, that the whole question of currency and monetary stabilisation is to be left on one side.


In case there is misunderstanding, I would say that that is not quite accurate. The meeting which took place of one of the sub-commissions on Friday upon this subject decided by a majority that none of the subjects should be excluded from the agenda of the Commission. How far it will he possible to make progress with each individual item on that agenda, of course I cannot say at the moment, but it would be a misunderstanding to suppose that anything is cut out from possible discussion at the Conference.


A thing may be possible, but not very probable. That is how it strikes me. I should also like to say that when the right hon. Gentleman states that restoration of confidence is the most important thing, I think that the application of a little cold, common sense to the problem is what is most necessary. As to the psychological effect of carrying on the Conference, about which you have not very much confidence as to what the end may be, it is very much open to question. Over and over again during the last dozen years, conferences of one sort and another have been held. There was the Genoa Conference, which dealt with this sort of question, arid from which a very great deal was expected. There has been no end of conferences on disarmament, a very considerable number of commissions and committees on the question of debts, and, at the end of them all, we are, I think, very much where we were at the beginning. As the American would say, "We are no forrader" on any of those questions. It is a great mistake if this Conference is to carry on simply for the purpose of registering the sort of pious opinions, such as the right hon. Gentleman described, which were sent out to the President a few days ago. These are days when something definite and specific is required to be done in order to deal with the ills of the world.

I was very glad to hear the right hon. Gentleman make the Socialistic admission, which was frankly denied during the Election, that the economic problems of this country, as well as the economic problems of other countries, were dependent on international settlements. We now know for good that the Labour Government did not produce the conditions which have produced the world position of to-day. We now know, from statements at the Conference and from statements made by Ministers again and again, that the economic chaos and confusion into which the world has been plunged during the last few years is due to international causes, and is not due to the sins either of a particular Government here or elsewhere. I want also to make it clear that the sort of inquest which is being held in the Geological Museum, or that was attempted to be held in the Geological Museum, is not on the defects of Socialism, not on the defects even of Communism, but on the breakdown of capitalism throughout the world—the breakdown of the system based on private profit and money-making for individuals, the system based on the notion that the world can succeed only through creating millionaires on the one hand, and paupers on the other. Our own Gov ernment, it seems to me, have never faced up to the question to which this Conference, if it is to be successful, must face up.

We want an international Conference. We asked for it within a few days of this Parliament assembling, but we wanted that international Conference to discuss how better it could raise the standard of life of the masses throughout the world: how it could bring abundance to the ser- vice of mankind. The commissions which have done any work at all, so far as I have been able to gather, are commissions which have been discussing how to restrict production, how to cut down supplies, not how to extend consumption in any sort of way; and unless this Conference, or some other Conference, takes that problem in hand, we shall still be beating the air. The one thing, among many others, that President Roosevelt has done has been to throw up, as it were, on the screen the fact that we must provide some means by which the productive power of the world, instead of being a curse, shall be a blessing. So far as I can judge, our Government have no solution for that except to support the cutting down of supplies of wheat, sugar, cotton and other commodities in the hope that by restricting abundance, by cutting down supplies, they can raise prices. I think that is sheer lunacy. The one thing that ought to be in the minds of us all is that in the world to-clay, and in our own country to-day, there are mulitudes, scores of millions of people who are denied the means of livelihood.

I may be told that there is a great abundance of wheat, which is stored somewhere in Canada or in America, and that may be perfectly true; but is anyone going to say that there are no people in the world, even in our own country, who are in need of more of these foodstuffs ? If the right hon. Gentleman, or anyone on the benches opposite, says that there is enough foodstuffs, enough of all the things that are necessary to a decent standard of life for all the people who need them, then they must explain to the world why the people cannot get them. For my part, I do not believe that there is enough. I think that, if everyone had the same standard of life that the right hon. Gentleman requires for himself, or that I require for myself, we should have to put people to work to produce much more than is produced now. Therefore, the problem is not one of restriction; it is rot one merely of raising prices. That is what monopolies do. Anyone who wishes to monopolise an industry does it for the purpose of restricting supplies and raising prices.

I do not wonder that an assembly representative of a capitalist interest should adopt this sort of policy of saying to themselves. "In order that we may maintain the right of profit-making, industry throughout the world must be restricted and cut down in such a manner as to produce a scarcity where there should be an abundance." This seems to be a matter of amusement to the First Lord of the Admiralty, but I would like to put this point to him. Somebody may ask during the evening: What is the object of labour-saving machinery? What is the object of rationalisation? That is what is the matter with the world. Rationalisation, reorganisation, labour-saving machinery of all kinds—these are used, not in order to raise the standard of life of the whole of the people, but in order that those who own the machinery, or those who supply the finance for providing machinery, may be secure of their profits and dividends, and may get larger and larger profits and dividends. We say that, until the World Economic Conference and the statesmen of the world face up to this question—President Roosevelt in some of his statements seems to be at least trying to face up to it—until they face up to the question of how mankind as a whole is to be enabled to benefit by labour-saving machinery and by the reorganisation of industry, the problem will remain unsolved.

We contend that there is only one way of doing it, and that is to secure that, as machinery improves production, as machinery increases output, the standard of life of the whole of the people should be raised in relation to that increase. There is no other way out of the difficulty. I shall be very glad indeed if anyone can convert me to some other point of view, because it seems to me that the world goes staggering on, not so much under loads of indebtedness—though I will come to that in a minute—but under the fact that we can produce so much goods that, within the system under which we are allowed to operate, those goods cannot be distributed. It has been said by one of the supposed greatest economists in this country that what the world needs is a number of good national bankruptcies. What does national bankruptcy mean? It means the scrapping of goods which have been produced by the labour of masses of men. At this moment countries in South America that are unable to pay their debts burn coffee, burn wheat, destroy those good things which Nature has sent, and yet there are masses of people who need these things. What is it that stands in the way? It is not Communism; it is not Socialism; it is not even the British Labour party. It is the commercial, industrial and financial system, which in my view has outlived its usefulness.

This country has been the workshop of the world. I am very amused when I hear hon. and right hon. Gentlemen opposite talking about agriculture. I used to hear the late Lord Chaplin, years ago, inveighing against the industrialists of his time, who were telling the people of the country that they should spend their capital and their energies in providing capital in the form of machinery, railways and other things which were necessary for countries abroad. At the time it all sounded, and was indeed, very profitable for those who engaged in these undertakings, but is it not a fact to-day that there is so much British capital invested abroad that we are unable to take payment from our debtors in the only things with which they can pay us, namely, goods? We are faced now with the situation that, in the ordinary course of things, we cannot send machinery abroad as we used to do in days not long ago, for the countries that took those things from us are now in such a position that they cannot pay us, and, if they did, they would ruin us. When I hear hon. Gentlemen, one behind me and another in front, asking that Russia should be made to pay up, I wonder, if Russia were to pay up—if it were possible that she should pay off the Tsarist debts and the War debts to-morrow, and bundle the goods into this country—what should we do with them? What would happen in this country?

The situation of the world does not brook the sort of treatment that either the Conference or the Government is giving it. We are living in an entirely different world from that which existed before the War. The conditions in which we are living now started before the War, and the War and the developments in other countries have accentuated the difficulties. There is another thing. People are asking each day about the competition of the East. I would again ask, who is responsible, or, at least, partly responsible, for the competition of the East? Who are the directors, the managing directors, and the shareholders of the great undertakings in Burma, India, China, Japan and elsewhere? You will find good British names on their boards, and you will find that good British money, earned by British working people, has sent machinery out to those countries; and, unless they can sell goods over here or in competition with us in the world, they cannot pay their debts to us. It is no use the hon. Member for Farnham (Sir A. M. Samuel) complaining because one country or another is not able to pay. He knows as well as I do why they cannot pay. It is because we cannot take payment from them in goods, and I support him when he asks that we should stop sending money abroad under those conditions. I do not deny that there was a time when that was, perhaps, the proper outlet for what are called the surplus profits of the British capitalist class, but we have lived through that period, and, nowadays, the more we try to do that the worse will be our condition.

I know I may be told that we have had from £300,000,000 to £400,000,000 a year in what are described as invisible exports, but everybody knows that these are falling. Part of the invisible exports arose through shipping. Go round the British coast now, and up the rivers, and you will see the great liners lying up there, no longer needed. Nothing that we can do along the lines of perpetuating the fight between nations can help us in any way. That is what is really the matter. It is economic war. It is not war, of course, in the bloodthirsty manner in which nations fight and destroy each other, but they try to destroy each other in a peaceful manner. All these gentlemen who meet at the Economic Conference are there to get the best for their own individual nations, and all cannot have the best when it comes to competitive trade and competitive industry; they must be prepared to adopt the Socialist policy of true co-operation. That brings me to another point. I would not attempt in the presence of the Chancellor of the Exchequer, though I would in the presence of the President of the Board of Trade, to pose as any sort of authority on the question of currency, the Gold Standard, and so on. The President of the Board of Trade has told us that nobody understands it, so there is no reason why I should not be among the nobodies; but what a lunatic world we are living in, with all these geniuses attempting to administer a system which they do not understand. There is a story that the late Lord Swaythling once said that there were only two people who understood foreign exchanges, and he was very doubtful about the other person. As Lord Swaythling has passed away, there remains nobody, as the right hon. Gentleman admits.

We have all this jiggery-pokery about the Gold Standard. I have listened to the right hon. Gentleman the Member for Epping (Mr. Churchill), the right hon. Gentleman the Member for Hillhead (Sir R. Horne) and the right hon. Gentleman the Member for Sparkbrook (Mr. Amery)—the one telling us about silver—I do not know where the silver is; I shall have to inquire—the other telling us about the mistake we made when we went back to the Gold Standard, and so on; and now the United States has just floated off, and, as it were, thrown a bombshell into the Conference. We now know the view that the President takes, and, without at all asking that I should be considered to be in the same boat with him, I would like to say very respectfully how much I agree with him. Mr. Montagu Norman and Dr. Sprague had meetings at this House during the last Parliament with myself and my colleagues, and they made our blood run cold by telling us what would happen if we went off the Gold Standard. I expected earthquakes and devastation, but we slid off it very comfortably, and now the United States has followed suit. All the gold bugs in the world are up in arms against them.

What is it all about? I should have liked the right hon. Gentleman to tell us. Does he believe that the welfare of the world depends upon how much gold you can dig up and bury in the vaults of the bank? Does anyone on that Bench believe that the well-being of the world depends upon whether there is gold in the world or not? Surely that is nonsense. The thing that maintains the world is the bone, sinew and muscle of the workers of the world applied to raw material. [Interruption.] No one could have worse brains than those who have invented a system that they do not understand and who cannot make work. I should like to know where the brains are. I hear men talk learnedly about banking and say this, that and the other ought to be done. They have no conception that the one thing that ought to be done is to distribute the goods that the workers produce and to raise their standard of life. I hope someone will tell us clearly to-night what is the Government's policy in regard to the Gold Standard, whether they intend to restore it or not and when and on what terms. It is all very well for right hon. Gentlemen to laugh. They are content in a half-hearted way to condemn the President. I dare say that in America they will cross the "t s" and dot the "i's" of the early part of his statement without my doing it, but anyhow, rightly or wrongly, he has a policy which he is following. We should very much like to know whether the Government has a policy. This country does not want to be crucified on a cross of gold, and we here are going to fight very hard against the notion that the Gold Standard is something so sacrosanct that it must not be broken. We should also like to know whether the Government proposes to abandon all questions of quotas, tariffs and restrictions. I cannot believe that they do, because I have been reading some of the doings of the Commission over which the President of the Board of Trade presides, but we ought to know to-day what is their policy in relation to these matters.

We asked for this Conference before the Ottawa Conference was called. We thought then, and we think now, that it was a profound mistake to have held that Conference and to have made the Agreements that we did before the present Conference came into being. With regard to the future action of the Government, we are of opinion, as the right hon. Gentleman is, that we must have world co-operation to bring about a solution of world economic problems. We think that, like charity, co-operation should begin at home and that on the question of currency, finance and control of the exchanges, so far as we can control them, the Government ought to remove the whole of this money business out of the sphere of gambling once and for all. We think the President has laid down a very good principle, similar to the one laid down by the right hon. Gentleman the Member for Epping, that your unit of currency should be of the same value tomorrow as it is to-day, and there is no more reason why it should vary than the yardstick measure should vary. The only reason why it varies is that money has become a commodity to be bought and sold. We think that money ought not to be a commodity to be bought and sold. Money ought to be the means of exchange between one set of commodities and another, and it ought not to be subject to the insane gambling which you read about every day and which has been so thoroughly well shown up in the banking inquiry in America. We also think, on the question of unemployment, that it is high time that there should be full 'and entire co-operation in the management and control of our own industries. We believe there is still considerable potential wealth in Great Britain, and it is not used, not because the masses do not need it to be used, but because it does not pay financiers to allow us to use it. It is the business of the Government to take that in hand.


The right hon. Gentleman says he would make the £ the same to-day as three years hence. Can he show us how he proposes to do it?


We have been told to-day about the breakdown of the exchanges due to gambling. The Governments of the world ought to put an end to that sort of thing, and the value of gold ought not to depend upon a bull here and a bear there. The value of commodities ought to be apart altogether from those things.


Has the right hon. Gentleman never heard of the law of supply and demand? Has he never heard of King Canute telling the sea not to come in?


I have heard something more modern. I have heard that champion of private enterprise and all the evils that are being discussed at the Economic Conference plaintively ask, "What are you going to do about it?" because certain countries cannot pay, because we cannot take payment. The supply and the demand are there already. Who prevents the two coming together? I will sit down if anyone will get up and deny the truth of what I say. There are plenty of goods in the world and masses of people needing them. Why cannot they get them? Supply and demand are both there. There is very considerable potential wealth untouched in this country, but it is a flea-bite compared with what there is in Canada and the other Dominions and Colonies. When I asked the capitalists why we cannot develop Canada and Australia in an altogether new fashion by giving assistance on a large scale, they said, "What will you produce if you take a million men into Canada and another million into Australia?" I said, "We will produce whatever there is there to produce." They said, "We do not want any more coal, we do not want any more cotton, we do not want any more timber, and we do not want any more wheat." I said, "Then you are admitting the Communist argument." Under capitalism millions must starve in the midst of plenty. Has anything as mad as that ever happened outside a lunatic asylum, that men are to remain idle and are not to be allowed to produce? They are told that there is too much, but they must not share the too much and they must not produce more. In the old days you built up the Dominions and the Colonies by sending out men and women who, through sheer hard work, created a new life. Now we are told that is all useless. Why do you want to worry about the Dominions if their lands are not to be developed? I want to know when the Government are going to formulate a policy for developing our own country in conjunction with the Dominions policy for developing theirs.

4.45 p.m.


My right hon. Friend the Chancellor of the Exchequer evidently did not feel it right to tell us anything new this afternoon, nor to admit us more closely into the grave problems which are now dominating the minds of the Members of His Majesty's Government. I do not think we could blame him for that because of the immense responsibility which attaches to the action of the representatives of Great Britain at the present time and the possibility that later on—perhaps a little later on—they would see more clearly exactly in what direction to move and would be able to make us a full, or at any rate, a much fuller statement than what we have already received. Therefore, I do not at all take occasion to complain. I merely note the fact that so far we have been told only what I may call the articulations of the conference, and no new light has been thrown upon the purposes of His Majesty's Government. I do not think that the same conditions of silence and reticence are necessarily imposed upon private Members, and, indeed, it is a good thing, I think, that we should ventilate this subject and bring House of Commons opinion into focus upon it when the proper occasion arises, as it has this afternoon. But I speak upon it with the very greatest diffidence because, as the speech of the right hon. Gentleman the Leader of the Opposition has shown, it is a very complicated and difficult subject, and one in which one might easily lose one's way while all the time seeming to proceed along extremely promising and attractive avenues.

A year ago I ventured to suggest to His Majesty's Government that they should call an international conference on the monetary problem with a view to arresting the deflation, and I had in mind, as I said hopefully on another occasion, that the object which we should set before ourselves should be the effective revaluation of commodities up to something like the values of 1928. A year ago the world was divided between gold countries and non-gold countries and the United States led the gold countries. It seemed to me when I made this suggestion that, if the United States could be persuaded to detach herself from the gold countries and embark upon a policy of revaluation, it would become much easier and much safer for Great Britain as the leader of the sterling countries to raise wholesale commodity prices. After all, the great obstacle to price expansion a year ago was the formidable power and authority of the United States ranged behind the Gold Standard, and in that enforcing of deflation inevitably associated with the Gold Standard under the present conditions of gold hoarding. It was very difficult for us to move with any effect while the United States adhered so rigidly, so firmly and so authoritatively to that position. Very large purchases had to be made by us across the exchange every year, and the movement of our exchange in relation to the United States was one of the very serious factors we should have had to consider.

If the United States proved obdurate in her adherence to gold, it seemed a year ago that there was nothing for us but to go with what we then called the sterling convoy and steam at a pace which would encourage the largest number of countries to join the convoy and enable them to keep continuous station in it, and then the world would have ranged itself definitely into two great monetary and trading groups, as it then seemed, of almost equal power. Within each group all transactions would become increasingly easy, but between these two groups all transactions and all payments would become increasingly difficult, and we should have had—there seemed to be no alternative open—the evil of two vast rival monetary and economic worlds each of which believed that it was being ruined by the other—the gold countries believing that they were being defrauded of the debts which were due to them and undercut by the depreciated exchanges of their debtors, and the sterling countries believing that the gold bloc were enforcing a policy of deflation upon the whole world with a view to enhancing the enormous masses of gold which they had hoarded in the unfortunate period preceding these world disturbances. It seemed, therefore, that there was no outcome from such a state of affairs except the wholesale repudiation of debts by sterling countries to gold countries, and the freezing up of all the exports of gold countries to non-gold countries.

That was the situation, and of the two groups I had myself no doubt, although they seemed so evenly balanced, that the sterling group would in the end prove much the stronger, even although the United States was on the other side. The sterling group, comprising as it did then almost the whole of the British Empire, and as it does now the whole of the British Empire, together with many powerful Continental countries, seemed to have the stronger position as between these two great spheres into which the world threatened to divide itself. But great friction and tension lay ahead, and a new arbitrary cleavage was opening in the world to international trade, in addition to all those other cleavages which we have known so far. I thought, therefore, that we should do our best to detach the United States from the gold bloc before we began consciously organising the sterling convoy and reconciled ourselves to the somewhat gloomy prospect I have ventured to outline.

I did not a year ago regard this as hopeless, because it was so evident to anyone who travelled about the United States, as I had recently done, that that great country was strangling itself both in respect to external and internal trade by its rigid adherence to the Gold Standard and to hoarded gold. On the other hand, when we remember how the gold obligation was soldered into the fabric of so many of the greatest American undertakings and how it was enshrined in the domestic law of the United States, with our minds dwelling upon a thousand million pounds worth of gold, including so many of our vanished British sovereigns, which had been solemnly buried in the vaults beneath the Federal Reserve Bank, when we thought of all that, it seemed that the hope that the United States would be induced to detach herself from gold and come and join the freer area outside the Gold Standard, was at any rate rather a forlorn hope. Still there was a possibility of a world conference. There was a possibility of the facts telling their own tale. In that interval there was the possibility of intimate conversations between representatives of Great British—which have taken place—and the United States, and one hoped that that result might be achieved.

But what has happened? The result which I had in my mind as the most hopeful that could be sought for has achieved itself. It achieved itself before the Conference ever met, freely, voluntarily, without pressure from us or bargain with us; the United States has repudiated gold. It has abandoned the leadership of the gold countries, and it is now resolutely and hopefully engaged in that very process of revaluating commodities up to the prices say, of 1926, or, it may be, 1928 or thereabouts. As far as I am concerned, while making every excuse and apology to the House for forming an opinion upon these extraordinarily complicated matters which have, nevertheless, forced themselves upon us, revaluation to the figures of 1928 was a result which I had always regarded as of paramount importance and desirability. I say "1928 or thereabouts," because, although there are many who share hopes, everyone knows also the danger of the experi- ment upon which President Roosevelt has so courageously launched himself and his country.

If anyone had told us a year ago that the United States would join Great Britain in abandoning gold we should have thought him far too sanguine; we should have thought him a builder of air castles whose expectations were his desires and whose wishes were his beliefs. The tremendous event has happened. We get every day in the newspapers headlines of equal size, and therefore we are sometimes apt to overlook the fact that they deal now and again with matters of vast and dominating importance, and at other times with purely frivolous or trivial topics. But the great event of the United States going off gold—a greater event than our departure from that standard—has happened, and I for one frankly rejoice.

Let me submit to the Committee—and I do not intend keeping it long this afternoon—that I really would speak with great trepidation upon these matters, because, without contact with the technical experts and without the great knowledge in possession of the Government, it is very difficult to do more than express a tentative view, and that I intend to do. It seems to me that the following results have followed from the decision of the United States which are all satisfactory and beneficial to us, or may be later. First of all, there is the gold bloc. What is called the gold bloc—we are getting into a new terminology upon this matter very rightly—rests upon American support. Confronted to a certain extent with a measure of American antagonism it becomes incomparably weaker as a world force. We no longer have the two equal forces. The changed use of this enormous power has altered altogether the proportion as between the gold and the non-gold countries. The countries of the gold bloc play nothing like the part in the world's business and production as do the non-gold countries, nor do they possess their vast and varied territory and their immense reserves of raw material. We must certainly do nothing apart from what is in our own interests. We cannot deflect from our own proper policy, but apart from that we must do nothing to embarrass or hamper the countries who decide to remain upon gold and to adhere to that, but I must say that I think it is extremely doubtful, whatever we do, whether they will be able to adhere to this system now that the United States has changed sides. I do not believe that any steps which we could take—and I hope that we shall take no steps which are to our own disadvantage—would alter at all the outcome of events. Let me say parenthetically, but, I hope, in the most inoffensive terms, that these gold countries have really no grounds for reproaching either the United States or Great Britain.

I am tired of hearing these claims to superior virtue and integrity attached to the Gold Standard countries; to countries which have already like France devalued to the extent of four-fifths of their indebtedness, or countries like Germany which has destroyed its entire rentier class, relieved itself of all fixed charges and is not paying either its public or private debts. I am unfeignedly glad that there is no danger now, or very much less danger, of the creation of a crystallisation of two economic and monetary worlds. There is no danger—to borrow a word from a much more thorny controversy—of a monetary diarchy in the world as between two equally established and equally large parties. The liberation of all currencies from gold is a possibility which must certainly be taken into account for the future. That is a great event, a prodigious event, if we look back to the position where we stood last year. Hitherto, we have had to consider the case of particular countries one at a time quitting the Gold Standard, or to groups of countries departing from it, but if all the countries depart from gold for the time being—I say only for the time being—an entirely new and by no means necessarily unhopeful situation will be created. Through the period of general flux we might reach the solution, or a solution, a far better solution of this problem than anything that has been in our power so far.

It is in relation to this possibility of the non-gold area being enlarged until it is almost universal that the second beneficial effect of what has taken place arises. In such circumstances it seems to me, looking at it from the British point of view, that the prestige and influence of sterling must become enormously enhanced and that consequently the position of London as the financial centre of the world will become even more secure. We in this island have shown, both before and after the abandonment of the Gold Standard, that we can manage a currency detached from gold, and manage it with sober and sedate self-control. The United States have yet to prove that, having escaped from the gold hoarder, they may not fall a victim to the paper speculator. I trust that they will succeed. Every one of us must hope and pray that this valiant experiment will succeed. They are pioneers, they are in a pioneer position, and the consequence of their failure will strike a note of despair throughout the world. I hope that they will succeed, but, succeed or fail, it seems to me very likely that once gold has been dethroned, sterling will become the world's most trustworthy measure. Already in these circumstances, for one year we have had two rival systems at work, and we have heard the expression: "It was not sterling that went off gold, but it was gold that went off sterling," and there was some considerable measure of truth behind it. How much more will the strength and solidity of sterling be apparent when gold is nowhere set up as an anchor in any part of the world. It is a great responsibility for us that this should happen, but it is also a very great opportunity, and it is an opportunity which has come to us in conditions when we have a stable Government in this country possessed of enormous powers to deal with any situation which may arise. I hope that it will not be found unequal to that opportunity should it arise.

The third result of what has happened in the United States has been to remove a barrier which has hitherto prevented us from carrying out the declared policy of the Chancellor of the Exchequer of raising the wholesale price level. I hope the removal of that barrier means an endeavour on his part to raise the prices up to at least the level of 1928. We have been told hitherto that we could not do this because other nations, especially the United States, were wedded to gold, but now that divorce has become so common, almost universal, it may be found that we in these islands have regained our freedom too. For all these reasons, I rejoice—and I do not think the right hon. Gentle- man would shed many tears over it—in the action of the United States in quitting the Gold Standard. I am sorry for the World Conference because no doubt it has lost a very great part of its original purpose. The biggest thing it could do had been done before it met. But there is plenty more work, as my right hon. Friend has shown, of the utmost importance for the World Conference to do. Anyhow, conferences exist for men and not men for conferences. I trust that the Government will keep the Conference in being. It is of the utmost importance that it should be continued in existence during the unforeseeable and not by any means unhopeful conditions which the next few months may bring about. If some nations go I hope, and I gathered so from my right hon. Friend, that His Majesty's Government will remain with others, keeping the others together. So long as the United States representatives remain in this country very few countries in the world can afford to absent themselves permanently from deliberations which at any time may assume the most decisive character.

