ECONOMIC SITUATION.

HC Deb 26 July 1933 vol 280 cc2621-718

4.19 p.m.

Sir STAFFORD CRIPPS

I want to raise two questions, first of all, the tragic significance of the failure of the World Economic Conference and, secondly, the position in which this country is left as a result of that failure. I do not think it is necessary to remind the House at any length of the way in which both this country and the world have been keyed up to the vital importance and necessity of some agreement being arrived at the World Economic Conference. We have been told that it is the way out of chaos, and that it is essential to come to some agreement to avoid ruin, and various phrases of that sort have been used which have impressed upon us the fact that we are not nationally self-sufficient and that we cannot cure the evil of unemployment without some form of agreement with other countries. May I remind the House of one or two significant remarks which have been made by Members of the Government? The Chancellor of the Exchequer on 21st February, speaking at Edinburgh, said: If we are to get back anything like our former prosperity and see employment once more increase, then we have got to have co-operation with other countries that will allow the foreigner to trade with us once more. Speaking in this House on 22nd March, he said: We cannot be satisfied with pious resolutions but must take joint and wise action to get some actual mitigation of the evils from which we are all suffering."—[OFFICIAL REPORT, 22nd March, 1933; col. 390, Vol. 276.] Perhaps the most significant expression which was given the widest publicity throughout the world was the final sentences of the Preparatory Commission in the draft annotated agenda, where it says: Failure in this critical undertaking threatens the world wide adoption of ideals of national self-sufficiency which cut unmistakably athwart the lines of economic development. Such a choice would shake the whole system of international finance to its foundations, the standard of living would be lowered and the social system as we know it could hardly survive. These developments, if they occur, will be the result not of any inevitable natural law but of the failure of human will and intelligence to devise the necessary guarantees of political and economic and international order. The responsibility of the Governments is clear and inescapable. We believe that that statement sets out in none too exaggerated terms the vital importance which attaches to this Conference. The joint statement of the Prime Minister and President Roosevelt in April said they were impressed by the vital necessity of assuring international agreements for the realisation of their purpose in the interests of the peoples of all countries. I think those quotations are sufficient to remind the House of the expectation that was aroused throughout the world and throughout that great mass of unemployed persons of over 30,000,000 in the world as regards the possibility and, of course, the dangers of failure in such an enterprise. We have stated—and we have been accused of pessimism—that in our view failure was inevitable because of the unwillingness of the Governments of the world to face the real issues which they ought to have faced.

The failure, in our view, is not due to the attitude of any particular country. Many people have sought to accuse the United States of sabotaging the World Economic Conference, and it seems to us that a precisely similar attitude has been taken up by practically all countries when they come up against some matter which they consider of vital interest to themselves. There has not been, as we see it, any real co-operation. There has only been an attempt by one country, or one group of countries, to try to make everyone else fall in with plans which they themselves think are most suitable for their own areas, whether it is the United States and questions of currency, or the block of gold countries and the question of the gold standard, or ourselves and tariffs and quotas and restrictions, everyone else's being bad and ours being the perfect sort, or whether it is the expansionist policy of public works.

We believe and always have believed that it is wholly impossible to maintain a fiercely competitive system and at the same time to bring about international co-operation. Exactly the same thing has happened as regards the Disarmament Conference. The competition between different countries has made it impossible to lead to any real co-operation. No one is prepared to sacrifice the things that they considered important for themselves. Indeed, we believe it is inherent in the whole system of industrial organisation under which the world is suffering at the present time. This is not the first time that the Government have said, "Just wait for the conference and all will be well," and, when it fails, turned round and said that of course, it did not very much matter. It was not of the greatest importance. Exactly the same thing happened with the Ottawa Conference. There was a statement made by the President of the Federation of Chambers of Commerce which was quoted in the House to which the Dominions Secretary said he gave his complete adherence. It was: If Ottawa failed to take the necessary steps to enable us to give a lead it would bring chaos. The outlook would indeed be black. I think everyone now realises that Ottawa did not make any very great contribution to the solution of the world's difficulties. Indeed, there are many people who take the view that the embarkation upon Ottawa before the World Economic Conference was one of the factors which led to the World Economic Conference failing. The House will, perhaps, remember the letter written on 25th October, 1932, by Sir Walter Layton to the Prime Minister when he retired from the Preparatory Commission, setting out his views as regards the difficulties which would inevitably be raised by the conclusion of the Ottawa Agreements before the World Economic Conference. Now we find that, not only has Ottawa done no good, but complaints are arising all over the House because it is said to be doing very much damage to the farmers of this country. Of the policy which I understand we are encouraging of bilateral trade agreements, a very good example was given yesterday. A question was asked on the bi-lateral agreement between France and Spain, and we were informed that representations would be made immediately, as it was going to affect some of our trade. Presumably bi-lateral agreements with ourselves are good agreements but bi-lateral agreements between other countries are dangerous things which must be watched carefully and interfered with where necessary.

We believe that it is really the refusal of our own and other Governments to face the completely altered circumstances of world trade which has rendered the World Economic Conference so futile. It appears that Mr. Roosevelt has at least realised that circumstances have changed and that some new means have got to be devised of coping with the changed circumstances, not merely a return to some fiscal policy which has always failed in the past but some definite new action has to be taken. We are not here witnessing a mere trade depression as the result of the old-fashioned idea of the trade cycle, although it seems to us that the Government, especially in speeches during the last few days, is trying to convince the people that we are. Anyone who makes an examination of the recent statistical figures as regards world population and world productivity must be convinced that productivity has far outstripped the growth of population and is presenting a new problem to the world. This enormously increased productive power which, of course, has been accompanied or brought about by mechanisation and the elimination of man-power in the productive processes, has permanently restricted, under the existing system, the consuming power of vast masses of the population of the world and, accompanied with the difficulties of retaining or getting markets, there has been a most intense drive for reduction of wages, reduction of services, reduction of taxation, reduction of local and central expenditure, and that in its turn, of course, just as rationalisation has in the industrial field, has restricted still further the consuming power of various people.

It is not only that difficulty that has arisen. We by our own action, by our exports in the past, have contracted our own markets at present and are still further contracting them for the future. We have developed industries ourselves in countries which have now become the most fierce competitors for the neutral international markets. That intensive competition, for which we ourselves have been largely responsible, has meant that we have less and less opportunity for expanding in the export markets of the world, and as a result we find international competitive capitalists of the world fighting for those restricted markets, and fighting indeed literally, when one comes to Japan with Manchuria and Jehol, and fighting figuratively in the many cases we have stated from time to time in questions in this House of the difficulties of our exporters in this country. We believe that to attempt to deal with a problem of that sort, without considering even the adoption of some completely new technique, is hopeless, and it is equally hopeless to try and solve it internationally unless there is a willingness among the nations to sacrifice their national interests to the international good. As long as they cling to their own particular national hobby, whatever it may be, and refuse to give way upon it, we do not see how you are ever to get a solution of the difficulty.

Not only is there the difficulty of markets, but there is the other difficulty, which still remains and which will become more and more emphasised, of the load of international debt which has been built up, and to which the World Economic Conference bas supplied no sort of solution. That debt in itself is the natural outcome of capitalist exploitation of different countries one by another. You have built up this great system of creditor and debtor countries, and the attempted transfer of commodities to satisfy those debts or the interest upon them is one of the things which is now blocking the further expansion of world trade. Just as tariffs, restrictions and prohibitions are the day-to-day weapon of the international capitalist in order to try and preserve his own home market for himself, so this other feature of the interest payment is the result of his activities in the past. It is true that when trade gets bad the international industrialists and the national industrialists are prepared to talk about working together, or recreating confidence, or greasing the wheels of industry, or removing the blockage to trade, or whatever it may be, but when it comes actually to doing something which sacrifices the competitive power in a nation they are not prepared to take any definite steps. That is what has happened with regard to the World Economic Conference. If they had been able to agree completely to wipe out the whole of international in- debtedness instead of making, as we have done in this country in the past year, elaborate arrangements by which the international financiers can continue to draw their tribute from the half-starving populations of the world, as in the case of Austria, they might indeed have made a great beginning in removing the blockages to international trade.

We are met with the suggestion that by means of the re-creation of confidence we shall get an increase of spending power. I cannot imagine anything more likely to stop confidence than the meeting of this long-expected Conference, which everybody said was so vital to the future of the world, and the breakdown which has occurred during the last few days. The theory of the return of confidence may be a good one to apply to the rich man who has money saved and who by the creation of confidence may be made to spend it. One appreciates that the theory may apply, therefore, to the luxury trade and to the capital goods trade, but it is not much good telling the unemployed man that his spending power will rise by a re-creation of confidence. He has 24s. to spend upon himself, his wife and family, and however confident he may he, he cannot spend any more unless he steals it.

So that the first necessity for the increase of spending power is not, we venture to suggest, any attempt to release the hoardings of the rich man, but is the attempt whtch is being made in the United States of America--whether it will succeed or not we shall see--to re-create the spending power of the working population of the country. That is the new factor in President Roosevelt's programme which at least seems to hold out some sort of hope for a solution of the problem of distribution. The time when we can merely keep the population of this country employed by producing luxury articles or producing capital goods for export, as we did at the end of the nineteenth century,I believe, has gone forever. Some fresh method of distribution will have to be devised,. and I do not see how it is to be devised either by the Government sitting still, or going about the country making speeches to say that the crisis is over. I hope that members of the Government will remember that the moment the crisis is over there are a great many cuts to be put back, and the people who were led to think that those cuts were due to the crisis, the moment it is suggested to them that the crisis is over, will make a very rapid demand for the putting back of those sums of money taken from the wage earners, the salary earners and the unemployed.