I do not at all share, as an outsider, the naive astonishment with which some Members of the Government received the refusal of the United States to agree to a temporary price stabilisation of currency. I agree with the quotation read from President Roosevelt's speech during May, but how anyone watching the changes that had occurred in the interval could have imagined that Mr. Roosevelt, on the morrow of taking his tremendous plunge, and in the full tide of his successful experiment, having just severed his country from gold and launched himself on a revaluation of commodities, would agree to tie it all up again to gold, out of love for France, is quite beyond human comprehension. I agree with Professor Gustav Cassel, whose extraordinarily pregnant and suggestive statements have appeared from time to time during the last few years, that merely to tie up currencies even temporarily to hoarded gold--it is not gold, remember, but it is hoarded gold that you are invited to tie yourselves to at various ratios—would be no solution of the world's difficulties and certainly should not be attempted until the desired revaluation of commodities has actually been achieved.

I have indicated, I hope in language which is sufficiently vague not to fall into technical inaccuracies—we must all be particularly careful—my view, which I have sincerely held during the last 18 months while we have been compelled to address ourselves to this awful topic. Let me ask the Government what is the alternative to a real effort to revalue commodities. Now that the United States has joined the Latin countries and Germany in post-War devalorisation of their currency, we shall if we do nothing—I admit that we have done something—be the only Power which has not written off or written down past obligations at least to the level at which they were contracted, and we shall find ourselves alone in a competitive world crushed under a unique burden of debt and fixed charges, of which our rivals have freed themselves, burdens which will increase with every effort we make to reduce them and with every failure to arrest the fall in prices, while all the time our rivals will have relieved themselves in varying degrees. We shall be the only country where, above all others, the new wealth produced each year by the enterprise and toil of man is penalised to an unfair and destructive extent in comparison with the old wealth of past accumulations. We shall be the only country to assert and enforce the rights of creditors far beyond their original contractual equities, and by so doing if we go on indefinitely upon such a course with a falling price level, we may well bring about the ruin of that very rentier class who have been made usurers against their will, and without their knowledge to a very large extent, by the movement of monetary affairs, and whose lawful rights can only he guarded and guaranteed when founded upon justice, reason and public advantage.

Let the Government consider also the paralysing burden of taxation and the precarious balance of the Budget. We are incomparably the heaviest taxed people in the world. How can we expect a real revival—I rejoice in the signs of improvement which are shown, and it is no good part to minimise them—while we remain with a burden of taxation unparalleled in the past and crushing in its actual effect? While we proceed on the present lines I see absolutely no hope of any mitigation of the burdens of taxation. My right hon. Friend the Chan- cellor of the Exchequer has used up every conceivable resource merely to pay his way, and it is even doubtful whether he will succeed in paying his way. Very severe and much resented economies have been enforced and no others of a substantial character are now in prospect. All the yield of the tariff, the enormous yield, which has come to our aid, has been absorbed. All the savings of the skilful conversion, £20,000,000 or £30,000,000, have been absorbed. All the saving in not providing for the payment of the American Debt has been absorbed, because it was not included. All the relief of raising the entire Sinking Fund has been swallowed up, and still the balance trembles doubtfully. The explanations are only too plain. The burden of providing more than £120,000,000 a year, as we are bound to do, for 2,000,000 or 3,000,000 unemployed, has cut down the revenue at the same time that excessive taxation is drying up its sources. If a successful policy of price raising and wage raising, at the moment when the price raising had been effected, were adopted, the new wealth would he replaced in fair relation to the old.

You cannot measure by what unseen channels stimulus will come to your industries throughout the land. The burden of debt in relation to new production and to figures of revenue would also be reduced. Lighter taxation would liberate enterprise. Thousands of businesses which now make no profits at all, although they are still carrying on—a matter which was brought before me when I was Chancellor of the Exchequer—which are at present withdrawn from the tax collecting area, would come again into the revenue production area to the relief of the Chancellor of the Exchequer. You may get from lower rates of taxation, I will not say the same yield but, proportionately, a much higher yield than you get from destructive rates of taxation. Lastly, there would be a further reduction in unemployment, the most blessed economy of all, from which future Chancellors of the Exchequer alone can expect to have effective relief.

It seems to me that the course of His Majesty's Government is clear. Although they are absolutely right in not being precipitate and in watching carefully the moment at which to act, no doubt, they are justified in keeping their own counsel, as they certainly have done, I trust that this course, which is clear, is one upon which they will resolutely set forth. It seems to me that they should now proceed, or at the best moment proceed, to organise and guide a sterling convoy, in the centre of which lies the whole of the British Empire, upon a set plan of controlled revaluation; endeavour to raise prices in relation to sterling as far and as much as they can without losing touch with the Dominions and foreign countries who are keeping company with us. It is safe enough. The American navy has come over, as they did in the Great War, and although separate from us is steaming along the same course. It may be that it is steaming at undue speed considering the unchartered seas through which we are all passing, but there is no more risk of a direct monetary collision or confict between sterling and the United States of America. We ought, I think, to follow their general movement at a prudent distance, with every possible precaution which is open to experienced navigators, and with that thought for the common interest imperative on those who move in large associations. It may well be that the whole armada will be united at no distant date, and will move forward together in one majestic array and at one uniform speed.

5.19 p.m.


The two right hon. Members who have preceded me have spoken if not with great enthusiasm at all events with approval of the decision announced by the Chancellor of the Exchequer, that efforts should be made to continue the work of the Conference, and I think that from various quarters of the Committee expression should be given to the view that we should regard it as a disaster if the Conference were to abandon its task. It is true that great difficulties have occurred. I agree with the right hon. Member for Epping (Mr. Churchill) that the Government are not in any way to be blamed for not having foreseen the check which might come from across the Atlantic and for not having postponed the Conference. This Conference was brought into being by the Lausanne Conference of last year, and planned and organised at a date when it would have been utterly impossible to have foreseen the events which have lately occurred. Therefore, we are far from blaming the Government for the untoward situation which has arisen, and for my part I most cordially endorse what has been said by the Chancellor of the Exchequer, that every effort should be made to continue the Conference in being.

I find myself also in full agreement with him in the emphasis he has laid above all, in the interests of world trade and industry, upon the maintenance of confidence. Confidence depends on two things. There are two different kinds of confidence. One is confidence in the stability and maintenance of world peace, in the credit of Governments, in sober financial management, in balanced Budgets. That is the kind of confidence which the policy adumbrated by the right hon. Gentleman the Leader of the Opposition would destroy in a month. When the right hon. Gentleman the Leader of the Opposition was asked what his plan would be to maintain the stability of the sterling, he answered that he thought our currency should be placed fully under Government control. When he and his friends advocate a policy of placing under political management the Bank of England and all our banks, and the currency itself, and imagine that that would maintain at a stable level the £ sterling, it leads me to say that either the right hon. Gentleman does not mean what he says or else he does not know what it means.

The maintenance of confidence demands also that manufacturers and merchants should be assured that, when they produce or buy with a view of selling, there should be a fair prospect that their action will not be at a loss; and there we are brought at once to the question of prices. The right hon. Member for Epping has said that it is of supreme importance to raise the level of prices, and the Chancellor of the Exchequer to-day placed the next emphasis, after confidence, upon this. The right hon. Member for Epping also declared that if prices were not raised it would mean an enormous increase in the real burden of taxation and indebtedness, with other grave consequences. That is true in substance, but many of us have not noticed—I myself did not fully realise it—the very remarkable change in the situation that has taken place in recent months, since the experts commission preparing for the World Conference made their famous report laying prime emphasis on this factor. I observed in the "Economist" newspaper two days ago a statement of the change in the price of some primary corn—modities that has taken place in sterling within the last 12 months ending in June. of this year as compared with June of last year. In wheat and wool it is 20 per cent.; in tea, 30 per cent.; in copper, 40 per cent.; cotton, 50 per cent.; linseed oil, 60 per cent.; and in tin and rubber, 100 per cent. Those are the actual realised increases within a single year in the sterling price of these commodities; but it must be remembered that they are above the very low level which obtained a year ago. There is already, therefore, good hope in the fact that so far as a prosperous world commerce depends on this process it is well in progress. It is true that many agricultural prices have not risen, indeed, some have fallen.

The right hon. Member for Epping, quite rightly, drew attention to what is now proceeding in the United States. Undoubtedly it is the largest, the most vigorous and the most significant economic experiment that has been tried in any country in modern times with the sole exception of. Soviet Russia. We have not yet realised the stupendous task undertaken by President Roosevelt and his advisers under the unlimited powers conferred upon them by Congress; but we re-echo the words of the right hon. Gentleman in expressing the most earnest hope that this heroic experiment will succeed. If it fails the effect may indeed be disastrous. The consequence is that it was impossible to expect the United States at this juncture to proceed to stabilise currency. I suggest that if we had been asked to stabilise our currency a few months after going off the Gold Standard, in the latter part of 1931, we should have rejected the advice. Therefore, the situation now is that the Conference, having been brought together partly with a view of stabilising currency, the gold countries are now disposed to say that as it is impossible to do this in the immediate future it is no use proceeding with other questions. It is true that if you want to have commercial confidence for manufacturers and merchants it is impossible when currencies are continually fluctuating.

And I do not think you can give as an answer to the gold countries that it is unnecessary to do anything; we can proceed with our previous programme, that we can go on, if we are able, to reduce trade barriers, or even to abolish them. They will answer, "How then are we to defend our industries against the possible dumping of goods sold far below the cost of production according to a stabilised currency but not below cost if you take into account a depreciated currency? "It may be necessary to have such a defence. I do not assert that such defence must be adopted. It was not found necessary for us to take any special measures when the French franc depreciated to such an alarming extent. It is often found that matters quickly right themselves and that the fluctuations in the currency have only produced temporary effects. But if the French say that the Conference cannot go on with any part of its previous programme so long as the danger of dumped American goods is hanging over their heads, some answer must be given. I suggest that the answer to be given is that if it is necessary to adopt some defensive measure they should adopt a defensive measure which is calculated to meet the particular evil to which they are addressing themselves, and which they have in view. There is no reason why the Conference should not consider by what means it can, in a general way, clear the channels of trade and fulfil its own officially declared and authoritative objective, the loosening of the restrictions on world commerce as a whole.

The Committee will not be surprised if I say a word or two on the subject of the level of world tariffs. I submit this point, which I am sure will carry conviction 'o every hon. Member, no matter how much he may believe in tariffs; that a tariff is not the right form of defence against a depreciated currency in some other country. In the first place, it can seldom be high enough to meet the need. When the Japanese yen depreciated by 40 per cent. and Japanese goods flooded the markets of the world, it was no good adopting a 10 per cent. or a 20 per cent. or a 30 per cent. tariff to meet a competition of that kind. You must adopt, if any, far more drastic measures. Secondly, in such a case it is completely wrong to adopt a tariff which affects the goods of all countries equally. Suppose the French say that in order to meet American dumping they are going to raise their tariffs in general, it will not only hit American goods but the goods of all other countries as well. While I do not say that it is necessary to adopt these defensive measures, I would urge that an effective answer could be given to those who hold the view that it is necessary, namely, that a tariff, whatever else may be its virtues or its defects, is not the right armament of defence against that particular attack upon markets.

The second point that I have to suggest to the Committee, the second in relation to commercial confidence, is with regard to obstruction to world trade in general. The Chancellor of the Exchequer to-day in very emphatic terms reaffirmed the principle of commercial internationalism. He used unqualified language, and said that no country could depend upon itself alone, that unless world trade as a whole is stimulated and restored no one country can enjoy prosperity. On many occasions he has used the same language in the House. He said on one occasion that our trade in recent years had dropped by one-half, and he stated that no artificial stimulus, so far as the home market is concerned, could be an effective substitute for that lost trade. Everyone agrees with that. Everyone agrees that international trade must be restored and that economic nationalism is an evil. Everyone agrees, except apparently now Mr. Keynes, who according to a recent article, is apparently becoming the apostle of economic nationalism. But Mr. Keynes never agrees with anyone else, not even with himself.

While the Chancellor of the Exchequer and other Members of the Government were propounding this doctrine, we had only a few days ago a speech in the country from the Lord President of the Council, who said that the Government were firmly resolved to carry out a policy of restriction in order to maintain our own market for our own goods. If the British Government do that, all Governments should do the same, and may be expected to do the same. What then becomes of the whole of this policy which the Chancellor of the Exchequer to-day has once more propounded to the Committee? At Question Time to-day the Foreign Secretary in answer to a supplementary question about Russia, said that it was impossible—I took down his exact words— for His Majesty's Government to adopt two completely inconsistent positions at one and the same time. But the Foreign Secretary is too diffident. This Government has continually and with emphasis adopted two completely inconsistent positions at one and the same time.

So also with regard to the Conference, the Prime Minister in his very able and effective opening speech quoted the Experts' Commission as saying that it was useless to adopt piecemeal measures, that the policy of nibbling would not succeed. But only last week the President of the Board of Trade, in a speech in this House upon the Economic Conference, declared that a piecemeal policy—he used those very words—was the only one that could be adopted. He said that one thing was certain, that unless we were prepared to proceed piecemeal it would be impossible for us to succeed. Inconsistency—could there be greater inconsistency? On the one hand, the Government declare that it is necessary to have a general measure of economic disarmament and not to proceed piecemeal, and then the British delegation declare to the Conference that the only effective way to reduce all tariff barriers is to make independent agreements between each pair of countries.

The Chancellor of the Exchequer to-day said that in his opening statement to the Conference he had covered the whole ground and had given them a definite lead. On currency and on many other matters, indeed, he did so. But so far as tariff barriers are concerned his lead was the very opposite of definite; it was inconclusive to the last degree. When I see it stated in the "Times" to-day, in the Political Notes, that there is no disposition in any quarter of the House to criticise the way in which the Government so far has handled the Conference, I would most strongly demur to that statement, which does not represent the facts. As soon as the Chancellor of the Exchequer's statement was made to the Conference we viewed it with dismay; we on these benches met and issued a statement expressing the concern which we felt, because we were sure that if this was the course advocated by the British Government and if their advice was accepted by the Conference as a whole, on the economic side the Conference could not succeed. I should fail in candour if I did not now make that abundantly clear to the Committee. But, for the rest, there still remain many matters of much importance, though perhaps of secondary importance, for which we look to the. Conference for results, and we trust that the British Government and the other Governments represented there, in spite of all discouragements, will strive to secure some concrete outcome which will in some degree relieve the most grave economic situation in which the world has so long been struggling.

5.36 p.m.


I would like to join the Chancellor of the Exchequer and others who have spoken in shedding a decent tear over the fate of the World Conference. We may all hope that the Conference may still lead to some useful result. But when we compare the Chancellor of the Exchequer's speech with his own past speeches about the Conference, and still more with the eloquence of the Prime Minister and of the Lord President of the Council, and even with the Prime Minister's opening speech, what a contrast! What a difference between that dry sub-acid vintage at which we made rather a wry face an hour ago, and the rich fruity liquor of the Prime Minister's speeches—something which on a wine list might be described as "Vin Mousseux (Gout International)."

When I think of the fate of the Conference I cannot help being reminded of those lines at the end of Matthew Arnold's "Sohrab and Rustum," in which he describes the fate of the River Oxus, lost in swamps and marshes: Oxus forgetting the bright speed he had In his high mountain cradle in Pamere A foil'd circuitous wanderer"— However, the poem does end by reminding us that the Oxus did at last emerge from the swamps to where— … the new bathed stars Emerge to shine upon the Aral Sea. Let us hope that that may come to pass.

I am not suggesting that anyone should be blamed. I entirely agree with my right hon. Friend the Member for Epping (Mr. Churchill), who made such an admir- ably cogent and convincing speech just now, that we cannot blame France or the other continental countries, who have been through a large and in many cases wholly excessive inflation or devaluation if they do not wish to go further than they have gone. On the other hand, we clearly cannot blame the United States. They have embarked on a tremendous experiment, to carry out in action that which for a year or more past we have said we intended to do, and have done comparatively little in achieving. It must have been clear from the speeches of the President, from his whole attitude, that with him the one thing that mattered, as it matters to the whole world, is the raising of the price level, and that the question of international stabilisation or synchronisation of currencies is a secondary and later stage in the whole business. If we look at the statement signed jointly by him and the Prime Minister, we see that the first and by far the most important and longest paragraph was devoted to the raising of the priclevel and the means by which it might be attained, and it was only in a. much shorter subsequent paragraph that, the ultimate re-establishment of equilibrium in international exchanges and the re-establishment of an international monetary standard, when circumstances permitted, was touched upon at all.

Surely—and I do not blame our Government in seeing certain advantages in meeting the French and the views of the bankers about avoiding speculation—it should always have been obvious to us that the moment we began to suggest stabilisation we were suggesting something which was bound to alarm the President, which was bound to cut right across the policy on which he has concentrated everything. You may say that it was a purely provisional stabilisation between bankers which was to be fixed up. Yes, but who likes to put his neck within a provisional noose 1 Naturally, President Roosevelt at the outset put an effective veto on any policy which might lead, as I have no doubt it was intended to lead, by Mr. Montagu Norman and those concerned, to an early stabilisation with gold, both of the United States dollar and of British sterling.

The real trouble of the Government is that they have never sufficiently made up their mind on which side of the fence they stand, that they are trying to reconcile and have tried to reconcile two irreconcilable points of view. You cannot run with the Montagu Norman hare and with the Roosevelt hounds. That is what the Government attempted to do, and they succeeded in pleasing no one. I do believe that it was at any rate possible if, acting in full accordance with the principles we have laid down, we had said to President Roosevelt, "Our intention is not to link to gold, but like you to get back, if we can, by our own methods to the 1929 price level"—on a clear assurance from us it might have been possible to achieve stabilisation of sterling with the dollar, if not now, yet at a comparatively early point. But the line that we took has not succeeded in pleasing anyone, and it has certainly killed any effective further discussion of the main monetary question at this Conference.

However, I do not wish to follow that particular line of criticism. I would rather turn to what, to my mind, underlies the failure of this Conference and of any conference similarly constituted and professing similar aims. It is that at all these conferences since the Genoa Conference—which did all that could be done by way of agreement on such lines, and has failed lamentably since—we are all trying to reconstitute the economic world of the nineteenth century. I was in entire agreement with a great deal of what was said by the right hon. Gentleman the Leader of the Opposition, when he stated that we had to face the problems of a new world. The world of the 19th Century, with its conception of Free Trade, as far as possible, and of a single international monetary standard, which enabled the fullest measure of production anywhere and everywhere as capital chose to invest, wherever capital chose to start industry—that world has gone In place of it we have a world which thinks less in terms of immediate profit to the individual, which thinks much more in terms of an ordered society, in terms of steady employment and of standards of wages and living.

Whether you call that Socialist or not, it is a national conception, and is bound to lead to national policies wholly incompatible with the old internationalist cosmopolitan world conception of economics. My right hon. Friend the Member for Darwen (Sir H. Samuel) said quite truly that no one could have reaffirmed that internationalist doctrine more strongly than the Chancellor of the Exchequer did just now. He also said very truly that that doctrine was incompatible with the policy which we are pursuing as a nation in this matter. In the Prime Minister's opening address he talked of self-sufficient nationalism in economics as the "death-knell of advancing prosperity" and said that "the nearer we could come to making the world an economic unit the better for each nation." I believe that statement to be profoundly untrue, and profoundly incompatible, either with the point of view of those on this side of the House or of those on the benches opposite. Can anyone doubt that the general standard of world prosperity has been enormously increased in the last two or three generations by the deliberate effort of nations to teach themselves every modern industry, to bring every kind of skill into their own countries and to make the utmost of the resources of their own lands, instead of leaving matters to chance? Can anyone doubt that if the world were an economic unit to-day, and if we had to encounter, under Free Trade conditions, unlimited Japanese competition, that that would be disastrous to British industry? We have got beyond that point.

I wonder how anyone could expect that a Conference which, no doubt with considerable sincerity, paid lip-service to these wholly out-of-date ideals, and professed to attempt to restore a bygone world, could ever hope to succeed. Every one makes the same profession and every one at the bottom of his mind has the same reservations, explicit or implicit. My right hon. Friend the Chancellor of the Exchequer pleads for an international outlook, an international world, no excessive tariffs—only such reasonable tariffs as suit us. The British delegation to the Conference points out with regard to quotas that "a clear distinction should be drawn between import quotas arbitrarily imposed as an additional measure of protection for the home producer and quotas established in pursuance of international agreements to regulate production or marketing so as to restore and maintain a remunerative level of wholesale prices for producers in all countries." But that is not the argument of my right hon. Friend the Minister of Agriculture to the farmers who want prices kept up for them and who want the foreigner kept out.

The other day my right hon. Friend the Lord President of the Council at Manchester pointed out how in a situation. like that of to-day, when you wanted something really stiff in the way of protection, no tariffs would meet your need. What you wanted was something which no foreigner could get past, and only the quota could supply that need. I might dispute that argument but I want to point out that we, and not we alone but all others who go to these conferences, will fail to bring about real results or will do anything but arrive at futile agreements, or the kind of disagreement at which we have now arrived over the monetary position, as long as we pretend to each other and to ourselves that we are trying to reestablish a world which is dead and gone.

What we have to do is to face and accept modern economic nationalism, which is not merely a point of view of aggression towards other countries, but is much more a point of view of the maintenance of internal conditions. It is the result of democracy; it is the result of the emergence of trade unions; it is the result of a mentality which considers labour, not merely an instrument or a raw material to be secured as cheaply as possible wherever you can secure it, but as an end in itself, as part of the nation, whose efficiency and well being are the prime considerations. All these things make for a regulated, organised, controlled view of national life which is incompatible with the promiscuity of the old free trade system. If you have tariffs—and here I agree with something which was said just now by my right hon. Friend the Member for Darwen—you want separate tariffs for different nations according to how they treat your trade, according to the state of their currencies and so on. You have to deal with a specific world and the abstractions of the last century are no good to you.

At the same time, I fully agree that nations, especially small nations, cannot live solely by themselves, and the true compromise which is emerging out of all this is not the regulation of the whole world on one pattern which you will never get again— a pattern of a world in which nationalities mattered comparatively little except for police purposes and within which everybody was free to trade to invest, to speculate as they wished. The true compromise that is emerging is that those nations which for historical, traditional or geographical reasons, or reasons of defence, wish to work permanently together, should form themselves into economic groups large enough to meet the essential needs of modern production and marketing, large enough to ensure the production of tropical as well as temperate essentials and the establishment of effective industries, large enough to have a market of 100,000,000 or more. Those are essential conditions of modern industry and within those conditions you can also find room for the main invest-vestment, the main finance, the main monetary system of the group. It is in that direction that the world is working, and I believe we would do far more good if we helped along that natural evolution instead of trying to ignore it and seeking to go back to a bygone age.

In our case we have already made a substantial step forward in that evolution at the Ottawa Conference. I believe that the result is going to be good, not only for the British Empire but for the world, if it leads to the more effective development of the countries composing the British Empire and a raising of the standard of living of their people. Why should we not encourage the peoples of Europe to form a similar group not only for monetary but for all economic purposes Indeed, it is only by combining all purposes that you will get really efficient results. You can make a monetary system effective even with a comparatively few nations, if their main trade is mutual. I see no reason why we should not have an effective sterling monetary system for the Empire and such countries as choose to join us, an effective dollar system for the United States and the nations who choose to join them, and an effective gold system or an effective gold and silver system for the countries of Europe if they wish to get together. I am glad to see that they are getting together.

I would add this—and I am sorry that the right hon. Gentleman the Member for Darwen is not now in his place—that you cannot make progress on those lines out side the British Empire, unless you first get rid of the most-favoured-nation Clause. That Clause, based on the 19th century conception of promiscuous Free Trade, has been an obstacle to true Free Trade and to the extension of better trade relations between those who want to trade with each other. It stands to-day in the way of any grouping of the European nations on economic lines, which would do more for the peace of the world than anything which could be done at Geneva. Yet I am sorry to say that the attitude of the British Government, so far, has been very equivocal upon that point. According to the Chancellor of the Exchequer: We find it difficult to agree to any formula allowing derogations from mostfavoured-nation treatment in respect of regional and group agreements except those based on historical associations such as are already generally recognised. That is a veto on Europe coming together. The President of the Board of Trade used more ambiguous and less definite language on another occasion, but I am afraid that the position still is that real progress towards development on economic lines is as much precluded at the Conference, as progress on monetary lines was precluded at the opening, only this time it is our veto apparently which is holding up progress. I earnestly appeal to the Chancellor of the Exchequer and the British representatives at the Conference to recognise the situation as it has emerged, to reconsider their point of view, to see whether the main work of the Conference cannot be helped along by giving freedom and encouragement to the nations to form themselves into groups which can restore their own prosperity on their own lines. Over and above that, there may remain a few items that can be dealt with on a general international plane. It may be possible to do something in regard to silver, a matter in regard to which the gold standard countries have none of the objections that they entertain to currency inflation on a paper basis. On the other hand it is a matter to which the United States are very favourably inclined and the Government of India at any rate should be more than favourably inclined to if it is endeavouring to establish a stronger position in view of the setting up of a Central Bank. I hope that our Government will now in the words of the Leader of the Opposition, get ahead with the development of this country and of the British Empire in all matters monetary, fiscal and social, believing that in that way we can play our part in the development of the world and be in a stronger position to give a lead and an example to the rest of the world, and in a better position eventually to come to stabilisation and possibly mutual trade arrangements with the rest of the world. In any case, let us get on with our own business first, and, if I may quote the words of Burke, let us not look back, but Let us pass on; for God's sake, let us pass on.