I ask the right hon. Gentleman whether he can tell us the policy of the Government as far as one particular point is concerned. Do they intend to try and increase the home markets' consuming power by raising wages and salaries, or do they intend to try and increase the export market by keeping down the prices of export commodities by keeping wages down and hours long, because those two matters must be approached in a completely different way. It is true that Mr. Roosevelt is trying to do both. He is trying to raise his salaries and wages and to shorten his hours internally, and then, by a currency depreciation, he is trying to get the beilefit of cheap exports as well. I think that it will very soon be apparent that those processes cannot go on side by side. He will never be able to force up his wages and force down his hours sufficiently quickly to overtake the rise in his prices, nor will he be able to preserve, if he tries to do it, the export market of America.

I think that as regards the activities of our own Government, the most cruel and cynical statement in regard to them was the one made last night during the Debate on the Mines Vote, when the hon. Member for Eastbourne (Mr. Slater) said that he considered the launching of the hydrogenation programme as the greatest achievement of the Government except the Conversion Loan. If one compares for a moment that activity with the sort of efforts which are being made in America to deal with the situation one realises how futile and fatuous are the attempts of the existing Government. We believe that, although Mr. Roosevelt's solution will not be a permanent one, it may be one which will assist in the inevitable transition which is going on throughout the world. Anything that can be done at the present time to relieve the terrible conditions of the workers of the world is something which will naturally be welcomed by us. He will find, in our view, that his attempt must fail unless he can go to such a point that he makes wages rise and hours shorten so as substantially to limit profits, and when he does that he will be met with the necessity for expropriating private ownership. Whether that will be the end, or whether the end will be failure, of course, nobody can possibly tell. But we are anxious to know whether the Government in this country are setting out upon a policy of continuing low wages, low taxes, economies, that is to say, and low social services in order to keep down the prices of export commodities, or whether they are intending to embark upon a home expansionist policy in order to try to expand the home market to take the place of the lost export markets. Those must be two completely definite and distinct policies. We have not yet had a statement from the Government as to which, if either, of those policies they intend to follow.

I think that the attitude of the Government on public works shows their state of mind upon that subject matter. The Prime Minister, on the 7th November, 1932, in this House in the course of a Debate, and speaking on private works and not public works, said: Again, do not let anyone imagine that, after this thinking aloud on my part, questions may be put down to-morrow and the day after asking what the progress has been. Everyone who has been at this kind of work knows that progress lags,— This was some eight or nine months ago, and it is still lagging but that, as long as the push is behind it, the moment comes when the results appear almost instantaneously. That is the method which we are going to follow.— [OFFICIAL REPORT, 7th November, 1932; cols. 50 and 51, Vol. 270.] We should be interested to know precisely what the push has done, and what the following of that method as regards private works have produced. As regards the question of public works the next important statement was that of the Prime Minister and Mr. Roosevelt in April, 1933, when they said: The Central Banks should by concerted action provide adequate expansion of credit and every means should be used to get the credit thus created into circulation. Enterprise must be stimulated by creating conditions favourable to business recovery and Governments can contribute by the development of appropriate programmes of capital expenditure. When the World Economic Conference was in its early days the right hon. Gentleman the Chancellor of the Exchequer, on 14th June, made the following statement to the Conference in the discussion on the question of public works: The question whether Governments can actively assist in this matter by schemes of governmental expenditure will also require consideration. The United Kingdom delegation will be very ready to examine with other delegate' s how far employment can be stimulated by such action…. The extent to which employment can be stimulated by Government expenditure necessarily depends upon the circumstances of each country and in particular upon the extent to which opportunities are still open for self-supporting schemes—which in turn must depend upon the extent to which in each country such schemes have already been promoted in the past. It is extremely difficult to know what is a self-supporting scheme. I do not know whether the right hon. Gentleman would say that the building of a secondary school is a self-supporting scheme. Presumably it is not because it does not make money, but I imagine that he was using the phrase "self-supporting scheme" there to mean one which was necessary for the welfare of the country in which the building took place. The important point to notice as regards this matter is that this question of public works is not being discussed in the void simply as a thing in itself but as part of an expansionist policy, as a means of getting the available credit into circulation. It is quite idle to look at the problem from the point of view whether public work per se is worth while or not. Having all this amount of available credit, how are you going to get it into circulation? That wars the problem with which the Prime Minister and Mr. Roosevelt were dealing and it was the problem of the right hon. Gentleman in the speech that I have quoted. It is a point of view which the Government, from the statements they have made in this House from time to time, do not seem to have appreciated. They look at public works themselves as they might do in a time of high interest rates and at a time when an expansive programme was not being carried out and deflation was actively being carried out in the monetary field. The result in the two cases is necessarily completely different.

The President of the 'Board of Trade made a speech at the World Economic Conference on the 13th July which surprised a good many people. Certainly it surprised the Prime Minister. I do not think he could have read the speech, judging from the answer that he gave in this House. He said that the statement made was directed primarily to the proposal made by the International Labour Office that facilities should be given for the issue of international loans to finance schemes of public works in Eastern Europe. The statement may have been dealing partially with that subject, but that was not what the statement said. The statement of the President of the Board of Trade said: We have formed our opinion, and it may be of interest to the Commission to know why we hold the view, that at present nothing would be gained in our attempting to extend our public works programme. Not in Eastern Europe, unless the right hon. Gentleman has become a member of a Government of Eastern Europe, of which I have no knowledge: We have in recent years devoted one hundred million pounds to schemes of this kind. The result has been that on the average for every million sterling expended we have employed 2,000 men directly and 2,000 men indirectly. In our view it is unduly expensive, and it is an experiment which we are not going to repeat. We have terminated our scheme for dealing with the unemployed by way of capital expenditure works and we shall not re-open these schemes, no matter what may be done elsewhere. That, I suppose, is what you call international co-operation in an expansionist way. I can say emphatically that for our purposes we are abandoning this policy once and for all, and we do not think we can usefully participate in any international scheme of a similar nature. Again, the right hon. Gentleman evinced a desire to extend the hand of friendship to Eastern Europe. If we are asked as a capital market to provide money or raise loans for this purpose, I think it is only right that I should inform the Commission that we could not do so. Not only are we determined not to carry out the expansionist policy advocated in the Commission itself but we are apparently determined to do what we can to prevent other people from getting assistance from us to carry it out. That speech was followed by the passage which I have quoted from the Prime Minister, to which he added the words that as regards public works in this country the policy of His Majesty's Government is in no way altered, and that we are providing or assisting to provide finance for schemes of a remunerative or necessary character.

What I want to know is, what do the Government think are schemes of a necessary character. It entirely depends on what the necessity is. Is the necessity to try and get credit into circulation, or is the necessity to disregard that altogether and simply to look at the scheme as a scheme and nothing else? I rather gather from what has been said before that it is the latter view which the Government are taking and not the view which the Prime Minister and Mr. Roosevelt took in the conversations which they had at Washington. We believe that it is the former view, the necessity of an expansionist credit policy that makes public works schemes of all sorts so essential at the present time, and it is because the Government have entirely failed to recognise that factor, that public works schemes are only part of a concerted scheme, that they have so completely failed to cooperate in this effort which was going to be attempted, possibly, if we had agreed, by other countries at the World Economic Conference.

We are not suggesting that public works or an expansionist scheme are per se any solution for the problem of unemployment, but we do say that you can by these means help to mitigate the immediate evils if you can speed up your circulation of credit. There are apparently no other means available. We may be told that there is hydrogenation. What is £2,500,000, to be spent in one and a-half years? That is not worth discussing when we are dealing with the question of the circulation of credit. It is very praiseworthy to get £2,500,000 spent, but when we are dealing with a problem of this magnitude that expenditure is not even a fleabite towards a solution. We believe that President Roosevelt is on the right lines so far as he is concerned in the shortening of hours and the raising of wages. That is an essential step to be taken, in association with public works, if you are going to try to solve matters along present lines.

We desire to put before the House a whole-hearted condemnation of His Majesty's Government for what we believe to be their very large share in the failure of the World Economic Conference—I know that there were other Governments that were difficult as well, and every Government must bear its share of the blame—and also for their failure, as we believe, to realise that there are quite new circumstances in the industrial difficulties of the present time which cannot be dealt with by the old method of merely having some fiscal arrangement or another, or having bilateral agreements as to trade, or anything else of that kind. Some imagination and enterprise has to be exercised in devising completely new remedies. We believe also that the Government are engaged at the present time upon a tragic attempt to mislead the country into the belief that the failure of the World Economic Conference really does not matter, that it is not a question of any great importance, because prosperity is round the corner and there are signs of the crisis being over. Time will show whether the crisis is over or whether what we are experiencing now is merely a slight temporary boom, which one is always apt to get. It is no use anyone attempting to prophesy as regards that. We are satisfied that even within the existing system, if the Government thought fit and if they had the enterprise of Mr. Roosevelt they could do a great deal by an expansionist policy to assist the workers in what may be the very tragic winter of 1933.

4.54 p.m.

Sir HERBERT SAMUEL

I do not propose to follow the hon. and learned Member in the earlier part of his speech, in which he took a general survey of the work of the Economic Conference. I have already had an opportunity of addressing the House on that subject, and I sympathise too deeply with the complaints from back bench Members which have recently found expression as to the inordinate share in the time of our Debates occupied by ex-Ministers, to venture on this occasion to detain the House for more than a comparatively short time. I will only say this in regard to the Conference, that its sad fate is only too clear. The valedictory speeches will be made in a few days from now, and I would suggest that possibly in those speeches use might be made of a quotation from an old English play, in which one of the characters says: Come, let us fall into each other's arms and vow an eternal misery together. I would ask whether the Prime Minister's statement which was made when we were discussing in advance the Economic Conference on the Easter Adjournment Motion last April still holds. He said: I believe that no great success can result from the International Economic Conference unless a large part of the obstructions which have been raised in the way of international trade have been removed."— [OFFICIAL REPORT, 13th April 1933; col. 2752, Vol. 276.] That is a clear and specific statement from the Prime Minister. Perhaps the Chancellor of the Exchequer when he replies to-day will be able to tell us how far that expectation, hope or desire has been fulfilled, or is likely to be fulfilled, as the outcome of the deliberations of the Conference.