5.59 p.m.


The speech of the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) was, I think, an endorsement of the speech of the right hon. Gentleman the Member for Epping (Mr. Churchill). I think that they were in agreement in regard to the policy of the President of the United States and its effects in America,. [Interruption.] I am sorry if I am interrupting hon. Members opposite—


Will the hon. Member allow me to say that we on this side are not complaining because he is addressing the Committee, but because of the fact that on every occasion when there is a full-dress Debate, back bench Members appear to be so largely ignored ?


I think I can satisfy the hon. Member that although I happen at the moment to be speaking from a front bench, I come within the category to which he has referred, and, in any case, I am sure that we have all confidence in the Chair and know that this Debate will be regulated in such a manner as will lead to the most efficient expression of the opinion of the House of Commons which is what we all desire.

To revert to what I was saying when I was interrupted, those right hon. Gentlemen expressed the wish that the President of the United States and his policy should succeed, and I think the right hon. Gentleman the Leader of the Opposition also expressed that wish. It was mentioned in some previous speeches that a great deal of the depreciation of the dollar was due to speculation and that there had not really been a very serious depreciation, as it were, dependent upon and governed by economic forces. I have taken the trouble to look into the figures of the inflation which has already taken place in the United States, and it might interest the Committee to know that the Federal reserve notes in actual circulation on 30th June, 1932, amounted to 2,755,800,000 dollars whereas on 28th June of this year the total circulation amounted to 3,061,320,000 dollars, or an increase of 305,520,000 dollars, or, taking the dollar at five to the £, about £60,000,000 already, so that there we have direct evidence of inflation, quite apart from speculators, who take advantage of the position but do not create it.

People rave about and attack speculators, but even speculators on the Stock Exchange serve a useful end, in that they create a market. We cannot have a, world without speculators, and I appeal to hon. and right hon. Members opposite to try to visualise the world as we find it, although we may hope for a better world. You cannot get away from the man who buys something because he hopes it will rise, whether stock exchange securities or commodities.


The hon. Member cannot expect us to be like him, but we will be as like him as we are able to be.


I was trying to appeal to the right hon. Gentleman to take the world as we find it, and we find in it speculation. I am not a supporter of excessive speculation or of gambling—God forbid—but I recognise that speculation in commodities and in stock exchange securities serves a useful end, and I ask the right hon. Gentleman opposite to be good enough to consider that statement. I hope I have demonstrated that the depreciation in the dollar is due to an excessive issue of notes, and that there really is inflation, rampant and unashamed, going on in the United States. How any human being can wish that that should succeed, is beyond my comprehension. We sympathise with the state of affairs in the United States, and anyone who is in direct communication, as I happen to be, with many correspondents over there can but lament and deplore the terrible state of affairs that exists throughout that vast continent at the present time. It is terrible, deplorable; it calls for our utmost sympathy, and I hope that anything I may say will in no sense cast any slur upon any American or any American institution or policy. I have in my hand a batch of Bills, which are sent to me from America every week. They come in at the rate of six or seven a week, and if anyone cares to read them, he will see that they are calculated, on the part of the Congressmen who introduced them, to do almost everything under heaven except to regulate the tides and the climate. These poor people are at their wits end to know how to restore their country, and so they bring in these Bills, which indicate the mentality that exists in the United States. We have the fullest sympathy with it, and it is crystallised and consolidated in the almost unlimited powers which have now been given to the President. He can issue notes up to 3,000,000,000 dollars and make advances to farmers and others to a similar amount.

We are interested from the point of view of whether or not we should follow that sort of policy. It is advocated by some, even in this House, that we should walk arm in arm with the United States and pursue this policy, because we are anxious to see a rise in prices, though I was delighted to hear the hon. Member for Limehouse (Mr. Attlee), as well as the Leader of the Opposition questioning whether this idea of a rise in prices is such a benefit to 'humanity in general. I would like to see a rise in the prices of commodities generally brought about by legitimate demands, but a rise in prices through manipulation or through inflation will, of course, lead sooner or later to a rise in all the costs of production and will not be an advantage even to the United States themselves in the long run.

If this policy is pursued by the United States, and they are entitled to pursue it, I believe it will surely work to our advantage. If, through cheapness, but not through sweating wages and reducing costs beyond what they ought to be reduced—I do not support that, and that is why I am a Free Trader—we can really reduce the cost of manufacture to a lower price than the Americans or the Japanese, will that not command the general markets of the world, and is it not more than likely that this policy, if America chooses to pursue it, will work to our advantage, because we shall be able to get a great deal of the trade which we formerly did with South America? I trust we shall be able to do that as a result of sticking to our policy and, as was well said by the Chancellor of the Exchequer, not losing our heads. It was said by Emerson that one characteristic of the English race was that they were a stout people, not that they were a bulky people, but that, though they did not always understand why they stood, they did stand and did not lose their heads. If we do that, and endeavour to avoid waste and pursue a sound policy of economy, I have no doubt, whether we are Tariff Reformers or Free Traders, that eventually this move on the part of the United States will help us in the general markets of the world.

I hope I shall not in any sense of the word say anything that would cause any ill-feeling across the Atlantic, but when the President of the United States issues a manifesto such as he has issued, we are bound to offer some criticism upon it. Let us examine what he desires. The right hon. Gentleman the Leader of the Opposition even supported his desire for a dollar in the future that apparently would always command the same purchasing power, but if you pursue a policy of inflation, that alone will prevent your dollar from always continuing to have the same purchasing power.


I never said anything about it.


I think the right hon. Gentleman agreed with the statement of the President of the United States that he sought the kind of dollar which a generation hence would have the same purchasing power as the dollar to which he hoped to attain in the near future.


Hear, hear.


Well, that is a physical impossibility. How can the President of the United States guarantee, by a policy of depreciating his dollar, to maintain it at the same purchasing power? What is the dollar at which he is aiming? If he wants a fluctuating dollar, he may well get that a generation hence, if the United States is still in existence then, but I think the right hon. Gentleman the Leader of the Opposition will agree that that is not the kind of dollar or pound that he desires. You may say, "What sort of a pound do you desire here?" I desire a pound that will have as nearly as possible a purchasing power which will remain fairly constant, and I will endeavour to show the right hon. Gentleman opposite how even the despised Gold Standard, which he thought had nothing to do with it, enters into this question of giving the kind of pound which is essential for the wage-earner. If there is one party to whom this policy of sound money ought to appeal, it is the right hon. Gentleman's party, the party of the wage-earners, because, like the rentiers, they are more interested in the pound being stable and maintaining its purchasing power than are any other class in the community.

If the right hon. Gentleman asks what policy I would advocate to bring about stability in the pound—we won the last election on restoring, as we hoped, the stability of the pound—of course, the way to maintain it is simply, in a sentence, to see to it that your notes are equal in value to the gold which they are supposed to represent. It is quite simple. What does a pound represent ? What is the meaning of a pound sterling ? One definition of a pound sterling was given 100 years ago, when, I think, a London accountant was asked the question, and his answer was that he could not say what a pound sterling was, but that every gentleman knew it when he saw it. Sir Robert Peel defined it as the equivalent of 123¼ grains of standard gold, and that meant that a pound sterling should be equal in purchasing power to the purchasing power of 123¼ grains of gold. That is what makes your pound stable, to base it on gold. The right hon. Gentleman opposite thinks it is not necessary to have it based on anything, but I do not know how you can guarantee the stability of the wages of the workers unless you have some foundation for your pound. Therefore, if he agrees that there should be a basis, and that this which I have just given should be the basis, I think he will also agree that we are getting on, and that that is the foundation of a stable currency.

Why do I say that we ought to aim at the restoration of the old parity? I say it for a very good reason, and I hope the Government, although they are somewhat inclined to temporise, will agree to go back to the old parity, when they come out definitely for the Gold Standard. Why do I regard it as of supreme importance to get back to the old parity? For no other reason than that there is a, moral obligation to do so. The currency note, which was the foundation of our currency and on which the Bank of England note was founded, had a condition in the Act under which those notes were issued, that any holder could go to the Bank of England in business hours and obtain gold of a certain weight and fineness in exchange. That power was transferred to the Bank of England note, and therefore there is a moral obligation on this Government and on any Government to restore, as soon as practicable, our currency to the old parity. My right hon. and gallant Friend opposite, the Member for Newcastle under Lyme (Colonel Wedgwood), does not attach any importance, apparently, to this moral obligation.




He would like to see the £ reduced to 5s., but many of us do attach importance to this moral obligation. If you do not restore the £ to the old parity, you will be branded as a repudiator. I have often heard the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme speak of the maintenance of the honour of contracts, and he must logically support me when I plead for the restoration of the £ to the old parity because it is honest and carrying out a moral obligation. We went through a similar experience a hundred years ago, when men like Canning—


Will the hon. Gentleman ask our friends who lent us money to take it back at the same value as they lent it, or with 50 per cent. more?


It is true that during the War, when we were off the old parity certain borrowings took place at varying rates of exchange, but we should keep in mind that the wage earners and people in receipt of fixed incomes for a, long period during the inflationary period were mulcted of their fair return because of the high price of everything. I admit that the point which the right hon. and gallant Gentleman makes is fair, but in the interests of honesty and fair dealing the restoration of the £ is the right thing to aim at doing as soon as you can while making allowance for the factors to which he referred. But there still remains the fact that it is honest and the highest ideal for a Government to aim at getting back as soon as possible to a parity when we can pay 20s. in the £. It is no merit on our part, but perhaps as the result of the inflationary policy of the United States the £ now is very near the old parity with the dollar. We are still at a discount as far as the French franc is concerned, but it is possible with a comparatively small contraction of our note issue to get back our £ to the old parity. That would be a great advantage to this country.

I do not fear the competition of the depreciated currencies. We have heard of the advantages to Japan of the depreciated yen, but a great deal of the advantage is due to her efficiency and her low paid and even sweated labour, which enables her to undersell other countries. I am convinced that if Great Britain will pursue a policy 9f sound finance and reduce her costs in spite of America's inflationary policy, it would be rather an advantage to us in the markets of the world. I hope that I have said enough to show my adherence to what I believe to be a sound policy, namely, the support of the Gold Standard and the hope that we may yet attain to the ideal of a pound worth 20s. It is our duty and our honour that we should do that. As Gladstone said, if it is morally right it is not politically wrong. This policy is sound both in honour and in economics. I am reminded of those beautiful lines which Tennyson wrote in his Ode on the Death of the Duke of Wellington": Not once or twice in our rough island-story, The path of duty was the way to glory: He that walks it, only thirsting For the right, and learns to deaden Love of self, before his journey closes, He shall find the stubborn thistle bursting Into glossy purples, which outredden All voluptuous garden-roses. Not once or twice in our fair island-story, The path of duty was the way to glory.

6.20 p.m.


There are very few hon. Members except the hon. Member for East Edinburgh (Mr. D. Mason) who are able to find poetry in the Gold Standard. I have listened to this Debate very carefully and to several other Debates of a similar character, and I would like to say on this occasion, as I would have liked to say on other occasions, that one cannot blame the Government, after one has listened to their supporters, for having failed to disclose any policy for the World Economic Conference. There has been such a conflict of policy from the supporters of the Government that the Chancellor of the Exchequer cannot be expected to have any policy for the Geological Museum. The hon. Member for East Edinburgh believes in the maintenance of existing price levels. The right hon. Gentleman the Member for Sparkbrook (Mr. Amery) believes that the existing price levels are disastrous and that there should be a deliberate policy of inflation to a level that has not yet been disclosed, but which, I suppose is the level of 1929. The right hon. Gentleman the Member for Epping (Mr. Churchill) hopes for the 1928 level. There is obviously a real conflict among the supporters of the Government as to the policy which the Chancellor should pursue at the World Economic Conference. Their divergencies arise out of the fact that they represent different stratas of economic interests in the country. The gold bloc nations are unable to agree to a departure from the Gold Standard because they dare not wipe out their rentier class twice in the same generation. It would be disastrous for France and Germany and the other countries that have passed through a period of inflation again to embark on the same policy and to wipe out the fortunes and the savings that have been accumulated in those countries. To do that would permanently destroy the frail foundations on which the structure of modern economic society is built

Therefore, it is impossible for those nations with that record behind them and with the circumstances of their own nations always before them to agree to a policy of wiping out the money values of those who have acquired money property. America, on the other hand, being a nation with only a brief and very unfortunate experience of foreign lending, with a huge burden of private debt which has grown up as the result of the instalment system and such-like factors, finds it imperative to wipe out the claims of the rentier class. Being within her frontier almost a self-sufficient economic unity, she is able to do that without any great international consequences. America, therefore, finds herself with the industrialist and the debtor in the ascendent. The rentier is in the ascendent in other countries, while the debtor and the property owner in particular are in the ascendent in America. Therefore, America finds it possible and desirable, indeed, she finds it absolutely imperative, to embark upon a policy which wipes out the claims of the rentier class. America has a policy for the Conference, but the Chancellor this afternoon finds it impossible to disclose the policy of this country. America and other nations have a policy, but we have no policy.

Why have we no policy? It is not because the Chancellor of the Exchequer is less able than the representatives of other countries. With every respect for an obviously eminent gentleman, I do not believe in all the "ballyhoo" about the President of the United States. He has not produced a policy because he is a man of extraordinary penetration; the policy has produced him. He emerges in the public life of America with a clear and definite contribution to make because certain needs and necessities have grown up in America itself. He is the articulation of the ascendency of a certain group of interests in America, and he speaks with greater clarity because those interests have brought him into bold relief in the American social scene to-day. Therefore, I do not subscribe to the hero worship of this great man who has suddenly appeared on the canvas of the world. It is not even because of the classical ambiguities of the Prime Minister that we have no policy. I do not think that even he could hare a policy for Great Britain in this Conference because he simply represents in his own person all the ambiguities of his followers. They have expressed themselves with such divergence to-day that the only way in which the Prime Minister is able to escape them is to take refuge in his habitual cloudiness.

The same thing cannot be said of the President of the Board of Trade. He is not a cloudy minded person. He thinks very clearly. Why is he not able to produce his policy? The reason is because no bloc of interests has emerged in Great Britain strong enough to dominate the others. We are a rentier and a producing nation at one and the same time. That is our difficulty. We could go to this con- ference as inflationist as America were it not for the fact that the rentier class has no more influence on Government policy than another. It is quite improper for people to suggest that the Gold Standard has no defenders and that deflation has no supporters. I think that deflation and the high value of money is supported obviously by those whose economic interests are bound up in it. I do not complain, for I have never regarded politics as the arena of morals.


It should be the arena of morals.


Politics is the arena of interests rather than of morals. By a peculiar method all his own the hon. Member is capable of transmuting his self-interest into a high morality. I am not capable of such self-deception. The inflationist would elevate his own ideal into his morality, and so we would have a conflict of morals as well as of interests—a conflict anyhow. It does not really matter whether it is a conflict of morals or interests. The point remains that in Great Britain the deflationist or the possessor of money values has enormous influence upon the policy of the Government, an influence reinforced by many economic considerations of great value. No one should deride them. The hon. Member for East Edinburgh put them forward very powerfully. It is all very well for hon. Members to say we must have inflation to inject more vitality into capitalism, but you can inject it too often. They injected it once in France, and had to have another dose.

It is foolish to represent the position as if there were no strong argument for defending the value of money where it can be defended. There is a real balance of interests in Britain between the producer class and the rentier class. The producer class received recently a certain bonus from our having gone off the Gold Standard. They obtained some advantages from that in export trade, and they are deeply grateful for them. On several occasions the right hon. Member for Sparkbrook and the right hon. Member for Hillhead (Sir R. Horne) have given their weed of thanks to the Chancellor of the Exchequer for that small benefit to the exporter-producer interests. But the fundamental conflict is in the ranks of the capitalist class itself, and not between the working class and the capital- ists, and it is not possible for this Government, representing the capitalist interest as a whole, to go along to an international conference with a coherent point of view. Therefore, I submit that the case against His Majesty's Government does not lie in the mouths of the supporters of the Government. They must array themselves on one side or another if we are to participate intelligently in a World Economic Conference.

Hon. Members on these benches take a fundamentally different point of view. I may not claim, like other hon. Members, to be able to understand the mysteries of modern finance, but I was amazed at the right hon. Member for Darwen (Sir H. Samuel) sneering at the Liberal economist Mr. Keynes, from whom he has received inspiration on so many occasions in the past. It is extremely ungrateful of him to do so. Mr. Keynes has been the idea-factory for the Liberal party for so long that this turning of him down is really too bad. It is not done. After all, Mr. Keynes cannot be blamed. The right hon. Gentleman said of him that he disagrees with everybody else, and often with himself at times, but, then, he is a Liberal economist trying to become a Liberal politician, and be is bound to change his views. Has not the right hon. Gentleman himself afforded us the spectacle of a Liberal politician trying to become a Liberal statesman, and has he not involved himself in many contradictions, including those contained in his speech this afternoon? No one presents a more pathetic spectacle of indecision than does the right hon. Gentleman opposite, and to turn round and accuse an hon. Member of great capacity and of great public influence of having changed his point of view—


He is not an hon. Member.


An hon. Gentleman, not an hon. Member. To blame him for having changed his point of view is very unfair. Mr. Keynes changes his point of view with the changes in the social scene itself. He is trying to follow the politicians. He is a day behind, of course, but he is doing his best to catch us up, and now that he sees that the politicians have moved into the age of economic nationalism he must give us his guidance. The job must be done properly, and he is doing his best to help. The right hon. Member for Sparkbrook has become one of the disciples himself. He is all in favour of economic nationalism. He says that the time has arrived when we must recognise the fact that we are a producer-nation. Our interests depend upon the development of our producer status, and we ought to abandon what he calls the economics of the 19th century. The point of view which we on these benches take is, as I understand it, that it is impossible for the representatives of any capitalist nation to have a policy for a world entente until they have first of all produced a policy for anarchy inside each nation. You cannot have order abroad and anarchy at home. The right hon. Gentleman takes up the opposite position. He says you cannot have anarchy at home and order abroad.


I am sorry if I failed to make the hon. Member understand my point of view. I tried to explain that, because we were all gradually learning the importance of order and regulation and control in our domestic relations, therefore we could no longer continue to meet internationally a system of anarchy in our foreign relations, and I hoped that ultimately we might come to world order.


I think I understood the right hon. Gentleman quite clearly. He talked about international regulation as a consequence of agreements between nations inside the British Empire. He said our trade must be selected. We must trade with those countries, preferably inside the British Empire, whose economy is complementary to our own. But as long as we have got competition inside the country, as long as we allow the distribution of the available labour force in society to be governed by fluctuations in the rate of profit, and the distribution of production over various industries to be governed by movements of prices, and as long as we allow the ultimate market for all goods—the labour market—to be decided by fluctuations in the rate of wages, we have got anarchy at home. When you talk about regulations and harmony and co-ordination on the top of all that, you are talking Fascism and nothing else, because Fascism is simply the false dawn of Collectivism. It is the super-imposition of the collective State upon competitive anarchy inside. When the right hon. Gentleman comes forward and asks us to swallow the language of Socialism, let him give us the reality of Socialism, too.

Politicians are learning the art of using Socialist phrases because they represent the movement of the future; they represent an adjustment to modern realities. The right hon. Gentleman is learning the Hitler trick and the Mussolini trick of using Socialist jargon, Socialist phrases and Socialist terminology in order to try to trap and ensnare us into his Fascist State. We have a clear conception in our minds between that sort of State and another. We join issue with those hon. Members who see in the world of currency the source of the modern economic crisis. We do not see it there at all. We regard the evils following from deflation and inflation as consequential, and not primary. We are perfectly prepared to admit that contracts entered into between individuals are falsified by changes in the value of money. The non. Member for East Edinburgh nods his head. He amazes me by nodding his head, because I thought just now that he was defending contracts. He says deflation has altered the value of the contracts, and therefore he wants to adjust the value of money to the new basis.


If the hon. Member had done me the honour of listening to my argument he would see that I was pleading for getting back to what the original contract was based on. That is all.


Then the hon. Member is not for deflation. He is now running away from his Gold Standard as fast as he can. I deplore this immoral practice on the part of the hon. Member. The case which has been made out is that the value of money having changed, the basis of the original contract has been altered, and therefore there should be an adjustment.




Really I cannot admit the argument. There is no dubiety in the hon. Member's mind about the fact that money to-day buys more goods than it did five years ago, and therefore a man who is having 5 per cent. is having more than he contracted to get five years ago. People who want to inflate want to readjust and bring things back to where they were. As I was saying, however, we do not see the source of our economic difficulties in the currency sphere. We do not regard the disequilibria between the rentier and the industrialists as the main source of the trouble. We consider the disequilibria arises from a more profound source than that. We do not, believe that we shall solve the problem by any modification of the system of tariffs and currency alone; we regard modifications in that system as necessary parts of the solution of the problem, but, not as fundamental. The right hon. Member for Darwen jeered at my right, hon. Friend for wishing to have political control of banks, but my right hon. Friend never claimed that we could control the banking system efficiently unless we modified other forms of private enterprise. That is our position. We regard the first cause of the world crisis as arising from disequilibria that lies at the bottom of society.


I am sorry to interrupt the hon. Member. You cannot have a disequilibria. If you are going to use a long word get it right.


That is a sort of small-minded snobbishness. I have heard this House imitate the Oxford Union, but I have not yet seen it degenerate lower than that. If the hon. Member wishes to intervene again, I hope he will pay the Committee the respect of intervening on a higher level than that. Hon. Members who belong to this part of the House have not had the advantage of a university training. We think that it is much better to speak clearly in bad English than to speak badly in good English.


It is bad Latin—not bad English.


The disequilibria lies we say, at the root of society, and is the cause of the other disharmonies. We hold the view that one of the sources of the crisis was a contraction in the area for world investment that occurred immediately after the War, because political disturbances in India and in China and the revolution in Russia had, to a very remarkable extent, closed the world to the surpluses of industrial nations. Those surpluses were available for sale abroad in enormous quantities, because of the restriction of the purchasing power of the home popula- tions. To find the market for those surpluses abroad, an intensive competition took place for whatever market there might be. Money was pumped, in a most extravagant way, as the Macmillan Report disclosed, into what has come to be known as the Colonial Empire, and into the raw-material producing countries. This was done to such an extent that it was not supported by the profit-earning capacities of those countries. The investments in the old world and in Germany came at the end of the period, but the investments in South Africa, and in South American States in particular as well as in parts of the British Empire, brought raw materials on to the world-market in such quantities that the first fall in prices occurred in raw materials.

That first fall in prices reduced the purchasing power of the better-off countries to such a low degree that they ceased to be effective purchasers for the produce of the industrial world. It was, that primary fall in prices that led to reactions such as gold-hoarding, tariffs, and all the exchange restrictions that this Committee is discussing to-day. To argue that the difficulty has its source in the failure of the banking system to pump out sufficient notes is absurd, because it is a difficulty which hits countries on the Gold Standard as well as countries not on the Gold Standard. It is not the failure of the Gold Standard that the Committee is really discussing to-day, but the failure of modern industry to distribute purchasing power in the place where goods may be consumed. That is the final contradiction and the final difficulty. We keep on saying that, because that is the position. If you solve your difficulty now by temporarily removing the consequences of deflation, and if you wipe out your rentier class, you will be faced with exactly the same difficulty in four or five years' time.

When hon. Members and right hon. Members get up and talk learnedly in good English about this problem, as they have done in this House for the last few years, we say that they are talking balderdash. They know very well that until you devise a financial and economic system that bridges the gulf between modern production and consumption you are not going to solve the difficulty. In private, hon. Members admit it. In private discussion in the country, as well as in this House, they all admit that they must devise some mechanism or apparatus to accomplish this result, but when they come on to the Floor of the House they do not say it, because the man who wants an end must will the means, and they do not will the means. The means, so far as I can see it, is that nations must assume control and possession of their own internal economic apparati first of all. To talk about collectivism and coordination until the interests of private property are alienated to the State, is to talk in mere empty words.

I suggest that if this Committee wants to discuss disequilibria and prices, as well as ways and means of restoring Great Britain to conditions of prosperity, it should cease looking towards the ends of the world and keep its eyes on the population in Great Britain. You will not have the financial difficulties that arise out of the undisposable surplus of goods if you allow people in Great Britain to consume those goods in larger quantities. Having allowed them to consume those goods in large enough quantities, you should then control, by some means of national regulation, the surplus that you must have for export. You will put that surplus of goods into some complementary part of the world where people are producing goods which you require. You will do this by selective foreign trade, and not by permitting financiers to put money where they like and then having to adjust your internal economy to meet what they have done. There is no dubiety about this.