I propose to devote myself solely to what was understood to be the main topic of Debate to-day, namely, the policy of what is known, I would submit incorrectly known, as the policy of public works. I hope that when the Government reply the answer will not be that the prospects are now so rosy, that the turn of trade is so evident, that the House of Commons need not trouble itself any longer very seriously on that matter. It is true that there are signs of improvement, and we all must earnestly hope that they will develop into a reality, and that next winter may not present the gloomy situation which the hon. and learned Member thinks may well occur. While we may entertain those hopes we can have no certain assurance. The fact is that there are still 2,500,000 people unemployed, and that owing to the economic situation of the country the burdens upon the taxpayers are still enormous, and there are little signs that they will be able to be lightened.

When some of us venture, here or in the country, to criticise the measures taken by the Government we are chided, either gently or roughly, for venturing to criticise. We are told that the crisis is still with us, that national unity is still most necessary and that any criticism is regarded as an. act of hostility. But a moment later we are told that the corner has been turned, that thanks to Ottawa and the other great measures taken by the Government, trade is on the upgrade, there need no longer be any grave anxiety as to the position of the nation. I trust that the right hon. Gentleman will not repeat the unduly optimistic speech that was made on behalf of the Govern- ment a few days ago by the Parliamentary Secretary to the Board of Trade, according to which everything was for the best in the best of all possible worlds, and that mainly because of himself and his colleagues the situation of the nation could now be regarded as not unsatisfactory.

It is not long ago since the Chancellor of the Exchequer surprised the House and the country by using a, phrase that quickly became famous, when he said that we could have no assurance that unemployment figures would return to reasonably small proportions in a period of less than 10 years. Why he should have said that I have never been able to understand. How anyone not gifted with omniscience could say what will be the state of the country in 1942 or 1943 passes my comprehension. The condition of the country may be better in that period or it may be far worse. If the right hon. Gentleman holds as a fact that for a whole. decade we are likely to have such a serious state of unemployment, it follows not merely that we should take such steps that are possible to give the unemployed o temporary occupation and part-time training for trades, but that we should with energy arid resolution adopt whatever measures are possible to bring them back into actual work. The term "relief works" was frequently used by the Government in the earlier days. They said that they were opposed to a policy of relief works*. That view is shared by everyone. There is no one who is in favour of relief works, meaning the expenditure of money upon works which do not really require to be done for their own sake but for the sake of giving employment. That is the proper definition of relief works, and to that the whole House is opposed.

Now we hear of public works, and while that expression is generally understood it is only a part of the policy which many of us on these benches have actively advocated. A far better name is a policy of national development, of which public works are an important part but only a part. Much of a policy of national development can be carried into effect by private enterprise, either alone or sometimes assisted and encouraged in a variety of ways by the State or by public corporations. Private enterprise must play a very considerable part. The hon. Member for Central Southwark (Mr. Horobin) in one of his bright speeches suggested that it appeared to be considered that nothing is done in a country except when the Government is doing it. Many people hold the view that unless the Government is taking action nothing is being accomplished. We do not hold that view, and if private enterprise can by its own energy restore prosperity in a large degree we should regard it as most satisfactory and as a triumph for the country, as well as a valuable means of effecting the purpose we all have in view.

On the other hand, we on these benches do not hold that it should be left solely to private enterprise. Hon. Members of the Labour party are continually suggesting that we on these benches advocate a policy of laissez faire, because in. the middle of the nineteenth century the Manchester school, which was an important and influential section of the Liberal party, held the theory of laissez faire and their policy was definitely based upon that principle. It was never the accepted and official policy of the Liberal party as a whole, and during this century Liberal policy has been entirely different. It has not been based upon the principle of laissez faire. All the great activities of the Government from 1906 to the time of the War in 1914 paid no attention to the principle of laissez faire. Year after year, session after session, a, whole body of constructive legislation, social legislation, industrial and commercial legislation, was passed which was the very negation of the principle of laissez faire, and I doubt whether there is a single Member of this House who now holds the doctrine of laissez faire unless it is the hon. Member for Mossley (Mr. Hopkinson). Because we are against tariffs and regard them as a clumsy, costly, and ineffective way of promoting national development, destructive of international trade and protective of inefficiency in industry, because we are against tariffs as a form of State action, it does not follow that we do not favour State action in a variety of other directions, and, particularly, in the sphere of national development.

It is not a new policy. It was advocated 20 years ago by the Liberal party of that day. The whole policy of road development was the result of a recognition that with the advent of the motor car it was essential to have an entirely new system of roads, which could not be provided by the ordinary highway authorities, which must be planned on a national scale, and owing to the constructive energy of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) the Road Board was established by his famous legislation of 1909, and was provided with a revenue. The outcome of that action by the Liberal Government of that day has been the vast system of roads which are the pride of the country. That is an instance of useful national development. The electric grid, for which the Conservative Government of 1925 to 1929 was responsible, an admirable piece of socialistic legislation, is again an example of national planning of the same kind. The right hon. Member for Carnarvon Boroughs and many of us for a number of years past have protested against the inadequate development of the telephone system. We pointed out that we were tenth in the scale of nations making use of the telephone. We were told that nothing could be done because of the trade depression, that the Post Office was doing everything possible, but, suddenly, there comes along a Postmaster, the hon. Member for Limehouse (Mr. Attlee) followed by the present Postmaster-General, and we find that with a little enterprise, energy and expenditure, a very great deal can be done. We have the telephone development which is now proceeding.

The great Southampton Dock, which has been opened to-day by His Majesty, is another example, and in the sphere of ordinary industry the dyeing industry has been created since the War, at the request of the consumers of dyes themselves, by special State assistance designed for that particular purpose, and a great and successful industry has been built up bringing with it a large export trade. For my part I have always supported it but the period having lapsed for which that special assistance was designed, in the view of many of us, it having fulfilled its work, it is no longer necessary. To-day we have a great development in the steel industry. The large importation of steel into this country was not mainly because of low wages in Belgium but because the kind of steel which is needed for certain purposes, cheap Bessemer steel, was not made in England, and had to be brought from abroad. A fine new establishment is now being erected at Corby in Northamptonshire, and for my part I should be prepared to consider such special arrangements as may be necessary in order to secure that experiments of that kind should not be a failure. Similarly, there is the case of the bacon industry. We have had great importations of bacon from other countries because in this country agriculturists did not breed the right kind of pig, and did not feed them in the right way in close connection with the dairying industry. The Agricultural Marketing Bill of the late Government contains schemes for encouraging an industry of this kind. National planning in this way is good, and ought to be actively supported.

But in all these cases, and whenever fresh cases are proposed, we must count the cost. We cannot say that everything may he done by a lavish expenditure of the taxpayers' money without regard to the amount of money required to produce a given result. The House has laid upon the nation enormous charges, and by financial recklessness, for which various parties in turn have been responsible, our finances have been plunged into confusion. Some thirty million pounds were given away under the Corn Production Act as a subsidy, in fact, wasted. Thirty million pounds were given as a coal subsidy, also largely wasted. Many millions were given under de-rating and many millions on widows' pensions, an admirable cause, but the revenue inadequately provided for at the time; and the most classic instance of all, the beet sugar subsidy, which has cost the taxpayer over £30,000,000, for which he certainly has not got £30,000,000 of benefit. There are advantages no doubt to a particular constituency in which there are beet sugar factories and farms; any district which has £30,000,000 spent in it within a short period will necessarily prosper. The figures, which have not been challenged, show that for every man employed in the factories or in the fields in the beet sugar industry the taxpayer has had to find per man per day, 25s.

Similarly, when we come to the question of oil from coal—some hon. Members have protested against the course taken by the Liberal party on this point. That there should be the best possible use of coal is an object which we all desire. I had the honour of being the Chairman of a Royal Commission on the coal industry, which unanimously reported with great emphasis that the real hope for the British coal industry for the future lay in the scientific utilisation of coal. Instead of merely throwing coal into use in a crude raw state it should be split up into its constituent elements, which should be separately used. Here again, the right hon. Member for Carnarvon. Boroughs has been advocating that policy as part of a coal policy for many years past. At the time of the Royal Commission the low temperature carbonisation process was the one chiefly advocated; the Commission recommended that experiments should be made and that every possible assistance should be given to this and to other processes. But we did not suggest that it should be done altogether regardless of cost. The cost is a matter which should be considered in every one of these cases. The present proposal is to give a rebate on oil produced at home, a rebate of 4d. per gallon. The effect of that upon the Exchequer financially is precisely the same as if the Exchequer charged the usual rate of tax and then paid out a subsidy of 4d. per gallon. It is obvious that if you give a rebate of 4d. it is precisely the same as if you give a subsidy of fourpence. How much this is going to cost the Exchequer is uncertain. As the Secretary for Mines pointed out, it depends on a number of factors which cannot at present be determined. He said that the scheme when in full working order would employ 4,000 men so far as this one plant is concerned, and that from the amount of petrol which would be produced the rebate, it was not an. unreasonable figure to assume, would be about £1,000,000 a year, it might be more or it might be less.

The SECRETARY for MINES (Mr. Ernest Brown)

I said that it might be 2500,000 or £1,000,000, if certain assumptions were granted.

Sir H. SAMUEL

The hon. Member did not dispute the fact that £1,000,000 might prove to be a reasonable figure.

Mr. BROWN

Always on the assumption which I carefully laid down.

Sir H. SAMUEL

Yes. There might be a rebate of £1,000,000. It will employ 4,000 men. That means £250 per man. If there is a saving on unemployment pay, say of about £50 per man per annum, the cost to the Exchequer would be about £200 per man per annum, or 13s. per man per working-day. The House of Commons is in duty bound to take these facts into consideration. It is not enough merely to say, "We want to help the coal industry; we want to make this experiment; we want to see the scientific utilisation of coal." We must count the cost in each ease. I do not deny that it may be worth while, that its cost may not be excessive. We may be giving encouragement to a scientific and industrial movement which will be of immense value to the whole country, and it may be worth while. All we asked was that these points should be examined, and it was for that reason that we suggested that this House, before it gave its sanction, ought to have evidence upon these matters and see whether it was probable that the advantage to be gained would be worth the very heavy cost.

Always in any popular assembly such as this, in every country, there is a temptation at one and the same time to urge increased expenditure and lower taxation. There is no democratic Parliament in the world in which that does not, happen, in which politicians do not endeavour to put into effect the simple political maxim of the candidate for Parliament, who said that his view of finance was that there should be "more from the Treasury and less from the taxpayer." In this connection we would strongly dissent from the point of view put forward from the Labour benches yesterday. They suggested that this money ought to be found by the State, that these millions should be ventured out of public funds. I cannot imagine any case more risky and speculative than this, or more improper for the investment of the taxpayers' money. Besides which, the State has not got the technical organisation or equipment winch would make it likely that it would succeed. The hon. and learned Gentleman who spoke from the Labour benches, and his friends, are always denouncing the system of private enterprise run for profit. They would substitute for it a system of public enterprise run for loss.

Each case must be dealt with on its own merits. Yes, but you should have a, purpose, a general attitude, a policy. In 1931, at the time of the financial crisis, the 'Government had a definite policy, that all borrowing must stop. I shared the responsibility for that, and I still think that it was necessary at that time, in view of the financial situation. But as soon as the immediate crisis was over that policy ought to have been changed. Now what we ask Members of the Government is, Haw far are they still continuing the policy adopted in the summer of 1931, and how far do they recognise that after the Conversion Loan and the restoration of financial confidence, with the plethora of capital now in the banks, it would be proper now deliberately and avowedly to change the policy of 1931?

We had in this House a three days' Debate on unemployment. Apart from all party considerations many Members made their contributions in the Debate, and there was a general demand in all quarters for a forward policy in regard to development. Outside, economists like Sir Walter Layton and Sir Arthur Salter strongly urged the same thing. My hon. Friend the Member for Finsbury (Sir G. Gillett) wrote a notable letter to the "Times" on these lines, and it was endorsed by that newspaper in a striking leading article. The County Councils Association has submitted a large policy of public works. The International Labour Office, consisting of representatives of Governments and employers and workers of all the chief countries, has unanimously passed a resolution on the same lines. There is a widespread public opinion in favour of such a policy. When the Prime Minister was in Washington with President Roosevelt he issued that pronouncement which has attracted so much attention. It included these words: Enterprise must he stimulated by creating conditions favourable to business recovery, and Governments can contribute by the development of appropriate programmes of capital expenditure: "Governments can contribute." The hon. and learned Member for East Bristol (Sir S. Cripps) quoted the statement of the Chancellor of the Exchequer at the World Conference: The United Kingdom will be very ready to examine with the other Delegations how far employment can be stimulated by such action. That is a reference to schemes of Government capital expenditure. Then came the speech of the President of the Board of Trade. Following upon those clear and specific declarations it was a speech which I hope I shall not offend him by describing as curt, contemptuous, perfunctory and purely negative. He said: We have terminated our schemes for dealing with unemployment by way of capital expenditure works, and we shall not re-open those schemes no matter what may be done elsewhere. That was after the Prime Minister had said that Governments can help by providing programmes of capital expenditure, and after the Chancellor of the Exchequer had said that the Government would be ready to confer with others as to the right course to take. On 1st May, after the joint declaration of the President and the Prime Minister, I put a question asking what steps were to be taken. The Lord President of the Council replied that in the statement there was a passage indicating that the questions there raised "were all inter-related and could not be settled by any individual country acting by itself." Consequently he deprecated any immediate discussion. Then came the President of the Board of Trade who stated that "the question is one for each country to decide by itself."

What is the view of the Government? Is it that there ought to be connected action by the various Governments, or that each country is to act by itself? We have clear, definite and opposite opinions presented by two leading Members of the Government. Similarly the Prime Minister in his inaugural speech to the World Conference said that it would be hopeless to attempt to deal with these questions of trade barriers piecemeal. But the President of the Board of Trade said: One thing is certain—that unless we are prepared to proceed piecemeal it will be impossible for us to achieve anything. When we were Members of the Government there was an agreement to differ. Is there another agreement to differ now? At all events our disagreement was open and public. We tendered our resignations. We were asked to withdraw them. We withdrew them on condition that we could state our disagreements in the House and in the country, and vote accordingly. But now we have the diametrically opposite statements which I have quoted from various Members of the Government, expressing complete divergence of view. No wonder the Prime Minister is accustomed to take refuge in rose-coloured, sweet-smelling clouds of rhetoric, and in what has been called a policy of blur, so that no one shall really know what is the precise policy of the Government. I do not demur to the negative given by the President of the Board of Trade to the suggestion of a great international loan to which we should contribute. There is a good deal to be said for lending money abroad in order to stimulate our own industries and their development, but the difficulty is to find countries which are credit-worthy. I see no reason why this House should be asked to give loans which would result merely in the loss of the money that is lent.

Finally, there is this large programme of possible undertakings which would be available with a policy of national development: Roads—It is absurd to think that our whole road system was completed and perfected in 1931. The Royal Commission appointed by the Conservative Government, with Sir Arthur Griffith Boscawen as Chairman, urged the necessity for many improvements in our existing roads. Telephones--there is still a vast development possible there. Buildings—the Building Industries National Council have circularised Members of this House saying that the whole outlook is befogged by uncertainty to-day due to the confusion created by differing authoritative statements as to the Government's intentions in respect of public works programmes generally, and urging that this House should press the Government for a clear and unambiguous statement. Land settlement and Empire migration—In these matters we should not limit our attention merely to national development, but consider the Empire, which is of equal importance. Land drainage and rural water supply—There was an interesting Debate in this House opened by the Noble Lord the Member for. East Norfolk (Viscount Elmley). We might also well urge that the electrification of railways should be further examined. On that subject there was a most elaborate expert report issued not long ago. Then there is the Charing Cross railway bridge, the continued existence of which is an insult to the Capital of the Empire and to the Empire itself.

The question is, have we a Government which is determined to get things done, determined to show something of the spirit which has been in evidence in Italy and in the United States Or is it a Government which is only seeking to find reasons for inaction? There is the fundamental absurdity which is patent to all of us, that there should co-exist all this idle labour and idle capital and unsatisfied need. The masses of the people see is clearly. It angers them and they resent it. They demand from their Government a continuous and a strenuous effort to bring those three factors, labour, capital and need, into a proper relationship, and this House, if it really represents the will of the nation, should make itself the urgent spokesman of that demand.

5.28 p.m.

Sir JOHN WARDLAW-MILNE

About three-quarters of an hour ago my right hon. Friend the Member for Darwen (Sir H. Samuel) announced that he would occupy a very few minutes only in addressing the House on a point which he thought ought to be specially brought before it to-day. That was the question of public works. I am sure he will take no offence if I suggest that the right hon. Gentleman, having travelled over the whole of England, having mentioned many of the schemes in the various books of all colours published by the Liberal party in years past, having told us of all the various proposals which ought to be carried out, ended by telling us in what might be described as emphatic language that none of these things should be done if the cost could not be met and if they were not in themselves remunerative. He complained very bitterly of a speech made by my right hon. Friend the President of the Board of Trade, which he described as purely negative, and asked what scheme the Government had in view. I am bound to say, with the greatest respect to the right hon. Gentleman, that although I have listened to many of his speeches with the greatest interest in the past, I listened to this one to-day without realising in the end exactly what it is that he now wants. I realise that he put forward the desirability of all these public works being carried out, but if he at the same time stipulates for all the various conditions which he set out as necessary for any prudent individual or Government to take into consideration to be carried out, it is clear that a great many of the projects could not possibly be brought into actual operation.

The right hon. Gentleman also intimated that he thought perhaps this was a time for dealing more with the details than with the subject of the World Conference as a whole. I do not agree with that view. A great many of us for months, indeed almost for the last two years, have kept very quiet—more silent perhaps than we liked—in connection with world economic affairs, first because of the possibility of this conference being called and then, when it was called, in the hope that there would be a successful conclusion to its labours. Many people who had grave doubts as to the possibility of achievement at. this time responded to the implied request of the leading Members of the Government and indeed of statesmen of all countries that every chance should be given to the conference to achieve success. Some of us felt that while there was little chance of real results for a World Conference in the present conditions of the nations, that it was not opportune that we should say so long as there was any possibility of even a partial agreement when the representatives of these 66 peoples met together.