I was in Poland in 1927, and I saw a Polish pit being sunk largely with the assistance of English capital. There were, at that time, 100,000,000 tons per annum more coal in existence than Europe required. Somebody went along to a collier in Durham and said, "Now look here. If you want to educate your child when he gets 15 years of age, do you not think that you ought to buy an endowment?" The collier said, "That is a good idea," and he bought an endowment. The insurance company took the money and instead of investing it in English goods decided to invest it in some other way. Along came a Polish company and said, "Here is a good proposition. Here are 40 feet of coal, and the Polish peasant will not require more than 18s. per week in wages. Put your money into it." Therefore, £500,000 worth of British capital was sunk in the Polish pit. The Polish coal had to be sold in the world market, and it was subsidised to the extent of 3s. 11d. per ton. It took away half of the British-Scandinavian market.

The colliery owner then came along to the collier and said, "We cannot continue your employment, because we have lost our Scandinavian market." The premium that the collier had paid for his endowment came home to him in unemployment. It is that sort of undirected surplus that is responsible for most of our difficulties to-day. I submit, with all solemnity, that the Committee is not doing itself justice by discussing the financial considerations. Monetary and financial disequilibria always follow from economic disequilibria. They are never the primary cause of it, but always the consequence of it, and if you want to seek for the source of your modern difficulties you must seek it in the relations between the modern employer and the wage earner.

6.55 p.m.


During much of the lecture that we have just had from the hon. Member for Ebbw Vale (Mr. A. Bevan) I found myself in agreement with him, in so far as I was able to follow it, but, as I understand the Debate, we are discussing the Foreign Office Vote, especially in the light of circumstances which have recently hindered the Economic Conference, and with a view to discovering whether there is any agreement in this Committee as to the financial and monetary policy which can be followed. I cannot quite understand how it is helpful to say that these financial matters are unimportant or meaningless, or that nothing can be done until the whole world is altered.


I did not say that. I simply said that they are not primary.


But they happen to be what we were supposed to be discussing. I have listened to the eloquent speeches from those benches attacking the capitalist system and pointing out the extent to which it is alleged to have broken down, and I will not go into the question of whether some hon. Members upon those benches have done their little bit to help its breaking down. I do not think that any hon. Member on those benches can honestly disagree with me when I say that conditions for the working people in this country, though they are not what we should like to see, have changed out of all knowledge, and for the better, within the lifetime of even the youngest Member of this House. The industrial system that we know as capitalism may be, so to speak, missing on two or three cylinders, but I am rather inclined to contrast that with the only example that we have had given to us of the alternative system in actual working practice. I might compare it with some of those rocket cars that are always going to get you to the moon in no time. They start off with a blare of trumpets, and they put in a black cat for luck. They set off, but the only result is that they have to come back to us very soon, to the poor old-fashioned capitalist, for the loan of a new black cat. With all its faults, this system has given an improved standard of life in this country to more people than any alternative we are ever likely to see.

Unfortunately, the critics of His Majesty's Government do not come only from those benches. We have had a good many exponents of revivalist finance from the Government Benches, and the hon. Member for Ebbw Vale has pointed out their inconsistencies. We have had the right hon. Gentleman the Member for Epping (Mr. Churchill), who has now resumed his seat in the smoking-room. He has always suffered from the disadvantage that though, in a moment of crisis, he may be willing to follow the uninspired but steady lead of His Majesty's Government, he never would do that for long. It has always been his trouble throughout his career that he must go one better and fare worse. If Leander comes to grief swimming the Dardanelles, he must needs try to jump it. The same applies, in this question of currency, as to his other invasions of strange territory. The hon. Gentlemen to whom I refer have recently received very powerful support from foreign countries. I wish to speak with all reserve, naturally, of the leader of a great and friendly State, but I do not think that it is unfair or irrelevant to point out to the Committee how true to type this new finance runs, even when it is across the Atlantic. We hear a great deal about the "new deal" in finance which consists in playing two cards at a time and altering the rules as you go along to the disadvantage of the other players. Just the same criticism I ventured to make on one or two other right hon. and hon. Gentlemen when they have, with vehemence, pressed the Government to carry out similar policies.

One other thing I would like to suggest to the consideration of the Committee, before leaving this aspect of the subject. The President of the United States, in the course of that remarkable document, instructed the world that it was very necessary that countries should balance their budgets. What exactly he meant, seeing he had a deficit which is more than all the deficits of the world combined, I will not venture to consider, but we are told by right hon. and hon. Gentlemen that we should hitch our wagon to the Stars and Stripes and should find there the solution of our troubles. Well, whatever he may have meant, if anything, in telling the world to balance its budgets, it is difficult to believe he meant the same thing as the right hon. Gentleman the Member for Hillhead (Sir H. Home), the right hon. Gentleman the Member for Epping, and others who implored His Majesty's Government to unbalance the Budget at the earliest possible moment.


Was the hon. Gentleman himself not one of the first to urge upon the House that the future currency policy should be one of expansion ?


I have not changed my mind. My hon. Friend has done me the honour of remembering my speech if he will refer to it he will see that its whole burden was directed to showing that the policy of cheap and easy money, which the Government have carried out with excellent results, does not imply the kind of policy of Government extravagance and artificial booms I then criticised and now criticise. I put it as my first point to the Committee that whenever, and wherever, His Majesty's Government have been pressed to carry out this kind of revivalism, a solution of our troubles by way of financial hallelujah, we have never been able to get the same prescription twice from any of these right hon. and hon. Gentlemen. And now, even when it comes from the head of a great State, officially, he is not able to say the same thing twice, or even get two men of his delegation to say the same thing. Apart from the theoretical issue, it is a grave count in that indictment of these gentlemen and the policies they pursue.

Leaving personal criticism, if the Committee will bear with me, I would like to suggest for their consideration one or two points which I do not think differ, strangely enough, from some parts of my hon. Friend's remarks on this question of the manipulation of currency and price levels. I have already, on some previous occasions, suggested to the House—and I wish at this crucial moment to suggest it again—that theory and practice alike show that, while we all agree that the level of prices should be as steady as possible, the result of an attempt at a public manipulation of the price level is that it does not even lead to stability of prices. There is very good reason for that. In the first place, wholesale prices in nearly every case are artificial prices, and the currency policy you are pursuing determines the success of the various groups of people who are able to keep any number of raw material prices at any kind of level. Take the 1928–29 level, they were only kept at that level because the United States Government were carrying out the policy which has led them into all their present troubles. You can take raw material prices. You will find there was a pool, or some form of control—some holding up from the market—that is inevitable. If you take retail prices, it is common knowledge they are the most insensitive of prices, and are the most independent from one country to another. They are even more artificial, if possible. Wages specially are very largely and rightly dependent on the level of retail prices. You will therefore inevitably get, and we have got over and over again since the War, this hopeless situation in which the currency and economy of the different countries have been hopelessly disorganised by dumping, exchange depreciation, and all the concomitants of a situation in which no one could tell, from day to day, what the policy of different and important countries was going to be.

The next point I would suggest to the Committee is that, surely, there is a fallacy behind the whole theory of keeping up prices, even of manufactured goods, by borrowed money. The whole trouble about the American situation, before the slump, was, it appears to me, that they lulled themselves into a sense of false security because prices were stable. It was in the period when they thought prices were stable that they sowed the dragons' teeth. It was so easy to pile up, internally and internationally, an ever-increasing burden of money debt— an entanglement in which you are sooner or later tripped up. It is quite unfair for anyone to suggest that it is the working of the Gold Standard which has broken down the American situation. They talked about managing currency. They attempted to manage their currency, they got apparent stability, and they have got into this net of internal debt and international debt, by the extent to which they exported their surplus abroad.

This is not an academic question, nor a theoretical question. It is a question of vital importance to this country and the world. It is a question of which the lessons of experience are decisive. And the lessons of experience are modern. We have not to go back 100 years and follow up delicate trains of reasoning which may lead us astray. We have been through all this before. Managed currencies free from gold are not new. We have been suffering from them since the War. An hon. Member says, "During the War." I agree, and it brings an important point to my mind. During the War and immediately afterwards happened probably the one really discreditable occurrence in British finance—almost transatlantic in discredibility. I refer to Lancashire cotton financing. I put it to the Committee that the lesson of our recent experience is that if you have a boom you will inevitably have a corresponding depression. It is in the boom that the trouble comes, and it may sound strange to put it to a country in such troubled straits as we are, but the most important thing we have to consider is to prevent ourselves being carried away in the wake of America into a boom. There are a great number of equity stocks in this country already, with prices out of relation to their earning capacity. The situation in this country is disturbingly similar to the situation in the United States in 1929. Then the situation was held much longer than it would have been because money was coming from abroad to take part in financial speculation in the United States. It is in the knowledge of hon. Members that a good deal of the recent unhealthy boom on the Stock Exchange is due to the same reasons.

The Government refuse to give a cut-and-dried, and elaborate scheme. They are not bold with a great programme which can be written down, even if it has to be re-written. The thing which gives me most confidence with regard to the Government is that when they are taunted with not having any policy they continue not having one, so far as publication is concerned. This country is still feeling the aftermath of Socialistic experiments. I am not accusing hon. and right hon. Members above the Gangway. I am thinking more of those associated with the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). The suggestion always appears to be that nothing is happening in a country, except when the Government are doing it. I put before the Committee the view, and I think it true, that if we are to get out of this mess it will not be primarily by anything the Government do, although we might be hindered by what they might do in following dangerous counsel. My hon. Friend led me into perhaps a discourteous intervention. As he introduced the use of what was, I suppose, intended to be Latin, I may refer to the old phrase vis medicatrix naturae. We must rely on the vis medicatrix industriae.


Will the hon. Gentleman please translate ?


I may translate as "the natural medicinal forces of private industry," not medicines and not drugs. May I just make one final remark to the Committee? We hear a good deal from these benches of the need to increase demand. What is the real demand we have got to increase? When the Dominions and raw-material-producing countries say that prices must be increased, what they really mean by that, although I do not think they would like meaning it, is that they want to increase the amount of our manufactured goods which they are prepared to take. I see that the Colonial Secretary is here, and perhaps he might suggest that to them.

What has really happened is not that demand—the working-class demand—has fallen off here at home. Hon. Members on the Labour benches may be surprised to know that, between now and the 1929 period, there has been at the most a 10 per cent. falling off in the real demand of the working classes in this country. I suggest that the correct interpretation of the figures is that in this country, owing to various experiments in municipal and other extravagances in the past, we have been busy killing the demand of the investing class, so that all those great industries of ours which depend for their livelihood upon somebody being forthcoming to put money away for a rainy day, have been ruined. That is largely the reason for the plight of the heavy industries. At the same time, the Dominions and raw-material-producing countries have been busy killing themselves. I believe—and I suggest this to the Committee as a matter for serious consideration—that the need at the moment is for an increase in world demand at present prices, rather than an artificial rise in prices brought about by some jiggery-pokery in connection with currency. The Chancellor of the Exchequer himself has pointed that out better than anyone else in recent days. His association with the President of the Board of Trade seems to have had the happy result that he is making all the President's Free Trade speeches, while the President of the Board of Trade is making all the Chancellor's Tariff Reform speeches—a very admirable system; long may it continue.

The Chancellor of the Exchequer has pointed out on various occasions that, unless the world is prepared to go back upon this evil way of economic nationalisation, and, in particular, unless our Dominions and the South American countries associated with us are prepared to change their mind on the subject of self-sufficiency, real international demand—the destruction of which is the cause of our troubles—cannot and will not be recreated by any financial manipulation. Still less by following the dangerous policies to which America is now, apparently, committing herself. It is not a change of parity, but a change of heart, that is needed, and, if that can be obtained, I believe that, given sound, stable government such as we have in this country, a slow but steady and certain recovery will be attained. Failing that, I cannot see that there is any solution. It is no use deluding ourselves or the country, or getting 66 nations together in order to delude them, into believing that by just raising prices, by public works, or by any other form of manipulation, you can get over the root evil. We shall have to give ourselves up to an ever-lowering standard of life. It is by firm determination to avoid these will-o'-the-wisps, by perseverance, cheap money, confidence, and keeping quiet—including, if possible, keeping the Minister of Agriculture quiet—it is by these methods only that we can save the industrial system, which is the only one, so far, that has even begun to work, however little hon. Members on the Labour benches may be prepared to prefer substance in this world to shadow in the world of Karl Marx.

7.20 p.m.


The Committee has listened with great pleasure, as the House always does, to the speech of the hon. Member for Central Southwark (Mr. Horobin). We all admire his skill in dialectic, and much apprecite his gift of fence. He has accused some of us of never saying the same thing twice. That is not an accusation that I can make against him, because the speech to which we have just listened is, in fact, a repetition of one which we heard in the House with equal delight some time ago. So far, however, as I am concerned, I am not conscious of any inconsistency in the attitude which I have taken up on these subjects. Indeed, if reference were made to the speeches of my right hon. Friend the Member for Epping (Mr. Churchill) and myself some 18 months ago, it would be found that many if the forecasts which we then made have been realised, and I do not think that the solution we would offer for these problems to-day is any different from that which we then offered to the House. Indeed, if I am a correct judge, the speech which the Chancellor of the Exchequer made at the opening of the great Conference which is now sitting was not very different, as regards the solutions which it offered, from those which my right hon. Friend and I tendered at that time.

I am certainly not going to say the some thing twice in the sense of repeating the arguments which I have already used. I would only venture to say to the hon. Member for Central Southwark that he does not bring argument to an end by talking about the manipulation of money. That sounds a very horrible thing in the ears of people who are not accustomed to think what the manipulation of money is, but, in fact, money is being manipulated every day all over the world by the central banks of the various countries. It is only that the kind of manipulation to which my hon. Friend objects is when it is manipulated upwards instead of downwards. Deflation is the thing upon which he has set his heart, and, so long as money in this country is being manipulated in order to bring about deflation, he has no objection to offer; it is when it is suggested that something might be done to relieve the terrible inequity that lies upon the shoulders of debtors to-day, who find that, through no fault of their own, the debt upon them is increased by as much as three times its original value, that he disagrees. He does not, however, suggest any solution for the difficulties of these people, nor does he tell us how we are to escape universal bankruptcy if the position in which the world at present finds itself continues.

My hon. Friend has aptly reminded the Committee that what we are engaged upon to-day is a discussion of the Foreign Office Vote, and in that connection I should like to say a word upon the Conference which is still in being. In the first place, I do not think we can sufficiently express the debt of gratitude that we owe to the skill and patience of His Majesty's Ministers for keeping the Conference together under very difficult circumstances. It would have been a tragedy if the Conference had broken up, not only because of the futility which would have been exhibited of men trying vainly to confer together in order to solve the troubles of the world, but also because there is very much important work left for the Conference to do. If I might venture a suggestion, it seems to me that, even on the monetary side, to which some people take exception, there are still many problems which may very usefully be discussed at this Conference.

For example, the whole Conference is agreed, I understand, that at some time or other we all propose to return to the Gold Standard, or at least to a standard of which gold will form the most important part; and, if that be so, it is surely worth while to-day to discuss the conditions upon which we shall return to that standard. When we have all these people together, experts in their particular subjects, it would indeed be a great misfortune if their opinions could nut be marshalled and decisions arrived at upon the conditions which are necessary to attain an object to which we are all looking forward. There are questions, for example, as to whether gold should be put into active circulation again in any country, or whether it should simply become useful for the balancing of debts as between different countries, and there are questions as to whether the amount of reserves to be held in metal should be reduced or not at the present time. That is a question of very great importance, affecting the present distribution of gold in the world.

There is also the question as to whether the metallic reserves to be held by the central banks should not include a certain amount of silver. Whatever view one may hold on that subject, it is surely worth while at the present moment, when you have a very important body of experts in this country, to discuss whether or no we are to give consideration to silver. The question is forced upon us by the representatives who are here, and it would be a tragedy, particularly in view of the presence of one of the most interesting personalities in the world in this connection, Dr. Soong, if we were precluded from hearing his view upon a question which he thinks is vital to the prosperity of his country. There are also questions like that of co-operation by central banks in dealing with the distribution of the reserves of the various banks of the world. If once a solution were arrived at for some of these questions, I venture to think it would be found that the problems of restrictions upon exchange would be very much simpler to solve, and that one of the greatest difficulties which trade is experiencing at the present time might possibly be got rid of.

After such questions as these, there are the obvious economic problems. Is the world really suffering or not to-day from over-production? That, surely, is a question to which the Conference might address itself, and upon which it could clear our minds. If it be that that is so, are there solutions by which coordinated action could be taken by the various countries in order in some way to mitigate the distress which it causes That is a problem which it is worth while to probe, and upon which decisions might be reached. There is, further, the question of the effect of subsidies on world trade—


Does not the right hon. Gentleman think that the Conference might also discuss whether or not there is under-consumption?


Certainly. That, of course, is the obverse of the same question; I did not neglect it in my mind, although I did not specifically mention it. There is the question of subsidies. Are they of advantage to the countries which grant them, or do they, by the burden which they put upon the Budgets of those countries, really increase their difficulties at the same time as they injure the general trade of the world? That is a very important question for the Conference. Having sketched only a few of the problems with which this Conference might usefully occupy itself, I think there is reason to hope that it may continue in being until it achieves results upon which we may congratulate ourselves.

With regard to the question upon which the Conference was in danger of breaking up, we in this country, at any rate, cannot be lacking in sympathy with the President of the United States. I do not say that the form in which he addressed himself to the Conference was in the happiest vein, but, at the same time, I think we were bound to anticipate that he could not possibly conform to the suggestion which was made to him.

I think the Chancellor of the Exchequer was perhaps not quite fair in the quotation that he made from the President's statement which implied a reproach to the effect that he had in fact led the Conference on to the very topic which in the end he refused to allow them to discuss. At the time when the President of the United States and our Prime Minister issued to the world a statement of the result of their conversation the question that was put in the forefront of that statement was that of raising prices and the paragraph that contained the reference to stabilisation only referred to it as a matter which ultimately had to be taken into account. In fairness to the President that has to he remembered.

I have no doubt that you could cull from other announcements an indication that he was thinking of the stabilisation of currencies as a very important matter but I do not think it is quite fair to him to say that he meant that it should be treated before anything else and before any other discussions took place.

The truth has been perfectly obvious for some time that the policy in the matter of raising prices of the United States and of this country was upon exactly the same lines. We realise just as they do the effects of deflation. We see the havoc that it has created among the debtors of the world. We realise that any further fall of prices of agricultural produce for example would be disastrous to the agricultural industry not merely in this country and in our Dominions but throughout the world. We recognise at the same time that unless the agricultural industry of the world is prosperous the manufacturing industries of the world cannot be prosperous either, because the people who purchase the largest part of the manufactured output are unable to buy. Accordingly, seeing this matter from the same point of view we have each laid it down that our first objective is to raise prices. We in this country gave a lead on the matter. It was our Macmillan Committee that first put it forward and it was following upon the Macmillan Committee that the Chancellor of the Exchequer made a speech in the House of Commons giving his adhesion to the same point of view. Accordingly if anyone has been led on the ice in the matter it appears to be the United States because we have indicated quite clearly to them in the past that that is the attitude from which we are approaching this financial monetary and commercial problem.

The Chancellor's language is not precisely the same as the President's, but it is on exactly the same lines. When the Chancellor says: "We must raise prices until costs and prices come into favourable equilibrium," he is met by the President, who says: "We must raise prices in order that the debtors of the world may pay their debts." The language is slightly different, but the objective is exactly the same. When the Chancellor said in his speech to the Conference that we must prevent wide fluctuations in the purchasing power of gold in so far as it is due to monetary causes, he is echoed by the President, who puts it thus; that we must so arrange matters in the future that a man who incurs a debt to-day will not find it a heavier burden when the obligation comes to be discharged because of a change in the monetary unit. Although the liturgical language is different the religion is the same. The real fact is that we cannot dissociate ourselves from the policy which the United States has adopted.

When you come to the question of method of course there are differences. Let us recall what the Chancellor of the Exchequer recommended as the method to be followed by the British Government. It was, first of all, cheap and plentiful money. Perhaps I ought to give the exact language that he used in order that I may not be accused of any inaccuracy: Central banks should undertake to cooperate with a view to securing the monetary conditions required for a rise in prices. That is the main theme. When he goes on to deal with method, he says: In order that their actions may have the desired effect, it is necessary that the policy of cheap and plentiful money should be clearly announced and vigorously pursued. I lay stress on the phrase "vigorously pursued": Particularly the wider extension of what is known as open market operations by central banks should, in our view, be developed. But that is exactly the policy of the United States. They have gone further in announcing their intention to enter upon Government expenditure upon public works of an economic character. The Chancellor of the Exchequer was a little more caution in his statement upon that matter, but it is obvious that his mind was working on the same line. He says: The question whether Governments can effectively assist in this matter by schemes of Government capital expenditure will also require consideration. I notice in this morning's paper that the French Government have come forward with a suggestion that a sub-commission should be appointed to consider how far assistance can be given by expenditure by Governments on public works, and from everything they say you can see that their minds are certainly favourable to such a suggestion. It is a matter that requires more discussion, but, at any rate, our position, though more tentative, does not exclude the idea that the Americans are at present carrying out. Congress has authorised the expenditure of 3,300,000,000 dollars upon such projects and the mere announcement of what it is intended to do has created in America that spirit of confidence which the Chancellor of the Exchequer says is the first essential of the situation because in the anticipation of these great works being begun and before any money has been spent—before any inflation of any kind has taken place in the United States—already prices have risen remarkably. They are aiming at the 1926 level and they have already attained 66 per cent. of the difference between the old level and the 1926 level. It is based upon solid business. If you look at the returns of trade in America you will find that the car loadings on the railways have gone up to a great extent, textiles have been purchased all over the country and now the mills are working with an activity which they have not shown since 1929. You will find that the steel industries are all hard at work again and the motor car industry has had a remarkable increase in the number of its orders. All this is going forward without any active inflation of money having taken place. I think, if we had had a little more courage at an earlier period, perhaps the results to-day would have been somewhat better here than they are.

I do not mean to suggest that it is our duty at present to embark on these projects in the same way as the United States is doing. We shall naturally go more slowly and more cautiously than they will. Temperamentally they are much more impulsive than we are and naturally their activities will be greater, but at the same time I would beg the Committee and the Government not in any way to divorce themselves from the action of America but on the contrary to maintain the policy which they have from time to time announced and to put themselves more or less alongside America in the main lines of the policy that they are going to adopt. By doing so I am sure there is a chance of prosperity returning to this country in a much greater degree than otherwise.

One of the most embarrassing things at present is the extraordinary change that has taken place in the ratio of the dollar to the £, but if we can raise our prices comparably with the rise of prices in America that ratio will adjust itself because obviously the ratio of one to the other depends mainly on the purchasing power that each has in buying commodities. If our prices rise together you will have much more chance of keeping the exchange ratio regular than by any other method. How else you are going to redress the difficulty of the difference between the dollar and the I do not know, but at least that is one way and it is within the lines of our policy.

But suppose nothing comes of this, suppose all these suggestions should be impracticable how do we stand? I have never been one of those who believe that we can do nothing by ourselves. I have always thought that the British Empire and the countries which ally themselves with our sterling money were sufficient in themselves to create a great influence in the world in the way of raising prices. In order to show how much effect one country has upon another let me remind the Committee that while gold prices have not risen the effect of the rise of dollar prices has been considerably to increase sterling prices. We have been obtaining a clear benefit from what has been done in America. It is apparent that if without acting exactly together we co-ordinate our activities in every possible way—if the world are assured that we are working along the same lines and from the same point of view as the United States nothing can stop us. Nothing could be so effective in achieving our object as the fact that the United States and the whole British Empire and the sterling countries were acting together. The result that we should thus achieve would be conformed to by the rest of the world. While not wishing that anything unhappy should occur to any of the people who are still on gold—on the contrary we should wish them every possible success—I hope it will not be regarded as an affront to any other country that we should rather keep in line with the expansionist policy to which we have committed ourselves than adopt another policy to save other people's feelings. I am sure that we can do much effective work if the Dominions and the other countries embraced in the sterling area are with us; and it seems to me, in putting before the Committee the ideal with which the Economic Conference is charged, that if it is a question of doing our duty internationally the stronger we are in ourselves the more formidable will be our help to the nations of the world.

7.45 p.m.


I think that we may all congratulate ourselves that one admirable result of the Economic Conference has been that at last England has come down on the right side of the fence. We are, in the decision taken the other day, linked indissolubly with the policy which has been inaugurated in America—as between the gold countries and America, we have chosen America. There is one objection to the indefinite continuance of the conference, that as long as the excuse of an international conference in being remains, so long will it he possible for the Front Bench opposite to avoid making up its mind what actually to do. Although the decision was taken the other day to support America against the gold countries, even to-day I defy any Member of this Committee who listened to the Chancellor of the Exchequer to describe what it was that the Chancellor of the Exchequer hoped that England would do. He was as vague as he has ever been. Over and over again he has stated, just as President Roosevelt has stated that he wants to restore prices to some level or other, and that that is the aim and object of our policy. One may say that between the whole of this Committee, and between the whole of the Government and America there is a complete identity of aim. But the difficulty is that in America they have pulled the trigger, and in this country the Chancellor of the Exchequer still hesitates to fire.