I maintain that the House is entitled and indeed is bound, before we disperse at this time to consider the situation in which we now find ourselves. It is not a question of considering who is to blame. That is not the point. It is not a question of considering whether the Government are or are not largely responsible for the failure of the conference. I do not believe for a moment that they are responsible. I believe that this Government and indeed the Governments of the other nations did their utmost to get agreement. What we are bound to consider first at this stage is the question: What were the causes of failure? The consideration of that question may help us to success in the future. That is the first point which we have to consider. The second is: What is to be the position of Great Britain and of the Empire as a whole in the situation in which we now find ourselves? That is a subject which we are entitled to discuss to-day and it is of vastly greater importance I suggest with great respect than the more detailed points to which the right hon. Gentleman the Member for Darwen devoted himself during the last three-quarters of an hour.

Sir H. SAMUEL

Half-an-hour.

Sir J. WARDLAW-MILNE

I wish to put this consideration before the House. People have had great difficulty in understanding the attitude of America. There has been a great deal of misunderstanding in this country of America's attitude and a great deal of blame has been attached to the President. and the people of the United States because they were not able to implement the arrangements which were indicated when the Conference was first called in regard to an agreement on currency policy. Most of those who have attempted to study this subject are, I think, in agreement that, situated as the United States is to-day, it was impossible, at this moment, for her to enter into any agreement to stabilise the dollar. The position in a few months may be different, but the United States at present is in a totally different position from this country. The export trade of the United States compared with their total volume of trade is small, whereas we are entirely dependent upon our export trade. What is possible for us is not possible for the United States. They have to consider, far above everything else, the position of the raw material producers within their own borders. Therefore, we have no reason to find fault with the United States because they were not able to come to a currency settlement while they are engaged in a great experiment the success or failure of which will affect the whole world. It is perhaps unfortunate—and it is not doing any harm to say so plainly now—that being the case, that the Conference was called at all. I think we shall be doing no good to-day if we seek to gloss over the fact that the Conference has, on the whole, been a failure. It has failed through nobody's fault, and though we may hope for results and advantages from it at a future date, it is no good pretending that it has been a success so far.

If we cannot get a world agreement regarding stabilisation of currency this House should consider, I venture to suggest, what is to be the attitude of the Government of this country, and indeed of the Governments of the Empire, as to our future currency and financial policy. If we cannot yet get agreement with the United States, it is equally clear that we do not want an agreement binding us to the Gold Standard countries. We have suffered ever since the War from a continuous policy of deflation. The policy of the Gold Standard countries, so long as they can hang on to a so-called Gold Standard, must be one of deflation. In reality, Switzerland and Holland are the only two countries on gold. Other countries are on gold on a very depreciated form of franc, or whatever the currency may be. Leaving that point aside, however, it is clear that if our policy is not to be one which will keep our currency in tune with the dollar, we do not want to waste time trying to support the franc. That is what I am afraid of if our present policy is continued. The Chancellor of the Exchequer upon numerous occasions has truly said that what we all want is a rise in prices. He has also said, with equal truth, that that cannot be achieved by monetary action alone. But there the right hon. Gentleman has stopped short. He has never told us what else is required.

We all agree that monetary action alone will not raise prices, but I suggest to all who believe in the desirability of raising prices that our hands are now free and that it is now for us to say what action Great Britain is prepared to take to bring about that result. If we follow the trend of prices since we went off the Gold Exchange Standard in 1931, we find that, although sterling prices have gone up and down more or less in the same manner as gold prices, they have never or almost never fallen below the level of the day when we went off gold, whereas gold prices have gone sometimes 10 points, sometimes 25 points lower than the basis of September, 1931. If we want to raise prices, it is clear that we must disregard gold altogether. It has no bearing upon prices in this country. A Gold Standard may be the best kind of Standard for some future day, and I would so far agree with the Chancellor of the Exchequer as to say that I do not think any better standard than gold has ever been put forward. But there is no possibility that any human being alive to-day can see, that within a reasonable time we can return to the Gold Standard on lines which would be approved by the Gold Delegation to the League of Nations. That delegation has laid down many conditions which must be fulfilled before the world returns to gold. We need not go further than the first condition which is, that the gold of the world should be redistributed. But it cannot be redistributed without upsetting the whole basis of world trade. The sooner we get away from the idea of gold as the one thing that matters to us, the better it will be for the future of our trade.

The hon. and learned Gentleman who opened this Debate spoke strongly of the desirability of following here the system now proposed in America of forcing higher wages and shorter hours. I agree that those are very desirable things, and I think there is not an employer in this country who would not like to pay higher wages and who would not be agreeable to adopt shorter hours, but to achieve those two things a third thing is necessary. There must be profits, otherwise the employer has not the money to pay the higher wages. Unless he gets higher prices he cannot pay the higher wages, and unless he pays the higher wages he cannot get higher prices. So it goes round in a circle. If we make a condition that the employer must first pay the higher wages, it is clear that we are going to have difficulty in starting the circle revolving in the opposite way. Although it may come as a corollary of other methods, the forcing of higher wages alone is not going to achieve the end in view.

Then the right hon. Gentleman the Member for Darwen and other speakers in previous Debates on this subject have put forward the idea of public works. Remunerative public works can only be carried out to a very limited extent. It was said the other day, I think by the President of the Board of Trade—I apologise if I am incorrect in fathering the statement on the right hon, Gentleman—that during the period of the Labour Government, £200,000,000 was spent in two years to employ 114,000 men. Whatever the exact figures are, I think it is clear that the amount which the country can spend remuneratively on public works is limited. Therefore, that is not the way. Although, as I say, I agree with the Chancellor of the Exchequer that monetary action alone will not raise prices, I urge upon him that it is by monetary action first and foremost that we can begin the rise and from which will follow other actions to secure the end we have in view. As long as we keep money dear we keep everything else cheap. We keep prices down. There is a perfect balance. If you keep money very -dear you make all your prices cheap. If you make money cheap you make prices dear.

Lieut.-Colonel CHARLES KERR

Is not money cheap now?

Sir J. WARDLAW-MILNE

Money in the sense in which I am speaking now is not cheap. Money is cheap in the sense that it cannot be employed. That is a totally different thing. Money is locked up in the banks merely because people cannot employ it, and they cannot employ it because they cannot get profits on low prices. I suggest to the Chancellor of the Exchequer that while it is true perhaps to say that monetary action alone will not raise prices, it is equally true that monetary action must precede every other kind of action if prices are to be raised. Holding those views, I am bound to face this situation. The world, as shown by the result of the Conference, is not, unfortunately, able—though I think it would be very willing—to come to a settlement to enable goods to be freely exchanged on a basis upon which the seller and the buyer would build the financial transaction between them and know that their moneys were going to be stable for a sufficient period to make the transaction profitable. I cannot see any chance at present of world currencies being anchored to a common basis.

What then are we to do? I suggest that there is no reason why we should wait for America or for the rest of the world. Let us, by all means, work with the United States as soon as the United States are able to join us, but I firmly believe that we can make a start within the Empire which will bring not only the sterling group now but the whole world eventually on to one common basis of currency stability. It has been said that it is impossible to do these things until the whole world is ready to act with you. I would remind the House that there should be no more difficulty in exchanging currency than in exchanging goods between here and Melbourne, or between here and Edinburgh. We send our money from here to Edinburgh or, if you like, from here to Cairo, under a system which has worked satisfactorily for years. It is the system of currency stability which makes the transactions of our traders between London and Cairo simple and secure from risks which no trader should require to undertake. It is a system of depositing credits, or, in the case of Egypt, actual securities against note issue. It has worked, not only in the last few years but over a long period, through times of great inflation and through times of great depression. In the case of Egypt, when the cotton crop was being sold at very high prices and tremendous demands were made on the Egyptian currency system, and again when cotton prices were at the depth of a depression and there was very little demand, still the system worked perfectly smoothly. For the past 16 years we have been working a system between this country and Egypt which, to my mind, could be expanded to the rest of the Empire if it was ready and willing to join with us. I see my right hon. Friend the Secretary of State for the Colonies in his place, and he is well aware that the same system applies in some Colonies of the Empire and has worked smoothly for many years.

I suggest that it is worth the while of my right hon. Friend the Chancellor of the Exchequer and his advisers to consider that, now that we are not able to bring about at once a world currency stability plan, there is nothing whatever to prevent the Empire going ahead and forming one for itself. Three things perhaps will be necessary, but they are none of them insuperable obstacles. It will be necessary, no doubt, to ensure that each one of the countries, or parts of the Empire joining in the plan should have a common honesty policy in regard to its budget. In the Empire, at any rate, I do not think we need be afraid of that. The second thing is that it will be necessary to have a more or less common central banking policy, but there again we have largely got it already, and I do not think it is a matter which would produce very great difficulties. Having got those two, the third condition is that we should establish a central organisation. It is immaterial where it is settled, and it does not in the least require one unit of currency for the Empire. There is no reason why we should not continue to use rupees in India and dollars in Canada, for example. All that we want is to settle one approximately fixed basis upon which the currencies of the Empire can be exchanged to form the foundation for the exchange of our goods. If we did that, I think the sterling nations would promptly join us. They are anxious to keep in convoy with us to-day, and I firmly believe that if we did that, it would be but a very short time before all the rest of the world would be more than anxious to come into our currency circle.

Having said what I have said, I would ask the Government quite clearly to take the House and the country into its confidence. I fully appreciate what this Government have done. When I think of the days that are past, when I think of the conferences, the continual meetings, and perhaps not less than anything else the continual entertainments in which Members of the Government have had to take part during the last few months, I do not think anyone will hesitate to offer them a bouquet of thanks and appreciation for what they have done and tried to do in consultation with the nations of the world. I do not suggest for a moment that anyone is to blame that we have not got more success as a result of the World Economic Conference, bet I do suggest that at this moment, when Parliament is about to disperse for a time, the House, and the country, is entitled to know what is the Government's policy and whether in fact they propose to go ahead, now that we cannot get a world settlement at once, on some scheme for the Empire or to initiate negotiations with other units of the Empire, so as to bring about still better facilities for our own trade and in that way lead, as I hope, to an extension of world trade with us and beyond our borders.