Is the right hon. and gallant Gentleman quite sure that the Americans have not by mistake pointed the revolver at their own heads?


They have pointed it at raising prices to something like the 1926 level, which is our object as well. The question whether they will hit the target at which they are aiming is a very different matter. They have pulled the trigger; we still hesitate. I am confident—and let us all realise it—that we should not now even be putting the finger to the trigger were it not for the fact that our Dominions have been stiffening the finger and insisting that we shall not continue indefinitely this old deflationary policy but shall help sterling to remain with the dollar. We have got not merely our Dominions—Australia, Canada and New Zealand—becoming visibly and daily more anxious at the rise of sterling relative to the dollar, but we have many right hon. Members opposite, and I should judge the Prime Minister himself, getting a little anxious at the results of inaction while America has started a practical policy for putting the dollar down and prices up.

I think that the situation as it was a month ago has been made infinitely worse for this country, looking at it from the narrow point of view of our trade alone, by the fall in the dollar and the rise in the value of the Z. It is all very well to talk about our exports to the neutral markets of the world. In future we shall have the very stiffest competition to face from America where they have put the dollar back to sterling parity. All the advantage we have had for the last two years has been neutralised by the fall in the value of the dollar relative to the This has made the position here such that we cannot allow the Government to go on any longer amiably ignorant of what to do. We have seen in the Press, and we hear echoes in this House, of the horrible mistake which America is making, and the calamitous results that it must ultimately bring to the American people. Exactly the same people have been saying exactly the same about the calamitous result which might come from any inflation here. They have seen in America a rise in prices precisely such as was foreshadowed there and demanded here. They have been proved wrong on that point and they may be proved wrong here too if similar methods are adopted.

The really disastrous thing is that the Chancellor of the Exchequer here is still wandering after strange gods. He wants to raise prices and he sees that it may be possible to do something in the matter of raising prices by reducing the gold content of the £ sterling, but still he believes that the best way to raise prices is to restrict production—the old game.

Restricting production is the very way in which to ruin not only the trade of the country, but the consumers of this country as well. Everyone must know that it is not by restricting production, but by increasing the purchasing power of the public as a whole that you can possibly hope to improve trade and do any good to trade. In so far as the Chancellor of the Exchequer is seeking to raise prices by restricting production he is acting directly contrary to those of us who wish to raise prices by reducing the gold content of the currency; he is acting intentionally and diametrically opposite. We see from his speech to-day how he really envisages the fall in the value of the dollar. He says that it is due to speculation.

I am sick and tired of hearing that every movement of the currency everywhere is due to speculation. It is an excuse for shutting your eyes to the fact that, regulated by the balance of trade between two countries, speculation is only a superficial ripple on the tide of the change of the currency which is caused by international trade, by foreign investments, by interest and by the repudiation of debts. The fall in the dollar was never caused by speculation. It could not be caused by speculation. Everybody here knows that it was not caused by speculation. The chief people who speculated in the dollar to the best of my belief are the Treasury with their Exchange Equalisation Fund.

I received a cutting to-day from some Boston paper. Doubtless it was completely wrong in its facts but it stated that America had successfully arranged to buy from us £30,000,000 sterling and pay for it in dollars at 4.25 to the £. Last year we certainly were selling sterling, selling it hard in desperate efforts to keep the pound down. It may be that we have been trying to prevent the sensational rise in the dollar in the same way, lately, by selling sterling and buying dollars to keep the value of the dollar up. If we have been guilty of a piece of folly like that, there is speculation with a vengeance, but speculation which has failed. You buy dollars at 4.25 and you find that they have gone down to 4.75. If that has taken place you have a loss of £3,000,000 sterling, and I have no doubt that the fall in the dollar during the last few months has caused the Exchange Equalisation Account even greater losses. Apart from the bitterness felt by our traders and by the Bank of England at this fall in the value of the dollar, it exposes one of the stupidest gambles ever carried out by any State. I hope that this evening we shall have some satement as to whether we have bought dollars, and at what price, with the Exchange Equalisation Fund during the last few months. If we have done so, it is one more reason for sliding the £ after the dollar. For all those reasons it is extremely desirable that the Government should make up their mind to pull the trigger, and pull it in the same way as the American President has done.

The Chancellor of the Exchequer says that the fall in the value of the dollar is due to speculation. It is just as well to show that the fall in the value of the dollar during the last few months has been caused in exactly the same way as the fall in the value of the pound when we came off gold. We came off gold because our Budget was not balanced. We were driven off gold because for a long course of years, both in our collective capacity as a State and individually, we had been spending beyond our incomes and it was widely feared that we were going to unbalance our Budget even further and get deeper into indebtedness. That fear caused just the same rush from our currency as now from the dollar. We see there a Budget unbalanced to a degree we have never contemplated in this country. We have seen municipal budgets in America so unbalanced that they were not able to pay their teachers or scavengers. We have seen loans—600,000,000 dollars—made to the agricultural industry there, and anyone seeing that sort of finance in America was bound to expect a fall in the dollar, and perhaps to anticipate that fall by selling dollars which he has not got in the hope of buying them cheaper later on. The fall in the dollar has been caused by exactly the same inability to keep up the old standard of living; the old standard of expenditure from which we suffered in this country. It was the contemplation of an unbalanced Budget which sent the dollar down and which has sent prices up; which has, whatever hon. Members may say, largely saved America from the hell of the slump which they were in. Mark that it is an unbalanced Budget and an expenditure not wholly reproduc- tive. If we want to pull the trigger in the same direction as the Americans, if we want to raise prices in this country, if we want to restore our trade and increase employment, we can do it in exactly the same way. The creditor loses, but industry revives.

I have eaten my own words on this question and many hon. Members have eaten theirs. The policy that we are advocating now and that they are carrying out in America is to all intents and purposes the policy advocated by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) in 1929, before the slump came about. We all of us denounced that policy as being rotten finance, finance that would be undoubtedly destructive of the value of sterling. What we denounced in those days we have come in these days to see advantage in. If we want the £ to slide with the dollar there is the way to do it. If we want the £ to get back to its full gold parity, as some hon. Members do and as the bankers do, it will mean complete ruin to the people of this country. You have either to scale debts down, so that the debtors can pay; or one debtor after another will repudiate or liquidate, and you will break the rentier class just as surely as will any uniform scaling down of the public and private debts of the world.

The situation to-day is far more serious than it was. I hope that the policy of the Government has been changed. I hope that they have made up their minds, after listening to the views of Australia and Canada, to ally themselves to those countries which are off gold in a determined effort to push prices back to the 1928 level by devaluing the currency. It is plain to everyone why President Roosevelt turned down any question of stabilising a week ago. America turned down the possibility of stabilising a fortnight ago at 4.05 dollars to the R. Do not we wish that we could get that now. The only solution for us is consultation with America as to the gold content of the new dollar and the new £. I do not mind if there is parity between the dollar and the £ provided that there is similar devaluation in the gold content of both, so that such and such a percentage of the debts of the world should be wiped out.

If that is what we are aiming at, do let us remember that it is impossible to carry out a policy if you entrust it to people who hate the policy and wish it to fail. It is a policy which can only be successfully carried out if you have a Treasury, a Ministry and the Bank of England working together and anxious to make it a success. Any one element can destroy the extremely delicate work of bringing about the proper amount of inflation. What we all dread is an indefinite inflation. If we are to have a policy of that sort it is utterly useless to attempt it with the present Governor of the Bank of England. You must have a Bank of England seeing through the same glasses as the Government and the Treasury. If we could have Reginald McKenna in Charge on the banking side; if we could have leading the Treasury the only man who has persistently and consistently seen these things in the right light for the last eight years and put an end to the stupid "Its only Hawtrey" which has done duty for so long in those walls; and if we could get one of those Members of the Cabinet who really believe in this policy to replace the Chancellor of the Exchequer, who really does not understand that there is a problem at all to be solved, then we might get good results.

I warn the Committee that the one predominant feature about the Conservative party is that it is conservative. It finds it most excessively difficult to admit a new idea, and when the idea has been admitted it becomes almost a matter of sacred loyalty not to try to get that idea into the heads of any of their colleagues. It is necessary that the Government should begin to understand that if America makes a success of this business she will make it worse for us, unless we follow the same lines. We must get the Government to understand that there is a chance here of building up a unity far more important than that achieved at Ottawa, of countries working not on the changing value of gold but with the possibility of building up real international free trade as well as a real international Empire. If only we, America our Dominions and the Scandinavian countries, can solve the problems for ourselves, writing down debts, putting up prices, restoring trade, paying decent wages and re-employing the millions of the unemployed, we can let the gold countries go and play marbles if they like, for it will not matter to us.

8.6 p.m.


I find it a little difficult to follow my right hon. and gallant Friend but I understand that he was, in effect, advocating an inflationary policy. The aspect of the Debate which I find most interesting has been the exchange of opinions between the hon. Member for Central Southwark (Mr. Horobin) and the right hon. and learned Member for Hillhead (Sir R. Horne). Their difference of opinion is perhaps more apparent than real. I take it that they are both endeavouring to raise prices, but whereas my hon. Friend the Member for Central Southwark says that, the raising of prices must comes by the operation of cheap money and the natural return from it, the right hon. and learned Member for Hillhead, if I interpret him correctly, would take very active measures to produce that result. We have different methods in different parts of the world for dealing with situations that arise. For instance, in this country when the sun is shining we take off as many clothes as we can. That is the line that my hon. Friend the Member for Central Southwark would adopt. In the eastern countries the Arabs put on a great many more clothes in order to ward off the heat of the sun's rays. The right hon. and learned Member for Hillhead adopts that policy. He would adopt active measures to cut off the sun's rays, but the hon. Member for Central Southwark would lay bare his body for the natural operations of the sun, and hope for the best. I agree with his attitude rather than that of the right hon. and learned Member for Hill-head.


Although I do not altogether agree with the right hon. Member for Hillhead (Sir R. Horne) I cannot agree altogether with the interpretation of my remarks by my hon. Friend.


I find it a little difficult to follow my hon. Friend, seeing that he has not said in what respect he disagrees wilth me. I should like to refer to the main subject of our discussion today, namely, the question of the World Conference. Very exaggerated hopes were held out by statesmen in this country and the other countries as to the results which might be expected if the Confer- ence proved a success. On the other hand, very exaggerated fears have been expressed as to what will happen to the world if the Conference proves a failure. It has always seemed to me that too great hopes were being entertained when we were calling 66 nations together to discuss every kind of economic and monetary problem, to expect immediate and positive results. I should have thought that the old plan would have been far better of not calling the Conference until we were certain that we had a basis of agreement. In the old days of diplomacy the idea used to be that you should not go into Conference until you were certain that you had some sort, of basis of common agreement. In the present case it was obvious from the beginning that there was no basis of common agreement.

Would it not have been much better first to explore the possibility of agreement through the ordinary diplomatic channels, and then to have called together, if necessary, the big countries, representing particular monetary areas, such as the Dutch representing the guilder area, the French the franc area, the Americans—and ourselves—the sterling area? If we secured an agreement among those big nations, representing particular monetary areas, then, if necessary, we could have called the other nations together and have endeavoured to extend the agreement come to. Even if it is considered that the Conference is likely to be a failure, I do not think it can be considered that everything has been lost, because the interchange of views of the representatives of the nations gathered together may, in the long run, have a very beneficial effect. Moreover, I am convinced that the fact that the representatives of these 66 nations have gathered in London and have seen that we have not only political stability in this country but also complete financial stability may lead them to the conclusion that this country is in a, sound position and that if we make a move in any certain direction our views are very worthy of acceptance. Unless you have complete poliitical stability you can never have financial and economic stability.

All countries are agreed that one of the main objects now is the raising of wholesale prices. That can only be done—it may be a pessimistic view—by the operation of cheap money over a long period of time. Undoubtedly there are many obstacles in the way of economic recovery, to which undue prominence has been given. The question of tariffs and the maldistribution of gold, which have disquieted so many hon. Members, are, in my opinion, merely the results of the disease, the microbes in the blood which are only able to operate and function adversely when the body is sick. I have always held the view, and I think it is the correct view, that the main cause of the present depression is psychological. It originated in the enormous boom which arose in the United States, which, naturally, when pricked carried its aftermath with it. If you have a terrific boom, largely a. paper boom, and the bubble is pricked, you immediately have all the other adverse factors operating and receiving entirely undue prominence. When once the terrific speculation in the United States in 1926-27-28-29 began to subside, when there was a feeling of uncertainty permeating the whole of the commercial and financial population of America in the autumn of 1929, the uncertainty began to spread in an ever-widening circle through the commercial and industrial classes, right down to the bottom. And there was no brake.

Mercifully, we in this country had a brake in the extraordinary financial soundness of the great banks. In America, when once the depression started, when the panic set in, there was absolutely nothing to stop it; and owing to their banking laws there were enormous bank crashes, amounting to thousands, all over the country, whereas in this country we had no bank smash of any sort, kind or description. There was an effective brake on the depression which was not to be found in the United States. As soon as you had a panic setting in in these ever-widening circles of depression, with nothing to stop it all, these other factors began to have an entirely disproportionate effect. In order to try and mitigate some of these effects, like tariffs and the maldistribution of gold, the Conference was called together. Recently President Roosevelt has embarked on a policy which to many of us seems extremely dangerous. The Government do not seem inclined to follow the United States in their policy of inflation. They think it is safer and more reasonable to sit tight and see what is likely to turn up; to use a crude expression we are going to let someone else carry the baby and see if it grows into a fine child. But I should much regret any step the Government might take to follow the United States in her present currency and inflationist policy.

We have been told by President Roosevelt, in the newspapers this morning, that we are allowed to discuss various matters at the Conference, credit policy, individual and external commercial debts, producers agreements, and the innumerable prohibitions and restrictions; but we have also been told that there are certain subjects which are utterly taboo. We must not consider the question of War Debts or currency stabilisation. In that respect President Roosevelt is quite correct. It would be premature to discuss currency stabilisation before you have the faintest idea at what level your currency must be stabilised. It is like building a wall against the incoming sea without having first discovered how high the tide is likely to rise in that particular part and to what extent it is likely to fall. We have to be extremely careful as to how we follow the United States at the present time and, personally, I should prefer the Government to follow its present policy of extreme caution rather than take a step in the dark, and then find that that step was over a precipice. We have heard a great deal about the brains trust of the United States. There are certain remarks which an ordinary back bench Member, not tied by diplomatic inhibitions, may make. I feel that it is expecting a little too much of the brains trust, which consists of a number of professors of universities, no doubt of extraordinary mental calibre and great capacity in their own lines, to adumbrate a policy which not only the United States could safely follow but which this country also could safely follow. It is not unreasonable to suppose that there are a large number of people in America and elsewhere who rather wish that the laws against trusts in the United States could be extended to include cerebral trusts.

After these remarks the Committee may be under the impression that I have an anti-American complex and, therefore, I should like to say that I firmly and sincerely believe that in. the main our interests and those of America are similar, if not the same. Our political ideas are the same, and our ideals are the same. I believe that if we cast aside for the time being certain economic heresies we shall be able to co-operate much more closely than we have hitherto. The question is, will America co-operate with us? I believe that there is a growing conviction in America that the main lines of Our world policy are right, and if we stretch out the hand there is now a tendency in America to grasp it. I believe that we can work together, and everything possible should be done to bring about that consummation.

With regard to the other countries of Europe: I do not know to what extent it was conscious or sub-conscious—the redirection of trade by means of the Ottawa Agreements. We tried to guide trade into the most receptive channels, those channels which not only want to sell to us but to buy from us. But on the top of that we were also redirecting the trade, as far as it was possible, into those countries which were politically stable. I am convinced that if you endeavour to build up a trade with a country which may, to use a vulgar expression, go off at the deep end at any moment, you are building up a trade by a great deal of trouble, a great deal of blood and sweat, building up a trade which may be of no value to you and which may be swept away overnight. I confess that I am a little nervous as to the future of the trade policy of the Government. I do not think that the recent trade agreements with the Scandinavian and other countries have been good enough. I think it is quite possible that the Government came to the conclusion, fully realising that they were not very favourable, that it was extremely rash, taking a long point of view, to endeavour by waving the big stick to obtain a larger share, a too large share of the markets of these countries, and thereby alter too suddenly and too rashly the present channels of trade. After all, trade is at the moment quite sufficiently hound up and frozen to lead one to the conclusion that it would be extremely unwise to take too sudden steps in that direction. None the less I believe that now has come the time when it is possible for the Government to take a little more forward attitude in that respect.

Let me make one digression here. It is possible for the Government in the present negotiations with Russia to take up a very much stronger attitude than that taken up by previous Governments. There are two vital questions which must be decided in favour of this country. The first is that no diplomatic immunity should be given to Russians other than to those who are sent here for purely diplomatic purposes. The other is that it is essential that we take full advantage of the fact that now Russia is not only the sole buyer but also the sole seller, in order to obtain, I will not say equilibrium but evenness of trade between the two countries. Finally, I think the Government in the past have somewhat underestimated the strength of this country. I believe that it is possible in future to adopt a firmer line in matters not only financial and monetary and economic, but also political. I am convinced that it is only by a strong and united British Empire, financial and economical, and preferably in close co-operation with the United States of America, that prosperity can return to the world.

8.30 p.m.


To-day's Debate has proved at least one thing, and that is that back-bench Members of Parliament have a purpose to serve: faint with hunger they can keep a Debate going while right hon. Gentlemen enjoy their dinner. We are today discussing the World Economic Conference. Before I offer a few remarks on that subject I feel that it is time that a certain inconsistency was brought home to the hon. Member for Central Southwark (Mr. Horobin), who, I am sorry to say, is not present. The hon. Member spent some time attacking the thesis advanced by the right hon. Member for Epping (Mr. Churchill) and the right hon. Member for Hillhead (Sir R. Horne). Apparently, in congratulating him on consistency, the right hon. Member for Hill-head had overlooked a speech made by the hon. Member for Central Southwark on 25th April, 1932, from which it appeared that at that time the right hon. Member for Hillhead and his doctrines were followed by the hon. Member for Central Southwark. One would gather from the hon. Member's speeches to-day and on a few recent occasions that he was the arch-priest of orthodoxy, and that anything like expansion must not be mentioned in his hearing. But I have some recollection that a year ago he was singing a somewhat different tune. I have taken the trouble to look up his speech of 25th April, 1932. The hon. Member then said: We have people who say that we must economise, that we must reduce Government indebtedness, and that therefore we must not be led into anything that might savour of 'reflation' or inflation. That antithesis is based upon a complete and elementary monetary fallacy. We can and should both economise and reduce our indebtedness, and at the same time we can, if we so desire, expand the basis of the currency, and we can easily introduce an inflationary policy. At the end of his speech he said: From whatever angle we look at our immediate currency policy, all the indications are that our policy should be what, roughly speaking, is summed up in the words of an 'expansionist' policy; and the responsibility of those who oppose it is to come to the House and explain in some detail their analysis of the monetary position. It is up to those who would hold back the Treasury and the banks in any expansionist movement along the lines I have indicated to come to the House and explain in detail their analysis of our monetary position on which they base their views. I doubt whether it is possible to give any reasonable ground upon which to controvert the arguments which have been put up by the right hon. Member for Hillhead and others. Earlier he had spoken of himself as a humble follower of the right hon. Member for Hillhead. I agree that the hon. Member for Central Southwark deems it his duty to instruct the House on financial matters, but I think that he at any rate ought not to do so without revealing to the House that in the course of a year he has made this sudden and startling change in his views. Incidentally I observe that in the same speech, as an indication of prophetic quality, he said somewhat pontifically: Whatever may have been the case before the passing of the Glass-Steagan Act, it is exceedingly unlikely now that the United States will, in any circumstances, be forced to pass from gold—[OFFICIAL REPORT, 25th April, 1932; cols. 116 and 117, Vol. 26,5.] That indicates the value of the hon. Member's financial prognostications.

It is my intention to concentrate on one aspect only of the present Monetary Conference. The full title of the Conference is the International Monetary and Economic Conference. With the passage of time it appears to have been generally forgotten that in its original conception this Conference was to have been primarily, if not exclusively, a Monetary Conference, and the expansion of its scope to include the whole range of other economic activities, was a later and, in my view, an unfortunate development. The credit for making the first suggestion for this Conference undoubtedly ought to go to the right hon. Member for Epping. He spoke on the subject in his speech on the Address on 11th November, 1931, the very first day on which the present House of Commons engaged in Debate. The right hon. Member for Epping then asked for an international conference to settle the currency problem of the world, and he stated precisely the currency alternatives that faced the world. He asked the Government to take international action by means of a conference and use the whole influence that we possess to induce the countries which have hoarded gold to make it again serviceable for its function as a standard of value."—[OFFICIAL REPORT, 11th November, 1931; col. 135, Vol. 259.] Failing that, he suggested, in a phrase which I did not think particularly happy but which was none the less capable of being easily understood, that the Government should endeavour to establish— what I would venture to call a kind of Esperanto currency on the basis of sterling with the friends of sterling."—[OFFICIAL REPORT, 11th November, 1931; col. 135, Vol. 259.] Ideas have progressed and developed since then, but to-day the question facing the world remains, fundamentally, the same as it was then. It is still "what will you have—gold or another?" The suggestion made by the right hon. Gentleman the Member for Epping found echoes in the succeeding days in the speech of the Prime Minister, in speeches from the Opposition Benches, and in the speech of the Lord President of the Council in reply to that Debate. The Lord President of the Council is, as we are all aware, constitutionally a pessimist, and he was pessimistic in his remarks then. He used words not unlike those recently used by President Roosevelt. He said: As regards currency questions, there is undoubtedly considerable scope for international co-operation. We will willingly support it we will do all we can, but our first duty is to our own currency. The right hon. Gentleman prefaced those remarks by saying: I have not that faith either in international conferences to achieve that end swiftly"— that is, the revival of prosperity— or in our initiative in calling together such conferences to achieve that end."— [OFFICIAL REPORT, 13th November, 1931; col. 460, Vol. 259.] Nevertheless, the seed sown by the right hon. Gentleman the Member for Epping germinated and developed and the Conference was called, but I think it is important to notice that from that time the currency problem began to slide into the background. My principal object this evening is to remind the Committee that the Conference was called to deal with the monetary question, and that it is quite proper that we should concentrate our attention both here and in the Conference on the monetary question. From September, 1931, until the spring of 1932 currency questions were uppermost in our minds. The shock of the fall in the £ was still with us. Currency was a frequent, indeed some thought too frequent, subject of debate in the House of Commons. But when a depreciated £ ceased to be a novelty and became a habit, when for a time the troubled seas of international finance calmed down—we appeared to forget that all the wisest financial prophets had assured us that the storm was not over. We ceased to regard it as urgently necessary that we should adjust our financial canvas to meet the gale that we had been told was coming. It was unfortunate, because the Conference, then in prospect, accumulated in consequence a lot of additional cargo. The monetary aspect of it began to assume a position of relatively minor importance. Trade agreements and the removal of barriers to trade began to be understood as its principal function. The cart was firmly planted in front of the horse.

The Conference itself has surely brought us back to realities. The cart refuses to move until the horse is put in the right place. No progress can be made towards a revival of trade, until some accepted, definite and agreed meaning can be put, upon money which is the instrument of trade. I am not one of those who deplore the turn that the Conference has taken. It was perfectly obvious to anyone who considered the matter carefully, that it was bound to take a turn of that sort. It was inevitable from the outset that the problem of money would arise. It was bound to come to a head sooner or later, and I am glad that the Confer- ence has brought the matter of monetary policy to a, head sooner rather than later.

Now that the issue has come to a head; now that it is apparently agreed that if we try to decide matters of trade before matters of money we are putting the cart before the horse; now that it is agreed that that situation must be remedied, a curious division of opinion seems to have arisen. That division of opinion is as to whether we shall put between the shafts of the cart a dead horse or a live horse—whether we shall put in the lamented, but undoubtedly defunct Gold Standard which was ridden to death in 1931, or whether we shall have a new steed, perhaps with some of the blood of its predecessor in its veins but more elastic in its performance and more fitted to deal with tile uphills and downhills of the economic road which it has to travel.

If I may leave that metaphor I would say that, as far as I am concerned, as between the gold bloc countries of Europe and President Roosevelt, I am definitely on the side of President Roosevelt. I do not believe for a moment that if the Conference had gone to the fundamentals of this monetary matter, President Roosevelt's message would ever have been sent from America. Earlier this afternoon the Chancellor of the Exchequer quoted from a statement issued by the President of the United States in which he referred to currency stabilisation. I suggest that currency stabilisation is by no means the same thing as exchange stabilisation, and I took it, when that message was published, that the American President meant by currency stabilisation, stabilisation of currency in terms of commodities. Surely if that were done the exchanges would stabilise themselves automatically. I took it that that was the intention of President Roosevelt in that statement and I saw no inconsistency between it and his present actions.