I think the right hon. Gentleman the Chancellor of the Exchequer would do a very great service to the country if he would give us a lead at this time. Those of us who are interested in this subject are undoubtedly bound to be without full knowledge of the Government's policy. The right hon. Gentleman cannot expect us to be anything else. We read on the one hand inspired reports about how marvellous it is that India should be sending us gold. It is good for India, and I am very glad that India is selling gold at a very high price. I have always been taught in business that it is good to sell when prices are high. Therefore, it is good for India and for us in one sense.

Colonel WEDGWOOD

Why?

Sir J. WARDLAW-MILNE

For us, because we are able to get that gold. It is good for us that there is some State in the Empire, if we want gold, able to sell it to us, but when we come to why we are buying, I am bound to say that I find myself in the curious position of not realising the Government's objects in buying gold at all. It is good for India to sell gold at this price, but why is it good for us to buy it and store it? I can understand our buying it to sell it at a profit to somebody else, but why we should buy this quantity of gold, and what is going to happen to these purchases if the world eventually is not able to come to a settlement for the free use of gold and the price falls, I do not know. These may be very simple questions, and it may be that the right hon. Gentleman will feel that I am putting to him questions that I ought to be able to answer for myself. All that I can say is that, with a very earnest desire to assist, as far as a mere back bencher can assist, in the Government's financial policy, I do not and cannot understand what has been in the last few months, and what to-day is, the real object of that policy.

It is not good enough to tell the House and the country to-day that you cannot raise prices by monetary action alone, unless you are prepared to go further and say how you propose to do it. It is not good enough to say that confidence is wanted. Confidence does not fall like manna from heaven. Confidence wilt come by our giving the people knowledge that the past policy of deflation is at an end. There is not the smallest difficulty in the people of this country carrying out such works as can be done remuneratively —only they would not then be public works—if the schemes are on a business basis and they have confidence in the future of our currency and financial policy. I have the greatest admiration for the Chancellor of the Exchequer and the way in which he has managed the finances of the country during the past year. I have the greatest admiration for his setting up of the Exchange Equalisation Account. I think it was a great idea, although I am bound to say that I do not quite know how it is operating. [HON. MEMBERS: "Oh!"] There is nothing inconsistent, I suggest, in making those two statements. I think that anything that is aimed at keeping exchanges stable —and to a large extent I gather that it has had that result—is all to the good, and I support it, but I should like to know what the position of that fund really is. That, I take it, we shall not be allowed to know. Still more I would like to know what is the position regarding the £170,000,000 of gold that we now have.

If the policy is merely to wait and see what happens in the future, this country will go on in a rut, and we shall not take that lead in the world's affairs that we could take to-day. I know that I shall be accused of having attacked the Government, but I do not look at it in that way. I think the Government have been muzzled and shackled until to-day. They have muzzled themselves, and for the very best of reasons, because if a world agreement could have been come to, it was to the interest of everybody that it should be brought about. But we are now in the position that that cannot be achieved at present, and that being so, we are entitled to ask that the Government should go ahead freely, without hesitation, on an Empire policy which will bring back real prosperity to us, our Dominions and Colonies, and in the end will benefit the trade of the world.

5.54 p.m.

The CHANCELLOR of the EXCHEQUER (Mr, Chamberlain)

Although I am very anxious not to trespass unduly upon the time of the House, after watching the example of the hon. Member for Kidderminster (Sir J. Wardlaw-Milne), who has just preceded me, and who has himself taken up, I think, nearly as long as the right hon. Member for Darwen (Sir H. Samuel)—

Sir J. WARDLAW-MILNE

I spoke for exactly 23 minutes, I think.

Mr. CHAMBERLAIN

I was going to say that I was not going beforehand to set any limit of time that I should find it necessary to occupy, but I think the Debate has progressed sufficiently far to indicate fairly clearly what the House would desire to hear from me this afternoon. We are in the position that the World Monetary and Economic Conference is to be adjourned to-morrow, and the House desires, I presume, to have from me any comments that I might appropriately make upon the situation produced by that adjournment, and any enlightenment that I can give it as to British policy in the near future.

First of all, I wish to deprecate the attitude of what seems to me extreme pessimism taken up both by the hon. and learned Member for East Bristol (Sir S. Cripps), who opened the Debate, and, as usual, by the right hon. Member for Darwen, who hoped that to-morrow the delegates would "fall into one another's arms and pledge ourselves to eternal misery." Fortunately, it is not into his arms they are going to fall, and, therefore, there does not seem to be any occasion to take a gloomy view of the future. Do not let us talk as if the adjournment of the Conference was synonymous with the completion or the conclusion of the Conference. I think that everybody who will look up in the dictionary the word "adjournment" will find that it has not the same meaning as the word "conclusion," and it is perfectly clear and plain that the Conference has been obliged to adjourn—I am not going to mince words about it—without being able to tackle the most important part of its agenda, because conditions supervened after the Conference began which made it impossible for the time being to continue its discussions usefully upon some of the most important points that it had intended to debate. One can say that without attributing blame to any Government or country concerned. I entirely agree with my hon. Friend who said that in the circumstances which prevailed in the United States recently it clearly was impossible for their Government to contemplate a temporary stabilisation of their currency.

Well, we had to accept that position, but it does not mean, because we accept that position, that we think that is a permanent condition of affairs. It is quite obvious that those very conditions which brought the Conference to an earlier conclusion or an earlier adjournment than we had expected are not of a permanent character. They are circumstances which are bound again to change, and I see no reason why anybody should assume that when the circumstances have changed, when some sort of stability has been arrived at which will enable the countries again to discuss these questions in an atmosphere of tranquility, there should not be a reassembly of the Conference. A reassembly of the Conference does not necessarily mean that all the same individuals come back. After all, this is a Conference of many nations, and it is always possible, if one member of a delegation is not able to come back, for some other representative of his country to attend.

I do not in any way qualify or derogate from any statements that I have made at any time on the general subject of the necessity for international co-operation if we are to win back international prosperity. I do not in any way withdraw what I have said to the effect that we cannot ourselves expect to attain full national prosperity except by means of the restoration of international prosperity, and since some of the factors which are necessary to restore international prosperity are undoubtedly international in character, and can only be removed by international co-operation, it is quite clear that sooner or later, in one form or another, the countries have got to get together and come to an agreement about them.

The hon. and learned Gentleman who opened the Debate stated that there was a new factor in the situation owing to the advance of mechanical science and the displacement of labour by machinery. He knows very well that I have for long taken a serious view of that factor and have stated over and over again that it was, in my judgment, one of the most urgent and most difficult problems which the world has got to solve. The right hon. Gentleman the Member for Darwen said he had never been able to understand what I meant by saying that I did not imagine that we could expect to get back to comparatively small figures of unemployment for another 10 years. That was precisely the consideration which I had in my mind, as I have explained more than once to the House; it is because I see that labour is daily being displaced by machinery and economic devices that I say that that must add to the unemployment problem, not only in this country, but in every industrial country in the world.

The United States are trying an experiment on a gigantic scale of extraordinary interest, and all of us are watching it to see what is going to happen. I hope that the hon. and learned Gentleman is mistaken in his view that it must result in either a complete failure or in the expropriation of the capitalist. I do not think that that is necessarily the dilemma which has to be faced. But, undoubtedly, the experiment is one of which nobody can prophesy the result with any confidence at this stage. One can say, however, that the conditions in the United States are probably more favourable for the success of such an experiment than they are anywhere else. It was pointed out by my hon. Friend just now that the United States are far less dependent on their export trade than, for instance, this country is, and therefore they may be able to afford to raise their costs in their own country without thereby suffering a severe reduction in a large proportion of their trade. I would remind hon. Gentlemen opposite that, in considering the situation in the United States, they must remember that the President has to face a reduction of wages which has taken place in that country which is far greater than any reduction that has taken place here. Probably since 1929 the reduction over there is something like 25 per cent. Therefore, the President has quite a long way to go before he raises wages to a comparative level with those in this country. It may be that the experiment will be a great success. Whatever happens, whether it is a success or a failure, I am sure that all of us will be ready to profit by the example and experience which are displayed to us.

In the meantime, what are we to do in this country? My hon. Friend who has just addressed us pins his faith, not to an Empire currency, but to a sort of Empire currency unit. I think that he will forgive me if 1 say that his plan as he stated it, was very sketchy and vague in outline. Enormous and serious difficulties must present themselves when you examine seriously the prospect of any such plan. You have only to look now, for instance, at the various currencies in the countries of the Empire to see that there may be very different ideas as to the right relation between their currencies and sterling; and to find a system under which the Empire is to take part in the manage- ment of sterling, although it may have different ideas of the level which will suit its particular interests, is not a problem to be dismissed lightly as one to be easily solved. I will remind my hon. Friend that the question of central banks is not without its difficulties seeing that there is more than one country in the Empire which is without a central bank.

Sir J. WARDLAW-MILNE

Is it not a fact that most of the representatives of the Empire are more than anxious to tackle this problem?

Mr. CHAMBERLAIN

I do not think that any of them have put up any plan. At any rate, no such plan has reached me. When a definite plan is submitted to the countries of the Empire by any one of them, or even by my hon. Friend, it will be examined with every desire to give it impartial consideration, and, if it proves to be better than the plan we are following, it will no doubt be adopted. In the meantime, let me say this. I agree with my hon. Friend so far that it is no part of the policy of this country to link sterling either to gold, on the one hand, or to the dollar on the other.

Colonel WEDGWOOD

Or to the franc?