Had the Conference, before discussing stabilisation, decided to discuss, first, what meaning it desired to attach to money, I do not believe that America would have been unwilling to take part in those discussions. But what good was it to talk of stabilisation of the exchanges before defining the objects and purposes of that stabilisation? What merit could there be in deciding empirically and artificially that there should be this or that parity between the £, the dollar and the franc, without, discussing, first, whether the financial and industrial prospects were such as to make that parity remain a parity for any length of time? What merit could there be in stabilising the exchanges if they did not accord with the internal price levels of the various countries? Would there be any merit in such stabilisation, if the consequence was to doom the world to a price level already low, and to the prospect of a still further decline in that level?

I do not think it can be suggested that the discussion of stabilisation at the outset of the Conference was the manner in which the Conference ought to have addressed itself to its problem. To have stabilisation of the exchanges before the countries had expressed any desire to stabilise their internal price levels at particular points, before the countries had decided and were willing to declare where they wanted internal price levels to be stabilised—to make stabiisation on those terms would have been time-serving of the worst possible kind. It would have been doing no more than arranging chaos in the future, for the sake of the appearance of monetary order now.

President Roosevelt said no more and no less in his messages from America. He recognises that the stabilisation of international exchanges depends, first of all, on equality of the internal price levels in the various countries. Surely he wanted no more and no less than that the countries of Europe should determine where they wanted their internal price levels to be as a preliminary to the stabilisation of exchanges, and he is right.

What we are concerned with in this House is the action our own Government is to take in face of this problem. Those of us who take a particular interest in this question sometimes view with some anxiety the attitude of the Government and are haunted by an uneasy feeling that the Treasury, and particularly the Bank of England, are hankering to go back to the Gold Standard. We had a restless moment last week, when it seemed as if this country, perhaps driven by the truculence of Mr. Roosevelt's message, was going to throw in its weight against him, but happily that has not been done. We are told that the influence of the Dominions has been powerful to prevent our doing it. Once again the new world has been thrown into the scale to redress the balance of the old.

But though we have not taken sides against Mr. Roosevelt we have not yet taken sides with him, and I want to inquire whether it is not time that this House should be informed whether the Government intend to take that step. I make no complaint of their action so far, and I have great confidence in the Chancellor of the Exchequer. It would doubtless be very unwise if the Chancellor moved as quickly as some of us would wish him to do. Perhaps we have to exaggerate our ideas in order to drive him along the path. I am satisfied that the country's interests have best been served so far by the skilful manner in which this country has contrived to sit on the fence, has contrived to act, as it were, as an honest broker between the gold bloc of Europe and the United States of America; but surely the time is very near when a decision will have to be taken, and we shall have to come off the fence and decide whether we are going to go with the United States or with the gold bloc countries. At the present time an exchange war is raging between Europe and the United States of America. Are we going to remain neutral in that war? If so, what will our position be when the war is over? Will the victors be particularly grateful to us, will they be particularly considerate of our interests, when that time comes? Are we going to see Mr. Roosevelt endangered in the struggle that is going on? I hope not.

Last week the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) said the greatest strength of the foreign policy of this Government was the cordial relations established with the United States. Surely that is true, and, but for that, the extremely satisfactory arrangement with regard to the debt would not have been made. Is it not our duty as well as our interest at the present time to come to the aid of the President of the United States?

This is surely a conflict between the ancient and the modern. President Roosevelt, if he fails, cannot fail without injuring us. He is taking the modern view of monetary and currency matters. To put it in other words, this difference, between the ancient and the modern, is a difference between the artificial and the real: the artificial—a monetary system which is not conditioned by human needs, a monetary system in which gold is the master and man the slave; the real, a monetary system designed and operated to make available to the peoples of the world the wealth of the world, a monetary system in which man is the master and gold is the slave. I sincerely trust that in this important issue the Government may decide in the end to come down on the right side, on the side of President Roosevelt, the side that both humanity and reason certainly dictate

8.50 p.m.


I should not presume to intervene in this solemn, technical, and somewhat dull Debate but for two reasons. I have attended at the Geological Museum every single day except one since the Conference began; and I am convinced that very many of the speakers in the House to-day have got hold of a very erroneous impression with regard to the work of the Conference and the atmosphere that obtains at the Geological Museum. They seem to have come here to-night, not to praise Caesar, hut to bury him. I am here very definitely to praise Caesar, to point out that he is not anywhere near dead and will only be dead if Brutus, that is this House, stabs him in the back. It has become the fashion to sneer at the Conference, at the Prime Minister, and at British policy for not having produced any definite result.

For what it is worth, I should like to give the Committee the opinion I have gathered from the enormous numbers of foreign delegates, including, I suppose, most of the 66 nations represented at South Kensington, with whom I have spoken. Their opinion is the very opposite. They do not sneer at the Conference. They are not a set of old and weary politicians who are only too anxious to get back to their own countries. Large numbers of them are young, and most are energetic. They have a firm belief in the Conference, and they would not dare to go back to their own countries without some concrete and substantial results. Every one of them admires the way in which the Prime Minister has conducted the Presidency of the Conference, and the tactful and diplomatic manner in which he has kept it going; and finally, and most important of all, I have not yet heard a single criticism of British policy as being a mistake from the British point of view.

Meeting delegates unofficially, one sometimes hears their true opinions, and these things should be borne in mind when considering the whole matter of the Conference. In this Committee to-day there has been a tendency to exaggerate difficulties and to try to force the Committee into making up its mind, a tendency to put the whole thing in a series of antitheses, saying that you must come down either on the Roosevelt side or on the gold side, either you must put the dead gold horse or the live paper horse into the shafts. I do not understand that point of view. To my mind, that arises from a misapprehension of the position when the Conference started, and from a misapprehension of the true role of this country in such a Conference. The position, as I see it, at the beginning was that you had 66 nations, each with different traditions and desires. That was the first handicap. You have seen that situation clarify. Only yesterday we saw seven or eight gold countries come together and form a bloc. Every day and every week we have seen the British Empire forming a more solid bloc, with the sterling countries like planets circling around it. In the end, instead of having 66 nations or groups to deal with, you will have four or five or six.

Again, it is ridiculous to demand the Conference to produce something absolutely hat and strong, straight away, in the way of results. It is positively lamentable, to hear hon. and right hon. Members getting up and preaching the purest isolationism. The logical deduction from that would be that Hampshire should erect high tariff walls against Wiltshire, Berkshire, Surrey, and Sussex. We are definitely on the path of economic cooperation with the rest of the world, and if we may be sure of anything at the Conference, it is that. It is in all the statements of British policy that have been made. Another difficulty that the Conference has been up against is that, barring the delegates from the British Empire, there is not a single plenipotentiary. Everyone of them has to refer back to his own country to get decisions implemented and at intervals to receive instructions by cable.

Another difficulty, and this is the greatest difficulty, is that we are not just dealing with the delegates of the other countries or with their Governments, but with public opinion in their countries. Does anyone seriously imagine that the French Government would refuse to discuss the gold question or the question of stabilisation if the Conference was held in camera? The French nation would never forgive their delegates if they gave any cause for suspecting that France was likely to go off gold. I have no official information, but I am sure the French delegation have intimated to our Government that they will discuss anything we like behind the scenes, but that they cannot do it in public. At the same time, the way in which President Roosevelt has been criticised seems to arise from a complete forgetfulness of the fact that what he is up against is the absolute necessity of making certain of getting quick and definite results from the policy he has initiated, although I think that that policy will be followed by a disastrous reaction. I wish that hon. Members would make some effort to meet the delegates and to discuss matters with them. I think that they would find that matters look very different when they are discussing them with the actual representatives of the countries who are attending the Conference. There was of course the final difficulty that we are dealing with several different monetary systems: the European gold countries, the sterling group, the United States and the silver countries.

In view of these conditions, what was the obvious rôle of this country? It was the rôle of a connecting link between the different policies of the different groups at the Conference. This country has fulfilled that rôle with complete success, and for a very simple reason. The reason is that we are in an immensely strong position, and, properly backed up by public opinion in this country, which consists not only of the Press but also of this House, our success is certain sooner or later. We have got enormous handicaps in our favour. Our price level is stable, we are the biggest market in the world, we fix wholesale commodity prices throughout the world, we have followed a, consistent but moderate deflationist policy, and we are at last turning the corner. Constantly delegates say that the thing that has impressed them most has been the sense of solidity and national unity in this country. With all that behind us we cannot fail if we are properly backed up. This may be stupidly optimistic, but there are other points.

France and the gold countries cannot afford to break with England. Unless they have England's moral support they cannot remain on the Gold Standard as long as they like or leave it when and in the exact manner they will choose to leave it when they do leave it. I should like hon. Members to read the remarkable article by M. Herriot which appeared this morning in the French Press, in which he pointed out that it would be folly for France to break with England when England is the only link with the different monetary systems of the world. I believe that America is going to suffer rather a terrible reaction after this inflationary boom. Until the President departs from his present conviction that gold is not there to be used but is there to be kept in the vaults of the Federal Reserve Bank, he will not he able to stay the present inflationary boom. I think that America will have need of England far more than England will have need of America. We are not the suppliants in this case. Other nations will be the suppliants. We are the one stable factor in a fluid world. It is a commonplace to say that we did not leave gold, but that gold left us. After all, a platitude is only a truth which we are tired of hearing, and there is no reason why we should ignore it. We have remained stationary and stable, and it is to us that other nations of the world will look.

I venture to prophesy that the work of this Conference will go on if it receives proper support. For two or three weeks the results will be little, but events move fast to-day, and especially fast in America, and I think that we shall find in three or four weeks that the countries which refuse to play now, will be coming on their knees asking to be admitted to our game. If America refuses to play, let us carry on without her. If the gold countries refuse to play, let us carry on without them. H the sterling countries re fuse to play, let us carry on without them, and have an Imperial Conference. On the lowest and most pessimistic estimate you will have some groups of countries united together in a common effort to try and find a way out. What causes depression all over the world is the feeling that nobody is trying, and that we are all wandering in the dark and not even attempting to find out whether our neighbours are ready and willing to face the difficulties in a common policy. The Conference is alive and must be kept alive.

9.1 p.m.

Lieut.-Colonel APPLIN

As one of the three Englishmen who stood at Washington's tomb and who heard President Wilson create the League of Nations, I feel that the 42 nations who were at that meeting have now become 66 in London, and that America is really responsible for this international Economic Conference which we called and which is sitting in London. There are certain very elementary things which we have to consider, and the most elementary of all is the question of money. That is what the Conference was apparently originally called to consider. The trouble about our currency is that there is not sufficient in the world to enable us to purchase the goods that have been produced. I think the right hon. Member for Hillhead (Sir R. Horne) said that production had increased until it was overwhelming. There is really not too much production, but too much under-consumption, and the sole reason for the under-consumption is that there is not the money with which to purchase the goods that are produced. We have not to settle a national currency, which is a simple thing. The Government can guarantee their notes. You can produce your notes against goods, against gold or against a Government guarantee, but an international currency must be a currency accepted by all nations. It must be a stable currency. That is most essential, and you cannot have a national paper currency which will be stable in other countries. It must fluctuate according to the credits and debits of the country, according to the production of the country, and to other financial factors into which I need not enter.

For 3,000 years the world has used gold and silver as a currency. Up to 1873 we were on the Silver Standard as well as on the Gold Standard. We went off the Silver Standard mainly because Germany, who had just been paid in gold by France as an indemnity for the Franco-Prussian war, went off the Silver Standard because she had so much gold We went off in 1873 because we had discovered new gold, and gold was pouring into this country. When I went out to the East a good many years ago, silver was the sole currency everywhere east of Suez. The Mexican dollar was being used in Singapore, the Straits Settlements and throughout the East, and stood at 4s. 2d. When I left it had fallen to 1s. 11d. The dollar itself had practically gone out of circulation. The yen had come in and notes were being issued and used very largely by merchants. The people still demanded silver and copper. The reason was because no man is prepared to accept notes axcept as a temporary measure. Notes which are of so much value to-day may be another value tomorrow, whereas gold or silver remains practically static.

We often forget we are a great Empire with one quarter of the world's population under our flag. We must remember that 320,000,000 of those people in India are silver-using people; nothing is more astonishing than the vast amount of silver which is hoarded in every village in India. Silver is the coinage of the East. China is entirely on silver now and the right hon. Member for Hillhead mentioned the fact that Dr. Soong is most anxious to try to bring back silver. But it is not for the sake of China only that we want silver to regain its place in the world, though that would give us the most marvellous market in the world, to say nothing of settling India, because India would be happy and contented if we went back to silver again. Here is a point which hon. Members may not know unless they have read it in this evening's paper. Senator Pittman of America reported that his sub-committee on silver had proceeded so well that they expected to present a report by Thursday, when he suggested that they should be allowed to continue. That looks to me very hopeful.

I venture to think that the hon. Member for Huddersfield (Mr. Mabane) does realise that to try to stabilise paper throughout the world as a temporary measure would fail. In order to have a currency which the whole world will accept we must go back to the currency which has been used ever since the days of Father Abraham, for he bought the field of Macphelah for 400 talents of silver, current money with the merchants. It was current money with the merchants then, and has been current money with the merchants throughout the ages, and it ought to be current money with the merchants now. Most of our troubles have arisen through going off the Silver Standard in 1873, although it did not affect us so much then because we had just discovered Broken Hill and Klondyke, and the gold pouring into the country prevented us from feeling the change. If we consider that more than half the world's population are silver using people to-day, and that they are unable to buy the surplus of goods which Europe has created simply because they have not the currency, the question we have to ask is, Is it possible to return to silver on a stable basis and keep it stable?

The great fear is the overproduction of silver, but that is really a bogy which has been produced by the bankers, because banks do not want to handle a vast quantity of silver. It is a bulky thing, and expensive and difficult to handle, and the banks naturally enough do not want to have the burden and expense of handling silver. Furthermore, if we stabilised gold and silver and silver became a universal currency once more, there would be no or little fluctuations in exchange. The fluctuations in exchange would really arise on the balance of trade between a debtor and a creditor country, and there would be only a slow rise or fall. If we had all the nations of the world dealing in one currency, gold or silver, and their notes were exchangeable for gold or silver, it would keep their notes stable one with another and we should merely have a fluctuation of the value or price of silver as against gold. In the last decade, from 1920 to 1930, we were short of 328,000,000 ounces of silver and that shortage was made up not by the production of mines but by Government sales of 408,000,000 ounces of demonitised silver.

The question is, How can we go back to a silver standard, which is wanted by China with its 500,000,000 people, wanted by India and by ourselves—India being part of our Empire? It is also wanted by our Empire for the reason that Canada is really a silver-using country, she is a dollar country. There is no reason why we should not at any rate get the British Empire to go back to the silver standard. How could that be done with this present international Economic Conference? The production of silver in the world at the present moment is to some extent unlimited. It is a byproduct, and you can produce very great quantities of silver. Looking at the past to see what has happened we find that silver has fluctuated somewhere between 13½ to 16 ounces to the ounce of gold. It has hardly ever been much under 13½ or much over 16. If we decided to stabilise silver at 20 ounces of silver to the ounce of gold, and the international Conference could be made to agree to the proposal, it would be very simple to have a central bank to decide when silver was to cease being sold by those countries which agreed that they would restrict the sales of fresh silver if there was overproduction. The central bank would watch the fluctuations of silver, and, when silver rose above 20, would put a stop to its sale, the countries agreeing meanwhile that the production of silver should be limited until such time as the price fell again.

If silver were once more stabilised in the world at 20 to one-20 ounces of silver to an ounce of gold—the first thing that would happen would be a tremendous purchase of silver by those countries which have not got it for currency. That purchase of silver would draw the gold from the banks which are now hoarding gold. America and France would both buy silver. America has already bought silver from us at the law price at which it is, and the raising of the price of silver would bring it to something like 20 ounces of silver to an ounce of gold. At any rate this proposal is very well worth trying, and I believe that when the American sub-committee sitting at present do report there will be some attempt to get back to silver and gold. Silver and gold have always been husband and wife. I urge the Chancellor of the Exchequer and the others who represent us at the conference to consider whether, even if the world will not agree to this, we in the British Empire, with our great Indian Empire—and with China only too anxious for it—and possibly America could not go back to a silver standard linked with gold. Have bimetallism once more with silver stabilised at something like 20 to one. I believe that would solve the question of world currency, and give the world access to a currency stable and acceptable to everybody.

9.14 p.m.


No one who realises how hard and rough is the path of a, peace maker between delegations at an international conference will grudge a, [...]eed of sympathy to the Government in the difficulties with which they have been faced in the present World Economic Conference, and we are grateful to the Chancellor of the Exchequer for the clear and frank statement which he has given us of the difficulties with which the Government have had to contend in recent weeks. More than that, we applaud the courage that the Government have shown in deterraining to keep the Conference in being. I associate myself with the hon. Member for Morpeth (Mr. G. Nicholson) in deploring the unfounded pessimism with which it is fashionable to speak of the work and prospects of the World Economic Conference, and as to the courage and firmness with which, as he said, the Prime Minister has directed its work. The prospects of success in the tasks which confront the Conference at the present moment, seem to me to depend mainly upon two factors. One is the continuance of that close co-operation which was established by the Prime Minister with the Government of the United States and the other is the lead given to the Conference by the British Delegation.

As regards the first, the foundation of the work of the Conference was laid in. the conversations which took place between the Prime Minister and the President of the United States of America in Washington. The Conference will have to get back to the foundations which were laid there. According to the communique which was published just when the Prime Minister was leaving the United States of America the practical measures which were required were analysed and explored, and The necessity for an increase in the general level of commodity prices was recogrdsed as primary and fundamental. Various other measures were mentioned in what may be called the operative paragraphs of the communique, those dealing with the things which are immediately necessary. Those paragraphs conclude by calling for appropriate programmes of capital expenditure. Then, but only after those two paragraphs dealing with the immediately important questions, comes the further paragraph referring to the ultimate establishment of equilibrium in the international exchanges.

If we go back and read that communiqué, it seems clear that the reproaches directed against President Roosevelt for having departed from the original scheme of work laid down for the Conference—not that I suggest for a moment that the Chancellor of the Exchequer levelled such reproaches, but I am referring to those reproaches which are levelled at the President in the Press and elsewhere—are ill-founded. It is clear that, from the first, the stabilisation of currencies was not regarded as one of the primary and most important matters for the Conference to tackle. Senator Hull as leader of the United States Delegation has published a communiqué. It was published on Saturday night and appeared in yesterday's papers, recarpitulating the item of an agenda covering a very wide range which, in his opinion, can usefully be undertaken by the Conference. I therefore hope that the Government will in future work closely with the United States of America on those lines.

One of the matters to which, as we all know, President Roosevelt attaches great importance—which is mentioned specifically in the communique signed jointly by himself and the Prime Minister from which I have already quoted, and which is also mentioned frequently in communications from those who are in close touch with President Roosevelt and the United States of America—is a programme of public works such as he is carrying out with great energy and imagination in the United States of America. That programme will obviously be far more effective if it is carried out in a number of countries at the same time. The French delegation have tabled a resolution, which we saw in this morning's newspapers, that the problem should be considered by the special commission. I certainly hope that it will be adopted. We, on these benches, believe that a programme of public works, vigorously carried out, is essential to give that impetus to industry which it requires for revival, and to give a substantial amount of direct employment to large numbers of our unemployed.

While I attach importance to this question of public works, I by no means share the views expressed by the Leader of the Opposition to-day, in that very interesting speech with which he delighted us all. I refer to the views which he expressed about the breakdown of the capitalist system. He declared that international co-operation was the policy of the Socialist party. I am glad to hear it. I hope that he does not regard it as a thing to which the Socialist party has any monopoly, because the party to which I belong have always attached the greatest importance to international cooperation in trade. He denounces the export of capital goods to undeveloped countries abroad.


I did not denounce them. I simply said that we had reached the point where we were unable to send them, because of their inability to pay interest and repayment, and, secondly, because, in a large number of instances, the very machinery and the capital which we have put into those countries were enabling those countries to cut us out.


I think that the right hon. Gentleman pursued that point a little further. He said that it was one of the faults of the capitalist system in the past that it has encouraged this—


I took care to say that it was probably right in the early days and at the beginning, but that we have reached days when it does not work.


Even then—although I am obliged to the right hon. Gentleman, if I unintentionally misunderstood him, for putting me right—he said that he had been in touch with a number of Dominion industrialists, and I think Dominion statesmen, with the idea of exporting capital goods to those countries, and of developing those countries.


With our men.


I agree with the right hon. Gentleman. I am all in favour of the idea of developing those countries still further. I think it is splendid, but it does imply still further development of those undeveloped countries, which I think is a very good thing. We ought to be glad that it is being done. It has been the foundation, very largely, of our wealth in the past, and I am convinced that it will be very largely the foundation of our wealth in the future. I hope that the Labour party will not pour cold water on the idea of our using our industrial strength to develop foreign countries. It is useless to suppose that foreign countries are going to be content not to be developed. They will get their capital goods and their machinery from somewhere. We have the best machinery in the world, and the best workmen in the world, and we ought to continue that great trade that we have done in the past and that has been very profitable to us, and to continue that great work of developing the undeveloped countries. If we do not do it, somebody else certainly will. The right hon. Gentleman may say that it will lead to over-production, but, surely, that again is inconsistent with the view which he holds and which I share, that it is misleading to talk about overproduction.

The real problem upon which we have to concentrate is consumption, and if everybody in this country were provided with a decent standard of living and a proper supply of the basic things of life, food, shelter and clothing, our factories would again be humming with activity. What we have to do is to remove the obstacles which exist, not only in capitalist countries, but, above all, in the only Socialist country in the world, to the greater consumption of goods by the great masses of our people. The right hon. Gentleman referred to the importance of developing the Empire. I believe it can be done more easily because we have common interests in each other, we have sentimental ties which are important in business as in other walks of life—we have common institutions and we speak the same language. All these things will help the mutual development of the Empire.

The right hon. Member for Sparkbrook (Mr. Amery) talked about a world divided into three great groups, the European group, the British Empire, and the United States of America. The right hon. Member for Epping (Mr. Churchill) had a similar idea, but different in one respect in that he divided them into the sterling group, the dollar group and the gold group. That division would not be strictly on national lines, because in the sterling group there would be not only the British Empire but all the other countries which are attached to sterling a the present time. This is a wider and more liberal conception. We certainly would advocate the formation of groups of people who are willing to work together in keeping tariffs down and abolishing other restrictions upon international trade. By all means, if we can get an agreement such as that come to between Belgium, Holland and Luxembourg to have a maximum level of tariffs between themselves, an agreement into which all other countries would be free to enter, that should be encouraged and allowed, and we should waive any objections we are entitled to make under our most-favoured-nation treaties. We think such movements for the freeing of trade should be encouraged, but do not let us set up national barriers between these groups. Do not let us divide them on national lines. Do not let us think that advantages are not advantages unless they are obtained at the expense of some other nation.

I therefore believe that once confidence is restored, and the conditions are created in which private enterprise can function freely, we shall restore prosperity in the world, and we shall restore it much more quickly if the millions of people who are engaged in trade and enterprise all over the world for the benefit of themselves, their wives and families, are free to trade with one another with the minimum of Government interference rather than if the lives and happiness of millions of people depend upon the accuracy to several places of decimals of the calculations of a few planners in Whitehall or in the White House. Freedom of trade and destruction of barriers between nations is, we believe, the first and most important of these conditions. We hope that the Government will give a consistent lead and speak with the voice the Prime Minister used when he pointed out the inadequacy of piecemeal measures in dealing with these problems, rather than with the voice of the President of the Board of Trade who said only a few nights ago that the piecemeal method was the only one. On several occasions Ministers have drawn our attention to the authority of the experts who drew up the annotated agenda for the Conference, and these experts said clearly, on this point of arriving at tariff reductions by bilateral as opposed by multilateral adjustments: These objects can, of course, be attained, up to a point independent or by bilateral negotiations; but, without disparaging the value of action on these lines, no serious progress can be anticipated under present conditions, unless the different countries have the assurance that they are proceeding pari passu with the majority at least of the other countries of substantial economic importance. Therefore, we ask the Government to hold to that view, which has been expressed with such authority by the experts and with so much eloquence and power by the Prime Minister.

We agree that the objective defined by the Chancellor of the Exchequer as leader of the British delegation, of raising commodity prices, is one of fundamental importance. We have had a long discussion to-day as to how that should be done, and as to the various monetary means which might be employed. We do not believe that it can be cured by monetary means only, nor do we take the view that the Gold Standard is sancrosanct. The Leader of the Opposition said he would fight against the idea that the Gold Standard is something so sacred that it cannot be touched. I listened very carefully to his speech and to nearly every speech in this Debate, and it seems doubtful to me at. the moment whether there is any standard which can replace it. We shall study with interest the discussions that are taking place at the World Economic Conference. It is not for us to make up our minds now. Have the Leader of the Opposition or the hon. Member for Ebbw Vale (Mr. A. Bevan) who also referred in his speech to the Gold Standard, suggested any serious alternative? The hon. Member who has just sat down suggested that adding silver to gold would give a firmer basis. Whatever may be the advantages of adding silver to gold, I can hardly see how the addition of a metal, which fluctuates even more than gold in value, is likely to give greater stability—at any rate in internal purchasing power—to your currency.

The point is that currency is a measure of value. We can either define it in relation to gold, or in relation to gold and silver, or, as the advocates of a managed currency would have us believe, in relation to an index number having many components. But it is quite clear to anybody who studies the course of prices that these components will fluctuate one against another and therefore that the value of your pound or dollar will fluctuate terms of to each of these components. Not only, therefore, do you not achieve that stability at which you are aiming in the purchasing power of your currency in your internal market, and not only do you not achieve justice and steadiness in the relations between creditor and debtor, but the fluctuations will capriciously affect those individuals and particular geographical areas who depend, as many areas will, on only one or two of the commodities which are represented in your index number.

Therefore, I applaud the proposal of the Government to keep the Conference in being. Their proposal has not won the assent of some of the other nations, but I cordially hope that it will. At the same time, I hope that we shall have a firmer and clearer re-statement of the British policy covering these economic issues. It does seem as though there was a division of opinion among Ministers on this question. I do not think there is any harm in saying that, for many people have said it outside, and people are saying it in the House too. It seems that some Ministers really want greater freedom of trade, that they want tariffs down, while the minds of others are directed upon the idea of international planning. If you cannot get agreement between nations to remove restrictions upon trade, how are you going to get agreement that one nation is to produce a particular range of commodities, and another nation is to scrap its production in that range of commodities and produce another range of commodities? That is going to be a far more difficult objective to attain than greater freedom of trade. Therefore, I hope the Government will proceed with the study of the many important questions which have been dealt with by successive speakers here this afternoon, and, above all, will give a firm and consistent lead to the Conference in regard to the problem of freeing the channels of international trade and giving an impetus to industrial revival by means of a programme of public works.

9.38 p.m.


I am not sure whether it is a part of the tradition of the House of Commons to afford to a Member who has been absent from it for a long time, and then has the hardihood to attempt to address it again, some measure of the consideration which is offered to a maiden speech. Perhaps the right hon. Gentleman the Member for Darwen (Sir H. Samuel) can enlighten me, because I think he has had the same experience.


The House gives that consideration which is sometimes given after a second marriage.


I am glad to hear that, because for the last few hours I have found myself in a condition which is probably not recognised by the natural history books—the unfortunate but very real one of a second maidenhood. Second childhood claims its indulgence, and I hope that second maidenhood may do the same. I feel the need for it all the more because I am going to range myself quite decisively with a party which is, I am afraid, at the present moment in a minority in the House—that of those who have been described, in connection with financial questions, as the revivalists. I listen with, I hope, becoming modesty and becoming abasement to those who give us the views of orthodox economics in these matters, but I remain unconvinced, because, even in my short experience, the orthodox economists have so very frequently been wrong. I remember when, with great authority, they told us in 1914 that it was quite impossible that the War should last more than six months. There was nothing more certain than that statement, but the War did last more than six months. I remember, too, that they told us that, if this country went off the Gold Standard, a catastrophe would ensue. It did go off the Gold Standard, but the catastrophe did not ensue.

There is another reason why I find it difficult to follow them in the present state of our affairs. They always speak, and I think the bon. Member for Central Southwark (Mr. Horobin) took the same line, as if our present course of finance were orthodox, as if we were not engaged in profligate expenditure, as if we had a certainty of balanced Budgets ahead. I maintain that we are engaged in profligate expenditure at the present time, that it is very doubtful whether we have balanced Budgets ahead, and that the real question is not whether we are to have heavy expenditure or not, but whether it is going to be productive rather than non-productive.

Finally, I disagree with them because they seem to ignore entirely the moral factor—a strange thing for moralists—and the moral factor, that is to say, the question of morale, seems to me to be as important in business and finance as in anything else, including war. The Chancellor of the Exchequer himself recognised that fact this afternoon, because, when dealing with the need for a rise in prices, about which we are all agreed, he said—I do not think I am misquoting him—that it was not the monetary factors alone that were the trouble, but that the central factor was lack of confidence. I venture to suggest that, if the central difficulty in raising prices at the present moment is lack of confidence, and the first step is, therefore, to recreate confidence, the Government can do it best by showing that confidence themselves. The Chancellor of the Exchequer said, and everyone will agree with him, that the present revival in the United States was largely speculative. It may be so, and possibly it may go too far; nobody can tell; but there is no question, I think, that the first step in creating the rise of prices and the return of confidence in the United States was confident action by the head of the United States Government. It is action of that kind which personally I should like to see taken in this country at the present time.

It is always easy to ask what forms that kind of action should take, and I would only mention one or two. I notice that one of the forms of expenditure on which the United States Government are embarking at the present time is a policy of very largely reconstructing the Navy of the United States. In the "Times" of the 1st July, it is stated that 32 new warships are to be constructed, at an estimated total cost of £47,000,000, and that more are to follow. The policy of the administration, in its own words, is to build and maintain a fleet of all classes of fighting ships of maximum war efficiency as permitted by treaty conditions. I should he the last person to suggest that we should do anything that goes outside our treaty agreements, I should be the last to suggest anything that would in any way militate against the policy of disarmament, but I am firmly convinced that the policy of reconstructing its fleet undertaken by the United States Government is one that merits attention here. I commend it to right hon. Gentlemen above the Gangway, because I listened with great pleasure last week to the Palmeratonian speeches which they delivered about enforcing right and justice in the world. It is not merely the fact that replacing obsolete ships and building ships up to what treaties permit would give valuable work to our basic industries but it would also give employment afloat to many more men, for nothing is better known than that the personnel of the Navy is at a very low ebb. I have heard on good authority that last year there were 44,000 boys and young men offering to the Navy of whom only 2,000 were taken. I suppose a considerable proportion of the remaining 42,000 are now drawing unemployment pay.

Another of the subjects now being dealt with at the Economic Conference is worthy of our attention. The question of shipping subsidies is to come under discussion. There seems, in any case, to be very little prospect that the United States, or any other foreign country which pays these subsidies, is likely to alter its policy at our behest. Is it not the best answer to shipping subsidies in other countries to use, at any rate, some part of the money which we are at present spending under non-productive heads in an effort to assist in the rebuilding of our own merchant marine? I speak with respect in the presence of many who, I am sure, know more about the merchant marine than I do. but I am told that nearly the whole of our present fleet is uneconomic and that, if it were rebuilt, we could compete on far more favourable terms for the trade of the world and, if that is the case, I can conceive that it is, at any rate, worthy of consideration whether assistance should not be given to the rebuilding of part at least of the merchant marine. That, again, would be of assistance to the basic industries, and even more assistance might be given if attention were paid, in the plans for new ships, to the possibility either of using coal again or, at any rate, of using fuel derived from British coal.

Finally, I come to agriculture. The United States policy is one of very considerable assistance to agriculture, and I find myself very much drawn in the same way. I am definitely afraid of pursuing too far the policy of restricting production. I wonder whether some measures are not open to us which, instead of restricting production, would increase demand. I think I should have the sympathy of hon. Members everywhere if it were possible to produce a policy of that kind, something which would both stimulate confidence and raise prices. I have one suggestion to make to the Minister of Agriculture. When I am speaking of agriculture, I find myself naturally drawn to milk. I wonder whether a, case cannot be made, after investigation, for some assistance from the Government to ensure that milk is provided for all children in Government schools. At present I think it is provided for about 10 per cent., nearly entirely but not altogether at private expense. That means a consumption of 8,000,000 gallons a year. If all children received it, the consumption would be 80,000,000 gallons, and that would transform the problem of the milk industry. The annual cost would be about £8,000,000. I do not think the State should bear the entire cost. A producers' board, if it was set up, might be expected to contribute a little. An increase of the total liquid consumption would be of great assistance to the producers. The money which this proposal would cost would probably hardly exceed the cost of the beet subsidy. For that reason alone I hope it may receive attention.

All this, after all, is not new expenditure. It is a question of diverting expenditure from other heads—a question whether it is not better to try to subsidise production rather than non-production. Although I have little hope at the moment that these words will receive much attention, I am bound to add, on top of the Debates on the Finance Bill, which have just been concluded, that I hope the Chancellor of the Exchequer has not entirely closed his mind to the possibility of reducing taxation. I know that it is easy, without responsibility, to make suggestions to a Government which carries a very heavy responsibility, and I make these suggestions with due deference on that account. Every Government, especially one carrying the responsibility that this Government carries, must take all these suggestions with a grain of salt. I only ask that they should apply a reasonable grain and not empty the whole salt cellar upon them. I press these suggestions because, as the latest come from the electorate, I believe it is action of this sort that the country expects from the National Government. The Chancellor may feel that he hears in me the voice of the serpent. I know him to be so high-minded and so single-minded that he would stop his ears at once against a voice of that kind, but I beg him to believe that it is not as a tempter that I come forward. I believe with absolute conviction that this policy, whatever support it may have in the House, represents human experience. After all, it is morale that commands and subdues material factors in all the great crises of human life. I do not believe that anyone who lived through the War can doubt that fact. We need the stimulus of morale, the stimulus of confidence, as the Chancellor said, and, if the Government wants to create confidence, it must show confidence itself. That has been the secret of leadership since the beginning of the world.

9.55 p.m.


When the Chancellor of the Exchequer addressed the Committee this afternoon and said that any embarrassment he felt was not due to scarcity of matter but rather to a plethora of material, he wanted our sympathy, because he recognised that, having been present at the World Economic Conference for so many days listening to the dreary debates there his interest would be somewhat dimmed and blunted when it became his turn to give information to the House of Commons. I feel, at the end of one day, the same measure of embarrassment, because I find it difficult to relate what I have to say to the discussion. The right hon. and gallant Gentleman the Member for Caithness and Sutherland (Sir A. Sinclair) could not refrain from making what I regard as an unfair allegation against my right hon. Friend the Leader of the Opposition. Every one in the Committee knows that if there is a person in this House who, at any rate, is interested in the development of the Empire, such a person is my right hon. Friend, who on so many occasions in this House has addressed himself clearly and definitely upon this subject. There is no excuse for the right hon. and gallant Gentleman the Member for Caithness and Sutherland to complain that my right hon. Friend is now unwilling that further assistance should be given to the Empire in the form of capital investment and development capital.

The right hon. and gallant Gentleman really must try to face the point, because what my right hon. Friend said goes right to the root of the whole situation at the present time. My right hon. Friend the Leader of the Opposition said that we have come to a stage in the development of British capitalism when we find it exceedingly difficult to carry on the process of expansion which has enabled us to provide employment, build up a vast, industrial equipment, and obtain for ourselves a higher standard of living than has been obtainable almost in any part of the world in the last 30 or 40 years. That process of expansion has now come to an end. If any one doubts it, let him go round the world and see where expansion is possible. As my right hon. Friend truly said, the problem now is, how to use capital in a way to create production and to provide employment where the resources of capital are undeveloped. Capital in this country has not ceased to exist. There are ample resources of capital here. Those who have been responsible for lending in the past now say that they cannot continue to lend, because there are no good borrowers to be found in any part of the world. The world has failed to find good borrowers, because already those who borrow have borrowed as much as they can afford to repay and even more.

In the case of the Dominions of Australia and New Zealand, it has been our painful duty, and a duty with which the Treasury, or at least the Bank of England, have been identified, to go out to advise Australia and New Zealand not to borrow any more, but to cut down their expenditure and to reduce their costs in order that they may meet in fuller measure the interest and charges on their existing debts before they begin to borrow again from anybody. The truth is, that we cannot get any further borrowers in the world because all borrowers are overburdened with debt and find it exceedingly difficult to pay the interest costs and sinking funds on the debts already contracted. The fall in prices which is menacing the future of production and of trade is mainly due to the efforts to pay debts under the conditions to which I have referred.

The right hon. Gentleman the Chancellor of the Exchequer referred to the pronouncement of President Roosevelt, which must have been made, I assume—and those who read the statement must be prepared to assume—hurriedly under the stress of domestic difficulties. It was couched in language which showed clear evidence of lack of time and consideration and of the selection of the right phrases. Anyone could say-that without being at all prejudiced, but the right hon. Gentleman makes a mistake, as the Committee would make a mistake if they criticised too narrowly a statement made in those circumstances, if he attributes to that statement the sole responsibility for the present difficulties in the Conference. I do not think that the difficulties in the Conference are clue to statements of any one man. They are very much deeper and fundamental. The right hon. Gentleman said that President Roosevelt's message to the Conference was a different message from the one he had given to this country a week or two ago. That is true, but in these changing times, surely, even the President of the United States of America has the right to change his mind. Has nobody on the Government Front Bench changed his mind? I cannot conceive of a body of people who have changed their minds and opinions and accommodated themselves to changed situations more readily than every Member on the Front Bench opposite. The fact that they are able to tolerate each other is proof that there have been considerable changes of mind on the part of each and every one of them.

There is a difficult situation. The hon. Gentleman the Member for Altrincham (Sir E. Grigg) said that we required the stimulus of morale, but what we require above all things is forbearance and patience, which are the ingredients of success in any conference. In a situation which is beyond our responsibility and control, if we are to play a, worthy part, we should be very patient indeed. It would be a disservice to the Conference if we insisted upon the demerits of any one or more of the parties who make contributions from time to time in the Conference. The right hon. Gentleman claimed for himself that he had made a definite statement to the Conference.

We read that statement, and we have listened to his speeches in this House, as we have listened to him to-day, and the right hon. Gentleman cannot truly say that he has given a definite lead to the Conference at any time. The right hon. Gentleman said to-day what he said on the 2nd June in the Debate at which I was present, that there are three main objects, first, the raising of commodity prices; secondly, the removal of tariff barriers; and, thirdly, the stabilisation of currency. He said, as he said in his main speech in the Conference, and as he has said here on more than one occasion, that those are the main proposals. But the right hon. Gentleman has not at any time told his colleagues at the 'Conference the means by which world prices are to be raised. He has not described his plan for the stabilisation of currency, and he has not told the Conference how far he is prepared to go, and the rate at which he is prepared to embark upon a tariff-lowering scheme. It is true that he has given a general lead, but a definite lead which the Conference must get sometime has not been given by the representatives of the British Government. I say that without any offence to the right hon. Gentleman, in the hope of clearing the ground in this Debate and in further Debates which we must have before leaving the subject.

The right hon. Gentleman described the machinery of the Conference, and said that the Monetary Commission and Economic Commission were busy at work, and that there were sub-commissions, and sub-sub-commissions, I think he called them, which were very much engrossed with particular aspects of the problem with which the Conference has to deal. He said that there was a, good deal of necessary preliminary work to be done. Everybody who has given attention to this subject must agree that there is a good deal of clearing away to be done. The more calmly and patiently that preliminary work is done, the better and larger work will be accomplished when the time comes. The right hon. Gentleman told us that the raising of world prices is the primary objective of the conference. I should like to know what is implied by that statement. What are the details of the scheme for raising world prices? How is it going to be done? I have never yet been satisfied that anyone has thought the matter out fully. When prices have been raised, what is going to happen to the consumer of the commodities? There are huge accumulations of goods of all kinds in the markets of the world. Stocks have continued to increase despite the fall in prices. If the prices of these stocks are to be raised, who is going to buy the increased accumulations of goods Where is the purchasing power to come from? We shall await information on that point if the Chancellor of the Exchequer is prepared to give it.

I find in the "Sunday Times," a respectable paper I believe, which dealt with this matter yesterday, a statement which should be examined, because it goes to the heart of the question. It deals with President Roosevelt's plan in America and a statement by General Hugh Johnson, Industrial Control Administrator, who said: If we cannot increase purchasing power to support higher production I shudder to think what will happen. The American Federation of Labour state that: Workers' incomes increased only 7 per cent. from March to May, while factory production increased by 35 per cent. How long can that disparity between production and purchasing power be maintained? The statement proceeds: Production in many consumption industries is at the 1929 level, but the workers' buying power is still 57 per cent. below that of 1929. There we learn that the purchasing power of the worker is 57 per cent. below the productive standard. It is beyond me and beyond any ordinary arithmetician to understand these things. If there is some mathematician who can explain it, I should like to have the explanation, and I promise that I will give it the most careful consideration, as a modest mathematician myself. The Americans are trying to do something. Whatever allegations or complaints may be brought against President Roosevelt—I am not going to say that he is the only wise statesman in the world—be is trying to do something. He has declared his determination more emphatically than any other statesman. I have here a copy of Act Number 67 of the 73rd Congress of the United States, dealing with industrial recovery. The declaration of policy contained therein reads as follows: A national emergency productive of widespread unemployment and disorganisation of industry, which burdens inter-State and foreign commerce, affects the public welfare, and undermines the standards of living of American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of inter-State and foreign commerce which tend to diminish the amount thereof and to provide for the general welfare by promoting the organisation of industry for the purpose of co-operative action among trade groups, to induce and maintain the united action of labour and management under adequate Governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilisation of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve the standards of labour and otherwise to rehabilitate industry and to conserve natural resources. That is a very ambitious statement. If it means anything it means an entire departure, a most radical departure, from the practice of Governments in any part of the world, except a Government such as that of Russia, which is Communistic in character. Here is a Government in a capitalistic State taking steps to limit, control and encourage production, to raise the standard of labour and to increase purchasing power. I have expressed the view in this House again and again that, despite the unwillingness of the Government to interfere with the system under which we live, if the capitalistic system is to be perpetuated in this country, even continued for a reasonable period, it can only be by the assistance of the Government. President Roosevelt has not ceased to be a capitalist in the Act of Congress which I have read, for which he is responsible.

The Chancellor of the Exchequer referred to stabilisation and said that the Conference had received a shock because President Roosevelt was not prepared immediately to accept stabilisation. That is a very important matter. I have tried to see the difficulties of America and the difficulties which America and ourselves would share if precipitate action were taken and stabilisation on an insecure foundation were achieved by the Conference. We must remember that our own currency has varied considerably in commodity values within recent years.

The British pound in 1913 could buy 168 lbs. of bread, in 1928 it could buy 108 lbs. and in 1933 it could buy 136 lbs.; that is, the manufactured food of our people. Let hon. Members mark the disparity in the commodity value of the pound measured in the wheat from which the bread is made. In 1913 the British pound could buy 250 lbs. of wheat, in 1928 160 lbs. and in 1933 360 lbs. That is largely the explanation of the difficulties of the primary producers all over the world. Raw material has fallen so low in price that our pound itself reflects to the very greatest degree the fluctuation in commodity prices.

If this plan for stabilisation is to be carried out, at what level is stabilisation to take place? At what level is it to take place, measured in any system of measurement? There have been such great fluctuations in France, Italy, Germany and Russia in currency values that the currency has lost all value and meaning. In our own country there is ample scope for stabilisation and considerable advantage to be derived from stabilisation between money values and commodity values, but in all this talk of stabilisation one asks, what is the aim? The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) drew a picture of the Chancellor of the Exchequer as a man standing with a gun loaded and ready to fire, but afraid to pull the trigger. I am not anxious to see him pull the trigger. I want to know what the gun contains. Is it small shot or a bullet? Is the target point blank or a long-distance target? What are we to aim at in stabilisation?

Is it stabilisation for next week or next year? Is it stabilisation which will carry us for a reasonable time without any further disturbance or complications? Stabilisation, in what sense? Is the £ to be stable to the dollar and maintained at a parity of 4.86, or some other parity? Is that satisfactory? Is it a measure of money against money? Is there not a danger of a competitive depreciation of currencies, a serious danger, and if we succeed in stabilisation we have then the larger question of the volume of currency to the volume of production, which is the only way by which stabilisation of prices can be secured. These are important problems. I want to know whether the Government in this process of stabilisation, in any process of stabilisation, are prepared to cease speculating and juggling with the currency of the country as they are in the matter of the Exchange Equalisation Account. Are we to cease attacking the currencies of other countries, because in an attempt to defend our own we must be attacking and undermining the currencies of other countries.

The United States of America has a case in this sense. Whilst she is strenuously endeavouring to raise prices at home she has to sell in the markets of the world, and Europe is still the best market for American products. America sends to Europe 80 per cent. of her cotton exports and 66 per cent. of her tobacco, wheat, lead, and petroleum exports, and really we must understand that the Americans, if they are to send their exports to Europe, must not raise the value of their commodities too high because of the impoverished condition of Europe herself. America must sell cheaply enough to enable Europe to buy. If she cannot, Europe ceases to buy; and nobody gains. It may be that that is selfish, but who is unselfish in this matter? Why have we the Equalisation Exchange Account, which is a protective measure, in which you cannot differentiate defence and attack? I want to know whether, when real stabilisation has been achieved, there will be no attempt to take advantage of each other by making attacks upon the currencies of other nations?

Now I come to the question of gold. There are not many people who wish to return to the Gold Standard, very few people in this House; with perhaps the sole exception of the hon. Member for Edinburgh East (Mr. D. Mason). The right hon. Member for Epping (Mr. Churchill) is always interesting but he has never been more interesting than today. He said that the Chancellor of the Exchequer had not given very much light on the subject. I listened to the right hon. Member for Epping to see if he would help us out with his rich and varied vocabulary, and I confess that I was not satisfied that the right hon. Gentleman, who was responsible for the return to the Gold Standard, would come down on the side of gold as against any other system of currency. He said a good deal about revaluation of currency and new values of commodities. It all sounded wise and authoritative. I listened for a long time, and ultimately he came to wages. Then it was "if" and "when." The rise of commodity prices was to be achieved directly, and wages might in certain contingencies follow, if and when conditions permitted. The right hon. Gentleman is as far from the truth as any other ordinary Member of the House despite his courage, his rich flow of language and his great imagination.

Anyone who has given the matter serious study must assume that wherever currencies are to be attached even distantly to gold, there must be a great deal of management, international management of currency, international agreement in order that, stabilisation having been secured, that stability can be maintained. There must be a great deal of joint responsibility so that currency values can be maintained. Gold does not provide us with that automatic stabilisation which it was the function of gold to offer in past times. I doubt whether in our time we shall see that automatic regulation and stabilisation which gold could give under different conditions. I do not think the Conference would be well advised in spending any time in discussing reliance on gold for stabilised currency.

When one examines the way in which currency is being handled, when one sees that so many million pounds worth of dollars have been bought in America, one fears that it is not bought for the purpose for which money should be bought, not for the purpose of buying foreign goods. I buy French francs in order that I might buy French goods and pay the Frenchman who delivers the goods to me in the one thing which he can use. That is the object of buying foreign currency. The Frenchman buys British currency in order that he might pay for British goods in British currency. When a foreign currency is bought for any other purpose there is always a danger. I should like to hear that the Chancellor of the Exchequer and the Governments of the world represented at the Economic Conference are facing the problem of the unnecessary purchases of foreign currencies of all kinds.

We want to come to a world trade policy under which goods are bought with the prospects of being paid for, with the object of serving the mutual interests of producer and consumer. At the Conference the delegations that came to London must have realised that this object can be achieved only by a larger measure of co-operation than the world has ever seen before. We want broader ideas of the relationships between the peoples. The idea of co-operation must be carried as far as possible to regulate the larger part of the trade of the world, which is now shrinking day by day and is in danger of falling to smaller proportions still.

Assuming that the Conference fails, what will be the price of failure? Who will pay it? Is it not better now to risk something, or to risk a great deal, in order by co-operation to gain the end of the Conference? Is it not better to take that risk than to stand on dignity, adopt a narrow viewpoint and insist too much on national interest? Otherwise there is a risk of the Conference breaking up, after having ceased to be even a conspiracy to raise prices, which it is in danger of becoming under present conditions. One would like to believe that the representatives of the nations could return from this Conference to their countries not with a complete scheme for the salvation of the world—for that is a very long way ahead in years, in effort and in organisation—but with a determination to do what can be done at this stage by the maximum of co-operation to prevent the world degenerating further into disorder and confusion. My right hon. Friend the Leader of the Opposition has described the Conference as an inquest on capitalism. Its failure will prove that the capitalist system cannot adjust itself to the present situation, that it cannot work under conditions of plenty but only under conditions of scarcity, hardship and penury among the masses of the people. Is that to be the verdict on capitalism? Can capitalism work under conditions of plenty? If so, let us be shown how it can work. Let us risk everything upon this enterprise for the future.

I believe that a way must be found for carrying out a world trade policy, a world policy for the exchange of commodities, a policy by which the resources of the nations will be pooled, a system which it will be the interest of all to maintain and under which the exchange of the materials for industry and the products of industry can be carried out equitably between the nations. I believe that political frontiers must be levelled down. They may be required for the purpose of efficient administration, but I believe they will have to be brought down to the lowest possible height in regard to questions of trade and commerce. Have the Government a world policy? Are we still to regard ourselves just as inhabitants of a small island in the North Atlantic, with relations scattered over the globe, thinking only of ourselves and the immediate necessities of those with whom we are associated politically, or are we to have a real world policy? Can we see ourselves fitting into a new world scheme such as I have described?