Mr. CHAMBERLAIN

It is no part of our policy to link our currency to any other currency. We must pursue our own independent course in this matter, and we must pursue that course in what appears to us to be the interests of this country and the Empire. That is the course we are pursuing, and it is the course we shall continue to pursue in future.

Let me come to the question of public works which has formed the subject of a large part of the speeches that have been delivered. This attempt to find some inconsistency between statements made at different times by different Members of the Government is really beating the air. Of course different Members of the Government, speaking at different times in different circumstances, addressing themselves to different aspects of the problem, will perhaps lay at one moment more emphasis on one aspect and at another moment more emphasis on another, but there is really no inconsistency whatever, and there has been no deviation in the policy of His Majesty's Government. I will take for a moment the observation of my right hon. Friend the President of the Board of Trade, which has been the subject of criticism by various hon. Members and various papers. There appears in it this sentence: We terminated our schemes for dealing with the unemployed by way of capital expenditure on public works, and we shall not re-open those schemes no matter what may be done elsewhere. I say emphatically that for our part we are abandoning this policy once and for all. May I read a passage from a speech which I delivered myself '? I seem to have delivered more speeches than I remember; this does not happen to be one of those that has been quoted. It was delivered on 16th February in this House. Then, in speaking of this very subject, that is to say, the effectiveness of public works in providing employment, I used these words: It is the deliberate opinion of the Government that that policy has failed and that. we must have done with it once and for all, and that is an opinion held unanimously by the Cabinet."—[OFFICIAL REPORT, 16th February, 1933; col. 1221, Vol. 274.] That phrase is identical with that used by my right hon. Friend the President of the Board of Trade. Let us consider what was the proposal with which my right hon. Friend was dealing. It was a proposal for international public works for the purpose of relieving unemployment, and my right hon. Friend said two things. First, he said that we have tried public works in our own country for this purpose; we believe it has failed to produce the effect that was desired, and we have done with it once and for all. Secondly, as regards international public works, he said that we are not going to lend our money for that purpose to any other country. I think it is obvious that if we have money to spare we can use it better than by spending it on public works in other countries whose ability to repay any loans that may be made might possibly be called into question. Apart from the question of unemployment, there is a considerable body of opinion throughout the country which does not take what I might call the extreme view about public works, which does not take the view, for instance, expressed by the hon. and learned Member for East Bristol, that it is essential that all kinds of public works should be carried out in order to carry out an expansionist policy. That means that it would be a good thing to dig holes and fill them up again. [HON. MEMBERS "Oh !"] I do not know what the hon. and learned Gentleman meant if he did not mean that. I do not want to misrepresent him, but that is what I understood him to mean, namely, that the great thing was to spend money for an expansionist policy, and that it did not matter whether the public works were remunerative or not, we should spend money and carry out an expansionist policy. If that is what he meant, it is the same as digging holes and filling them up again—

Sir S. CRIPPS

The instance of an unremunerative work which I gave was a school, and I ok the right hon. Gentleman whether he considered that that was an unremunerative work.

Mr. CHAMBERLAIN

May I take it, then, that the hon. and learned Gentleman does not advocate works which are not, as the Prime Minister said, either remunerative or necessary

Sir S. CRIPPS indicated assent.

Mr. CHAMBERLAIN

Then in that case the hon. and learned Gentleman pledges himself to what I may call the more moderate view. It is argued that in a country like this there must always he in the ordinary course of things a certain number of public works which may be carried out by the Government, or perhaps by local authorities, or even by private enterprise with, possibly, some assistance. The suggestion is that in bad times these works should be accelerated instead of leaving them to times when authorities will have to compete with a high level of activity in private enterprise. That is a very plausible view, and I think, indeed, that there is some solid ground for it. I do not think the Government would dissent for a moment from the idea that if you can plan your schemes for a certain time ahead so that you would carry out more when times were depressed and less when times were piping, that in itself would be a better distribution than leaving it to normal working.

What I do not think the House ever seems quite to understand is that that is the policy which has been carried out ever since the War, that there is not an unlimited number of schemes which you can put into operation, that we have been anticipating and accelerating works for all these years, and that we have, to a great extent, exhausted the works which could be anticipated. I think that there is an exaggerated idea in the minds of some hon. Members as to the contribution that can be made by a scheme of public works, even assuming that you can, to some extent, anticipate works which would be done normally two or three years hence. In the first place, let me lay this down, that we cannot spend large quantities of public money on public works without adequate preparation of the ground. We must examine into any of the work that is being proposed; we must see that the plans are effectively and economically prepared. That is the attitude of the right hon. Gentleman the Member for Darwen. The only difficulty is that he always finds that every plan we take up is wrong, and that the only ones that are right are those which have been proved by experience to be right. But I do not want to spend time on that point.

I say, let us have some regard to the size of the problem before us, and the volume that we can put into that problem by the expenditure of public money. Take, for instance, the situation in the United States of America. Has the House in mind what has been the extent of the drop in the national income of the United States? It has been estimated that since 1929 it has fallen from 85,000 million dollars to 40,000 million dollars, a drop of 45,000 million dollars. 'What is the programme of public works contemplated in the United States? A sum of 3,000 million. Big as it is, it is a drop in the bucket. What is the answer of the right hon. Gentleman? He says that our policy is still exactly what it was in 1931. No For a very long time we have said that we are not only willing but anxious to find schemes which are justifiable in themselves which will enable us to do what we can to carry out this expansionist policy, but our difficulty is that we cannot find schemes which would really involve the expenditure on those lines of sums which would really bear some substantial proportion to the drop in the national income.

Do not let the House be led away by the suggestion, which I am sure the right hon. Gentleman did not mean to make, though it was implied in his speech, that we are not doing anything. He talked about the great days when the right hon. Gentleman the Member for earnarvon Boroughs (Mr. Lloyd George) was in office. It is delightful to see the bouquets which are thrown in this atmosphere of good will. We are anxious to pay our tribute to the right hon. Gentleman, but do not let the House suppose that all public expenditure died and ceased when he no longer directed the activities of the country. On roads, for instance, we have spent since the War, £130,000.0000. I am not talking about maintenance, of course, but of capital expenditure. That was not all spent in the times of which the right hon. Member for Darwen spoke. He talked about telephones and other Post Office work. We have spent £120,000,000 on telephones alone. Does he suggest that that was all before the time of the hon. Member for Limehouse (Mr. Attlee) or my right hon. Friend who now presides with so much distinction over the Post Office? We have this year expanded our programme of Post Office works. But there, again, we cannot simply say to the Post Office, "Spend £100,000,000," and imagine that they are going to be able to spend £100,000,000 at once. They have to make their plans, they have to get their quantities out, they have to make their preparations, and it is quite impossible for them to accelerate the progress they are making beyond a certain point.

When we do put up new schemes, like the scheme for the extraction of oil from coal by the hydrogenation process, the hon. and learned Member sneers at it as being not worth speaking of, because it is so small, and the right hon. Gentleman opposes it on the ground that it has not been properly inquired into. I do not think any of us have made undue claims for a scheme of that kind. What we say is that at least that is an illustration of the fact that we are searching round all the time to see in what direction we can stimulate industry to start the wheels again. While not accepting the sort of description the right hon. Gentleman gave as resembling anything we have said, I think we may fairly claim that the corner has been turned, and that although prosperity has not come, and I do not expect it to come for some time, yet there are definite signs from all parts of the country of renewed confidence, of renewed buying, of renewed traffic on the railways, of more men and women in employment. There, again, I am not going to say that that is wholly due to the action of the Government, still, seeing that whenever anything goes wrong we are blamed, I think the Government are not unjustified in claiming that when things go right they at least have had some share in it.

Let me say, in conclusion, that the policy of the Government is the same as it was before the Conference began. We anticipate confidently that the work which has been obliged to be postponed will be taken up again as soon as conditions sufficiently alter to enable it to be taken up usefully. We rely now, as we did then, upon international co-operation, which we shall do all we can to help in order to remove some of those factors which are standing in the way of a restoration of national prosperity. As far as our currency is concerned, that is a matter on which we shall pursue our own course, independent of other countries, and, so far as the policy of public works is concerned, we must be governed by the practicability and the businesslike character of the schemes which we consider. But within those limits it is our intention to do everything we can by Government assistance, within the limits of sound finance, to make the credit which is available to-day not only available to but actively demanded by industry itself.

Sir S. CRIPPS

Would the right hon. Gentleman let me put one question? I want to ask if he could tell the House whether the policy of the Government is to get up wages and salaries and increase purchasing power, or keep them down so as to help our exports? Which is the policy?

Mr. OHAMBERLAIN

The Government has not got dictatorial powers to put wages up or down. What it can do, or what it can endeavour to do, and what it has to a considerable extent, I think, succeeded in doing, is to raise prices. If wholesale prices are raised, and they can be raised to a considerable extent yet without any serious effect upon retail prices, then at once the purchasing power not only of this people but of all peoples connected with sterling will be raised, and, of course, the effect of that must be to start trade, international and national trade; and the general rule applies that the time when trade is prosperous is the time when wages rise.

6.23 p.m.

Mr. LLOYD GEORGE

I confess to some disappointment at the speech delivered by the Chancellor of the Exchequer. I expected to hear something of what had happened at the conference, and was likely to happen to-morrow, and whether he had come to the conclusion that anything had been achieved by it, and what the future plans of the Government were in reference not merely to the conference, but, what is still more important, the future plans of the Government in reference to the fact that the conference had completely failed. I listened to a very remarkable speech by an hon. Gentleman behind me, and agree entirely with what he says that not merely the House of Commons but the country has been waiting for this conference in the hope that something would be accomplished. A good deal of criticism has been suppressed and withheld until the conference was over, and now that it is over I am certain that everyone is expecting to know what the Government propose to do at the present moment. If the Chancellor of the Exchequer had said, "The conference will be wound up to-morrow, we must have time to consider all the conditions created by its failure and we promise to do so during the vacation which is in front of us" —and although it is a fairly long vacation, it will probably not be too long for a thorough examination and survey of the whole position-- "and then we propose to take such action as we shall be advised," it would have been very difficult to criticise that attitude. But his speech was purely a negative one. He said, "If anybody has any scheme, tell us what it is. We can see no other than the proposals which we have already put into operation."