Have we even a national trade policy? I am not satisfied that we have. An hon. Member opposite said that the President of the Board of Trade had become a most eloquent and confident advocate of Protection, and the Chancellor of the Exchequer a most convincing advocate of Free Trade. I have watched that transformation taking place. I have seen the right hon. Gentleman opposite come much closer to the view which I hold on these matters than he used to be, but he has still a long way to progress. He still shares with others of his colleagues on that bench the belief that tariffs have some influence on employment and can be, in certain circumstances, an advantage to the country. He believes in what is called quantitative regulation, but the arch priest of that policy, the Minister of Agriculture, is not here. [HON. MEMBERS: "He is!"] I beg his pardon; I was looking further along the bench, but I see he is in, his right place. He is the champion of that policy, but I fear he has fallen under the deep suspicion of Members of his own party because of his approach to what was at one time known as Socialism.

Then we have the policy of trade agreements with other countries. Once again we declare from this side that we have no faith in those agreements. The right hon. Gentleman the Member for Darwen (Sir H. Samuel) has been studying a scientific tariff. It is a pity that he did not study it before he went across the Gangway, and I wonder whether his discoveries are going to lead him back again across the Gangway or across the Floor of the House to this side. He Accused us of having a new-born attachment to Free Trade. He charged us with not having been loyal to principles. We are Free Traders not because we are Free Traders first and foremost, but because we are Socialists first and foremost, and we believe that tariffs are not consistent with Socialism, but we believe that Free Trade is quite consistent with the principles which we hold.

The right hon. Gentleman will, I am sure, forgive me for saying that all these expedients, whether the matter of agreement at the World Economic Conference or the policy of the Government by itself, are really playing a game, like a game of draughts. The longer the game proceeds and the greater the success of the players, the fewer pieces are left on the board, and when the game is finished every single piece has been taken off. This kind of policy will cut down the measure of our international trade, the measure of our comforts and of our welfare at home, and we beg the Government tonight to maintain the connection with the World Economic Conference, to go there with a more definite scheme on the part of the Government of this country. They can take risks there. They are a very large Government, and they have a large support outside, though not as large as they had some time ago, and if they go with courage to the Conference, they will not only have the support of their supporters on that side of the House, but they can rely on the support of a large number outside as well; but if they go with temporary makeshifts and with the desire to outwit and to outmanoeuvre the people with whom they are in consultation, they must fail, and when they fail, the system which they avow must fail too, and some other system must take its place.

10.32 p.m.


No one in a responsible position can enter upon a Debate of this kind without a certain degree of anxiety, because in dealing with these international affairs it is so easy, with the best of intentions, to frame a phrase or a. sentence in a way which may be misunderstood, not in this House, but elsewhere, and, therefore, when one has achieved one's task without having made any unwitting slip of that kind, one approaches again with a double reluctance the opportunity which is now given of making a second speech on the subject. But I should be ungrateful if I did not attempt to show my appreciation of the consideration which the Committee have demonstrated this afternoon. They have fairly indicated that they have appreciated the delicacy of the situation, and indeed on the whole they have accorded a generous measure of approval and support to the action of the Government in the matter of this Conference so far.

I must, however, begin by making one very strong protest against a statement which has just fallen from the hon. Member for the Gower Division (Mr. D. Grenfell). He is generally so fair-minded and so careful in what he says, that I am quite sure he cannot have appreciated the mischief which may be caused by a statement which he made a few minutes ago, when he asked if the Government were prepared to see continue the juggling with the currency which was being done at the present time with the Exchange Equalisation Account, attacking and undermining foreign currencies. If that statement means anything, it means that in his view the Exchange Equalisation Account is being used deliberately to depreciate the £. It is singularly unfortunate that a Member of this House should, in the teeth of my repeated denials that the Exchange Equalisation Account has ever been used for such a purpose, give currency to that idea, because he cannot but be aware that there are some who are perhaps not altogether friendly to this country who have repeated in other countries that that was in fact the purpose, the unfair purpose as it may be described, of the Exchange Equalisation Account.

It would be perfectly possible to say that the present depreciation of the dollar, since it has riot been checked by the American Government, is an attempt to take an unfair advantage of British currency; but nobody in his senses would make such an accusation against the United States because we know that what is happening there with regard to the depreciation of the dollar has no reference to its relative value with regard to other currencies, but has reference solely to domestic and internal considerations. I repeat in a most emphatic way that the Exchange Equalisation Account was not intended to be used for the purpose of depreciating British currency. It has not been used for that purpose; it is used, and will be used solely for the purpose of evening out those fluctuations which are due not to economic factors, but to abnormal considerations such as speculation by private individuals or movements of capital due to other seasonal causes. The hon. Member probably deprecates speculation in currency by private individuals as much as anybody. In fact, he said that the buying of foreign exchanges for other purposes than the purpose of commercial transactions was improper, if not immoral. That is the very thing we are trying to stop. I agree with him that it is in the last degree improper that the interests of nations should be affected adversely by the operations of private individuals whose sole interest is to make some profit out of the exchanges. I hope that the hon. Member will not repeat any such suggestion as that which fell from him, and that he may even see his way to accept the statement which I have so often made before as to the real purpose of this fund.

The hon. Member, like his colleague the Leader of the Opposition, of course pretended that the Government had not been sufficiently precise and specific in the declaration of their policy. It is a little discouraging to find that, however often one repeats what the policy of the Government is, it never seems to enter into the minds of hon. Members opposite. They still go on asking the same old questions which we have answered over and over again. We go to the expense of issuing in Command Paper No. 4397 the statement which I made to the Economic Conference on behalf of the British delegation, and, if the right hon. Gentleman will look at page 6, he will find set out in considerable detail the conditions under which the United Kingdom would feel justified in returning to the Gold Standard. If I not only make this statement in detail to the Conference, but afterwards publish it as a printed document, which is supplied free of charge to the right hon. Gentleman, what more can I do? I certainly cannot force him to read the document, and all I can suggest is that he should get somebody else to read it to him, and he will get answers to the questions he puts to me.

The right hon. Gentleman and the hon. Member who has just spoken have once again fallen foul of the Government over the system which the right hon. Gentleman calls the quota system, and which the hon. Member calls a regulation of production. It does astonish me to hear hon. and right hon. Gentlemen on that bench denounce this system of adapting supply to demand which, I understand, is one of the principal features of the Socialist policy. I do not know how many times I myself have listened to speeches on this subject by Members of the Socialist party. What was the system of import boards of which we used to hear so much? What was the purpose of those boards? To adapt supply to demand, to see that while demand was met the country was not flooded with undue quantities of any particular commodity. Now, because the system which we propose is a. voluntary system of agreement between a number of producing countries, the hon. Gentleman falls foul of it, and says that he has no use for any such expedient. If he discards all the tenets of the Socialist party one after another like that, certainly there will be no stabilisation about him.

The question of the regulation of production is not, as so many hon. and right hon. Gentlemen put it, the whole story. I have often heard it said, and I think I heard the right hon. and gallant Member for Caithness (Sir A. Sinclair) repeat it to-night, that the real problem is not a problem of the restriction of production but the expansion of consumption. I submit that you cannot put it on either basis. It is a question of the relation between the two. An expansion of consumption is merely the other side of the coin. Expansion of consumption and restriction of production are two ways of achieving the same purpose. But the object of the arrangement which the Government have been advocating is not to deal with one side of the problem alone. It is more properly described as regulation than as restriction, because it contemplates that sometimes you may have to restrict but at other times you may have to expand production, and you can only achieve your purpose if you can contrive to see that supply is at all times equal to the demand and does not at any moment fall grievously short of it or prove to be so much in excess that prices fall as they have done in the last few years.

The hon. Member has a talent, I think, for putting the cart before the horse. He told us a. little while ago that in his view the fall in prices was largely, if not entirely, due to the efforts made by the agricultural countries to pay their debts. But has it not occurred to him that it is exactly the opposite process that is the real explanation of our troubles 4 It is because the prices of primary products have fallen so grievously that so many countries are unable to pay their debts, and if we could get the level of prices raised once again, so that there is what is generally called equilibrium between prices and costs, so that, in other words, the farmer could meet his obligations I think half the troubles of the world would be solved. It must be remembered that there are only two ways of bringing about this equilibrium between costs and prices. Either you must reduce costs, which means reducing wages, with all the disastrous consequences which we believe would follow upon that course, or you must take the other method and raise prices. It is for that reason that the Government, in agreement, I think, with the great majority of the delegates of the World Conference, is determined to carry out a policy which we believe will have the effect of raising the price level.

Let me mention one or two points that were raised in the course of the Debate. My right hon. Friend the Member for Epping (Mr. Churchill) has explained to me that another engagement has made it impossible for him to be here just now, but as his speech was so extremely noncontroversial I certainly have no complaint against him on that score, but he did say, and some others repeated the observation, that he was surprised at the simplicity of His Majesty's Government in ever supposing that President Roosevelt could possibly have agreed even to a temporary form of stabilisation. That was a different point of view from that of hon. Members opposite, whose point of view was that the President changed his mind, and that there was no reason why he should have done so. I am not going to answer the criticism, but I must defend the Government from the charge that they were excessively naive or simple-minded in thinking that the President ever could have considered the question of temporary stability. Let the Committee remember that, at the begin ning of the Conference, officials from the United States Treasury came over here, duly authorised to discuss this very question of temporary stabilisation. The Government were, therefore, fully justified in supposing that that was a matter which was open to discussion and consideration.

What happened afterwards may be described in this way: There came a time when public sentiment in the United States closely connected the depreciation of the dollar with the rise in commodity and other prices, and the moment that that really became established as the sentiment of the public in the United States, whether rightly or wrongly, it was indeed impossible for the President to agree to temporary stabilisation without running a very serious risk of putting a check to the policy to which he had set his hand. That is an explanation which we can all understand. We can understand and appreciate the difficulties of the President of the United States, but I think that it shows that the Government were not quite so simple-minded as perhaps some of my hon. Friends supposed when they thought at one time that it was possible that temporary stabilisation might be considered. My right hon. Friend the Member for Epping, in a very interesting passage, concluded with anavial metaphor. He suggested that we should take charge of the sterling convoy, and that we should follow upon the United States leader with some prudence and at a certain distance, taking care not to emulate the speed at which that vessel was proceeding.

I must again emphasise that there is no real analogy between the present depreciation of the American dollar and the depreciation of the Continental currencies which took place after the War. All the conditions in those countries were very different from the conditions in the United States. Those countries had external liabilities which were far in excess of their resources in gold and foreign exchange. They had unbalanced Budgets, and it was quite impossible for them to meet their deficits by borrowing the savings of their own people. They had recourse to ways and means through their central banks. In short, the conditions were such that they had no alternative but to swell their currencies in order to meet the unfavourable trade balance from which they were suffering. On the other hand, in the United States there are enormous resources, far in excess of any possible external liability, and if they have a deficit, as I have heard that they have, they can at any rate meet that by borrowing at home, and their loans have been very much over-subscribed. They have a favourable balance of trade, and a, still more favourable balance of payments. Therefore the depreciation of the dollar is, as I have said earlier in the day, what I may call an unnatural or artificial phenomenon, and is not in the least comparable with the depreciation of the Continental currencies. The depreciation of the dollar is due largely to speculation, and the moment this is appreciated it must be clear that there is a great deal of uncertainty about,the future course of the dollar. That being so, I cannot help thinking that it would be unwise on my part to attempt to commit the country to the course which my right hon. Friend seems rather to favour.

We also had an interesting speech from the right hon. Member for Hillhead (Sir R. Home). I was glad to note that in a large measure he felt himself in agreement with the course which the Government have taken. He pointed out in some detail a number of measures which might still be very properly and usefully discussed by the Conference, and I entirely agree-with him that these are all matters which are susceptible of further treatment and discussion, and that it would be a very great pity if we missed the opportunity, which is now presented to us, when we have so many authorities on these subjects from different countries assembled -in London, of having these matters discussed, and trying, as far as we possibly can, to arrive at some agreement as to the general principres which should govern our action at a more favourable moment in the future.

There is no doubt, as my right hon. Friend has said, that the avowed policies of this country and of the United States are closely parallel with one another. It is our declared intention to pursue by all the means in our power any measures which we think will tend towards that raising of price levels which we believe to be the first essential. I entirely agree with my right hon. Friend that we should not depend wholly on what we can do in conjunction with other countries, but that we should do all we can to help ourselves. I would claim that that is what 'we have been doing and are doing, and that we are achieving a considerable measure of success. My right hon. Friend the Member for Darwen (Sir H. Samuel) quoted from the "Economist" some figures showing a very considerable rise of sterling prices of particular commodities. The index for wholesale sterling prices generally shows a rise of no less than 8 per cent. since March last. There, at any rate, is a beginning, and seeing that more than one speaker has warned us of the danger of going too fast in these matters, I think we need not be disturbed or alarmed because our rate of progress in this matter is perhaps less rapid than it is in some other quarters. At any rate, we may believe that it rests on a solid foundation, and that our progress, if slow, is at any rate sure.

I am happy to be able, in the few minutes that I still have at my disposal, to give the Committee the latest returns of unemployment. I think they are exceedingly encouraging. The figures show that the numbers of unemployed at the end of June have now come down to 2,438,108. Compared with the register of a month before, that means a reduction of 144,771, and, compared with a year before, a reduction of 309,23 The figures of those who are in employment are quite as satisfactory, if not even more encouraging, than those I have just given. At the end of June it was estimated that there were approximately 9,792,000 insured persons between the ages of 16 and 64 in employment in Great Britain. This was 135,000 more than a month before, and as compared with a year before, it was no less than 461,000 more. These figures are not only satisfactory in actual volume, but I think it is particularly encouraging to note that the improvement in employment extended to all but a; few industries. It was most marked in iron and steel manufacture, engineering, shipbuilding and ship repairing, metal goods manufacture, textile industries, distributive trades, hotels and boarding houses, road transport, shipping and dock and harbour services.

I think we may take some hope and strength from figures of this kind. They show that, at a time of year when we should expect the figures to be going in the other direction, the improvement which we have been noting month by month is still maintained. We note, at the same time, that railway traffic receipts are improving, and, while I never like to say too much about budgetary prospects at this time of year, I think I might go so far as to say that they certainly are encouraging. In particular, Customs revenue is showing more favourably than the Budget estimates. Do not let us think that we are lagging behind; we are more than holding our own, and are doing better than many other countries are; and I

myself feel that we have really at last begun to see signs which show unmistakably that the improvement is not a fleeting one, but that it has a, solid foundation and may be expected to continue. While I do not wish to raise any extravagant hopes, I believe that the result of all the efforts which we have made in the past is now beginning to show itself to our advantage.

Question put, "That a. sum, not exceeding £124,178, be granted for the said Service."

The Committee divided: Ayes, 42; Noes, 239.

Division No. 259.] AYES. [10.59 p.m.
Adams, D. M. (Poplar, South) George, Major G. Lloyd (Pembroke) Maclean, Neil (Glasgow, Govan)
Attlee, Clement Richard Greenwood, Rt. Hon. Arthur Mainwaring, William Henry
Banfield, John William Grenfell, David Rees (Glamorgan) Maxton, James.
Batey, Joseph Griffiths, T. (Monmouth, Pontypool) Milner, Major James
Bevan, Aneurin (Ebbw Vale) Groves, Thomas E. Owen, Major Goronwy
Brown, C. W. E. (Notts., Mansfield) Grundy, Thomas W. Parkinson, John Allen
Cape, Thomas Hall, George H. (Merthyr Tydv11) Price, Gabriel
Cocks, Frederick Seymour Hirst, George Henry Smith, Tom (Normanton)
Cove, William G. Jenkins, Sir William Tinker, John Joseph
Dagger, George Jones, Morgan (Caerphilly) Wallhead, Richard C.
Davies, David L. (Pontypridd) Lansbury, Rt. Hon. George Williams, Edward John (Ogmore)
Davies, Rhys John (Westhoughton) Lawson, John James Williams, Dr. John H. (Llanelly)
Debbie, William Logan, David Gilbert
Edwards, Charles Lunn, William TELLERS FOR THE A YES.
Evans, R. T. (Carmarthen) McEntee, Valentine L. Mr. John and Mr. G. Macdonald.
Acland-Troyte, Lieut.-Colonel Clayton, Sir Christopher Ganzoni, Sir John
Agnew, Lieut.-Com. P. G. Cochrane, Commander Hon. A. D. Gilmour, Lt.-Col. Rt. Hon. Sir John
Albery, Irving James Colman, N. C. D. Glucksteln, Louis Halle
Amery, Rt. Hon. Leopold C. M. S. Colville, Lieut.-Colonel J. Glyn, Major Ralph G. C.
Anstruther-Gray, W. J. Conant, R.J. E. Goldie, Noel B.
Aske, Sir Robert William Cook, Thomas A. Goodman, Colonel Albert W.
Astbury, Lleut.-Com. Frederick Wolfe Copeland, Ida Gower, Sir Robert
Atholl, Duchess of Courtauld. Major John Sewell Granville, Edgar
Balllie, Sir Adrian W. M. Craven-Ellis, William Grattan-Doyle, Sir Nicholas
Baldwin, Rt. Hon. Stanley Crookshank, Col. C. de Windt (Bootle) Grenfell, E. C. (City of London)
Bainlel, Lord Crookshank, Capt. H. C. (Gainsb'ro) Gretton, Colonel Rt. Hon. John
Banks, Sir Reginald Mitchell Cross, R. H. Griffith, F. Kingsley (Middlesbro',W.)
Barrie, Sir Charles Coupar Crossley, A. C. Grigg, Sir Edward
Bateman, A. L. Curry, A. C. Grimston, R. V.
Beauchamp, Sir Brograve Campbell Davidson, Rt. Hon.J. C. C. Guest, Capt. Rt. Hon. F. E.
Belt, Sir Alfred L. Davies, Maj. Geo. F.(Somerset,Yeovii) Guinness, Thomas L. E. B.
Bird, Ernest Roy (Yorks., Skipton) Denville. Alfred Gunston, Captain D. W.
Bird Sir Robert B. (Wolverh'pton W.) Dickle, John P. Hanbury, Cecil
Blindell, James Doran, Edward Hanley, Dennis A.
Borodale, Viscount Drewe, Cedric Hannon, Patrick Joseph Henry
Bossom, A. C. Duckworth, George A. V. Haslam, Sir John (Bolton)
Boulton, W. W. Dugdale, Captain Thomas Lionel Headlam, Lieut.-Col. Cuthbert M.
Bower, Lieut.-Com. Robert Tatton Duncan, James A. L.(KensIngton,N.) Heligers, Captain F. F. A.
Bowyer, Capt. Sir George E. W. Dunglass, Lord Heneage, Lieut.-Colonel Arthur P.
Braithwaite, J. G. (Hillsborough) Eastwood, John Francis Holdsworth, Herbert
Briscoe, Capt. Richard George Eden, Robert Anthony Hore-Belisha, Leslie
Broadbent, Colonel John Elliot, Major Rt. Hon. Walter E. Horne, Rt. Hon. Sir Robert S.
Brown, Col. D. C. (N'th'I'd., Hexham) Ellie, Sir R. Geoffrey Horobin, Ian M.
Brown, Ernest (Leith) Elliston, Captain George Sampson Horsbrugh, Florence
Brown,Brig.-Gen.H.C.(Berks.,Newb'y) Elmiey, Viscount Howitt, Dr. Alfred B.
Burghley, Lord Emmott, Charles E. G. C. Hume, Sir George Hopwood
Burgin, Dr. Edward Leslie Emrys-Evans, P. V. Hunter, Dr. Joseph (Dumfries)
Burnett, John George Erskine-Bolst, Capt. C. C. (Blackpool) Hunter-Weston, Lt.-Gen. Sir Aylmer
Butt, Sir Alfred Essonhigh. Reginald Clare Inskip, Rt. Hon. Sir Thomas W. H.
Campbell, Sir Edward Taswell (Brmly) Evans, David Owen (Cardigan) James, Wing.-Com. A. W. H.
Caporn, Arthur Cecil Fleiden, Edward Brockteharst Janner, Barnett
Carver, Major William H. Fleming, Edward Lascelles lesson, Major Thomas E.
Cazalet, Capt. V. A. (Chippenham) Foot, Dingle (Dundee) Joel, Dudley J. Barnato
Chamberlain, Rt. Hon. N.(Edgbaston) Ford, Sir Patrick J. Johnstone, Harcourt (s. Shields)
Chapman, Col.R. (Houghton-le-Spring) Fraser, Captain Ian Jones, Henry Haydn (Merioneth)
Churchill, Rt. Hon. Winston Spencer Fremantle, Sir Francis Kerr, Lieut.-Col. Charles (Montrose)
Lamb, Sir Joseph Quinton O'Connor, Terence James Somerville, D. G. (Willesden, East)
Leckie,.J. A. O'Donovan, Dr. William James Soper, Richard
Lees-Jones, John Patrick, Colin M. Sotheron-Estcourt, Captain T. E.
Leighton, Mayor B. E. P. Peak., Captain Osbert Southby, Commander Archibald R.J.
Lindsay, Noel Ker Penny, Sir George Spens, William Patrick
Lister, Rt. Hon. Sir Philip Cunliffe- Petherick, M. Stanley, Lord (Lancaster, Fyide)
Little, Graham-, Sir Ernest Peto, Geoffrey K.(W'verh'pt'n, Bllston) Stewart, J. H. (Fife, E.)
Llewellin, Major John J. Pickering, Ernest H. Stourton, Hon. John J.
Lloyd, Geoffrey Pickford, Hon. Mary Ada Strauss, Edward A.
Locker-Lampson, Rt. Hn.G.(Wd.Gr'n) Potter, John Stuart, Lord C. Crichton-
Lockwood, Capt. J. H. (Shipley) Powell, Lieut.-Col. Evelyn G. H. Sueter, Rear-Admiral Murray F.
Mabane, William Raikes, Henry V. A. M. Sugden, Sir Wilfrid Hart
MacAndrew, Lieut.-Col. C. G.(Partick) Ramsay, T. B. W. (Western isles) Summersby, Charles H.
MacAndrew, Capt. J. O. (Ayr) Ramsden, Sir Eugene Tate, Mavis Constance
McCdrquodaie, M. S. Rankin, Robert Thomas, James P. L. (Hereford)
MacDonald, Rt. Hon. J. R. (Seaham) Rathbone, Eleanor Thompson. Luke
Macdonald, Sir Murdoch (Inverness) Ray, Sir William Thomson, Sir Frederick Charles
McEwen, Captain J. H. F. Rea, Walter Russell Thorp, Linton Theodore
McKie, John Hamilton Reid, Capt. A. Cunningham- Touche, Gordon Cosmo
Macguisten, Frederick Alexander Rentoul, Sir Gervais S. Tryon, Rt. Hon. George Clement
Makins, Brigadier-General Ernest Roberts, Aled (Wrexham) Vaughan-Morgan, Sir Kenyon
Malialieu, Edward Lancelot Ropner, Colonel L. Wallace, Captain D. E. (Hornsey)
Margesson, Capt. Rt. Hon. H. D. R, Rosbotham, Sir Thomas Wallace, John (Dunfermllne)
Mason, David M. (Edinburgh, E.) Ross Taylor, Walter (Woodbridge) Ward, Lt.-Col. Sir A. L. (Hull)
Mayhew, Lieut.-Colonel John Runge, Norah Cecil Ward, Irene Mary Bewlek (Wallsend)
Merriman. Sir F. Boyd Rutherford, Sir John Hugo (Liverp'1) Wardlaw-Milne, Sir Joan S.
Mills, Major J. D. (New Forest) Salmon, Sir Isidore Warrender, Sir Victor A. G.
Mitchell, Harold P.(Br'tf'd & Chisw'k) Samuel, Sir Arthur Michael (F'nham) Whyte, Jardine Bell
Mitcheson, G. G. Samuel, Rt. Hon. Sir H. (Darwen) Williams, Herbert G. (Croydon, S.)
Moreing, Adrian C. Samuel, Samuel (W'dsworth, Putney) Wills, Wilfrid D.
Morris-Jones, Dr. J. H. (Denbigh) Sandeman, Sir A. N. Stewart Wilson, G. H. A. (Cambridge U.)
Morrison, William Shepherd Shakespeare, Geoffrey H. Windsor-Clive, Lieut.-Colonel George
Moss, Captain H. J. Shaw, Helen B. (Lanark, Bothwell) Wise, Alfred R.
Muirhead, Major A. J. Simmonds, Oliver Edwin Womersley, Waiter James
Munro, Patrick Maj. Rt. H n. Sir A. (C'thness) Worthington, Dr. John V.
Nall-Cain, Hon. Ronald Skelton. Archibald Noel Young, Rt. Hon.Sir Hilton (S'y'noaks)
Nation, Brigadier-General J. J. H. Smith, Sir J. Walker(Barrow-in-F.)
Nicholson, Godfrey (Morpetn) Smith-Carington, Neville W. TELLERS FOR THE NOES.
North, Edward T. Smithers, Waldron Captain Austin Hudson and Lord Erskine.
Nunn, William Somervell, Donald Bradley

Second Resolution agreed to.

Original Question again proposed.

Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to. —[Captain, Margesson.]

Committee report Progress; to sit again To-morrow.