The Chancellor of the Exchequer made it quite clear that he agreed with the statement of the President of the Board of Trade—a very remarkable statement. I never charged the latter with being inconsistent. On the contrary, I think he was stating the policy of the Government. It is my complaint that my right hon. Friend—if he will allow me to call him such, in spite of the fact that we sit on different sides of the House—has a very remarkable gift of lucid and clear statement. In that respect he is disloyal to his chief. 1 am bound to tell him that he ought not to have developed or indulged so fatal a gift—so fatal to such leadership. When the intentions of the Government are not clear, to make a clear statement is both mischievous and misleading. But that is the position. I accept what has been said by the Chancellor of the Exchequer —that the President of the Board of Trade simply declared what the real intentions of the Government were, but that he did it too clearly to meet the exigencies of the leadership which he now follows.

But the Conference is dead, and I understand the Prime Minister is engaged at the moment in considering the best methods of embalming it so as to preserve the appearance of life after the spirit has departed. Sixty-six nations have been brought here to witness chaos, and I do not believe it is a bad thing myself, because it is something which is inherent in the situation. It is something which is fundamental, and it is a good thing the nations should be brought together to be confronted with it. So far from deploring what has happened, I congratulate the country on having escaped from a Government Conference without any serious happening. Lausanne has already cost us £31,000,000—E29,000,000 the last payment, and £2,000,000 a short time ago, and the account is not closed, except on the credit side. Ottawa—well, I do not think the Government quite realise the extent to which damage has been done by the agreement into which they were bluffed. Let them talk to any farmer and he will show them what a disastrous effect it is having upon some of the essential ingredients of the farmer's business—eggs, bacon, mutton, lamb, butter particularly, cheese and fruit. They do not realise what damage has been done. It will become increasingly evident as things go on. I am not satisfied with the conferences about India. I view them with considerable dubiety and anxiety, and I do not believe that that is the best method of settling that question, but that is by the way.

With regard to this Conference, we are out of it without any material loss, except the feather which the Prime Minister has prematurely stuck in his cap, but without any material gain. There is this advantage in it, that it has undoubtedly brought the nations face to face with reality. What have we to do, now that it is over? We have not to talk about future conferences. We cannot continue these flights from cloud to cloud, chasing the horizon. The conditions of the world are not such as are propitious to an international settlement of its difficulties. That is a serious fact. That is one of the things that emerges out of this Conference and other conferences. I agree with everything that was said by an hon. Member behind me, answering suggestions that America was to blame. It was too much to expect America, having regard to what is happening there, to come with any definite and clear proposals, either with regard to stabilisation or tariffs, or any of the other fundamental questions that were under consideration. President Roosevelt came in only in March. He was confronted by about the worst financial crash that has ever befallen any great country. It was worse than in 1931. He had to deal with it by a series of emergency measures which he had hardly time to consider. When the Prime Minister went over, by the time he arrived, America was off the Gold Standard; between the time he left Southampton and the time he reached America the dollar had dropped 50 per cent. I do not care what was said during his long week-end there; the facts were enough to force anyone who knew the conditions to come to the conclusion that there was no basis upon which you could stabilise in reference to the £.

I agree with the Chancellor of the Exchequer that the American experiment is a tremendous one and that it is too early yet to come to any conclusion as to whether it is going to be a failure or a success. Of this I am certain, that whether it is a failure or a success, it will have the most immense influence upon the course of economic events, not merely in the United States of America but in every country throughout the world. There are three experiments proceeding now, as we debate things in this House, upon the success or failure of which the whole course and outlook of the world depend—the Russian, the Italian to a certain extent—it is a very considerable experiment, and we hear very little of it here—and the American, the American being by far the more important. I hate using the word "revolution" in reference to it, but it is a complete transformation. Mr. Roosevelt, I heard, called it a. coordinated plan. It is an immense experiment. Whether he fails or succeeds, he has now started. He has behind him the resources of the richest country in the world, and a highly-developed, highly-trained and well-equipped nation with great liquid resources, and, having started, he has either to follow through or to fall through. Until that experiment has got to some kind of firm basis, there is no foundation upon which you can come to any arrangement with America in reference to stabilisation or tariffs.

Take tariffs. Senator Cordell Hull, a very able man—a strong Free Trader, and always has been—did his very best to raise the issue of Free Trade at the commencement of this conference. He put in a series of propositions a couple of days ago. They were very remarkable. He is all in favour of a revision of tariffs, but what were his reservations? Those are the things that matter, just as in the case of the right hon. Gentleman who was in favour of public works, but had so many reservations that there was very little left. This is one of his reserva tions: Additional duties upon goods found to be dumped. That might be considered in regard to the Dominions. New or additional duties or restrictions necessitated by Governmental measures of an emergency character which—by raising wages, shortening hours and improving conditions of labour—have resulted in increased costs and prices. If that means anything, it does not mean lower tariffs but increased tariffs. What arrangements were there in this conference for discussing stabilisation and for discussing tariffs, or, having regard to the statements made by the President of the Board of Trade, which was the policy at Ottawa, because it was declared by two men who have the gift of lucid statement, what basis was there for making any conceivable arrangements of a practical character at the conference? I agree again with the hon. Gentleman behind me. I cannot understand why the conference was ever summoned in those conditions.

What really matters is this: After the Conference, even though it is an unqualified, acknowledged and even ludicrous failure, what next? I think that we ought, before we separate, to have some declaration from the Government. What do they propose to do? I quite understand that they are not in a position at this moment to get up and say that they propose to do one, two, three, four or five things. They were depending upon this great international Conference easing matters, stabilising things that are unstable, and removing barriers here and difficulties there. That has gone. What is next? Are the Government going to consider the matter during the vacation, not in the very negative spirit of the speech of the Chancellor of the Exchequer, but in a receptive spirit? The principles are agreed. The right hon. Gentleman congratulated the late Solicitor-General upon the moderation of his policy. They were both agreed. Very well, the matter is left entirely to a question of interpretation. We are faced with two difficulties. Things are improving. I agree with the Chancellor of the Exchequer, and I take, as he has done now and as I have always taken, the railway traffic returns, as a very good indication of whether things are improving or not. If there are no goods manufactured, there are no goods carried; if there are more goods manufactured, there are more goods carried. There is no doubt that railway traffic returns are improving week by week, but whether it is a temporary boom or something a little more permanent, I cannot undertake to say.

May I remind the House that standing here in November I made two predictions? One was that by November, 1933, the numbers of the unemployed would possibly be down to 2,000,000. I do not think that that is impossible. That was a prediction in a speech in this House which will he found in the OFFICIAL REPORT for November, 1932. I made a further prediction, of which I am not quite so sure, that by October, 1934, the 2,000,000 might be down to 1,000,000, but that is where we were in 1929, and where we have been for nearly 10 years. The problem of unemployment, as we understood it, was not a problem of exceptional unemployment created by the world slump, but of chronic unemployment of 1,000,000—but l,000,000 running up whenever the world had any serious depression to 2,000,000, from 2,000,000 to 3,000,000, swinging from 3,000,000 to 1,000,000 and from 1,000.000 to 3,000,000, in an inexorable pendulum of unemployment. Let us assume the very best with regard to world recovery, that is, that you will be down next year to your 1,000,000. Your problem still remains. What do you propose to do? Have you any plans of any kind? I ask the Government now.

I think that we are at the end of our conferences for some time. Signor Mussolini has declared it, two or three days ago in an article with which I felt very much in agreement; but we are not at the end of drawing lessons from them. What is the lesson which we must draw from all these conferences, whether on disarmament or economic disarmament? It is that the world is so drenched with fear as the result of the War, that it is not prepared to surrender any of its protective weapons, in the shape of armies, tariffs or restrictions. We may deplore it; some of us think it is a great mistake; but you must recognise it as a fact, and build your policy upon that basis until there is a change in the psychology of nations. You have had disarmament conferences for 10 years, one after another, under one Government after another. What has happened? Each disarmament conference has been followed by an increase in armaments in almost every country in Europe. At Genoa, all the nations came to an agreement with regard to gold and the stabilisation of currencies, but nothing happened. You had a conference, headed by the President of the Board of. Trade, I think in 1927, at Geneva, where there was complete agreement regarding the reduction and ultimate elimination of tariffs. The industries of the world represented there, and the Governments of the world represented there, agreed unanimously to that resolution. What has been the result? Tariffs have been raised, restrictions have been multiplied, exchange difficulties have been springing up ever since. Why? We under-estimated the psychology of the War, and the fear which it put into the very heart and fibre of nations.

Take Russia to-day. Do you think that this is a Communist experiment? Not in the least. It is a Russian experiment. Why have they a Five Year Plan? Why did Russia fail in the Great War? I have been going through the documents with very great care recently, for another task, aided very considerably by the reports of the hon. and gallant Gentleman who was then with the Russian armies. Why did they fail? They failed for lack of equipment. They had no factories; they had no workshops. They had plenty of primary materials, but they had no skilled workers, and they had no means of equipping themselves, in a country which is the richest in the world in natural material resources. The Russians said, "Whenever anything of that kind comes again, we shall he prepared; we shall have our factories and our workshops." I wonder whether lion. Members have noticed this with regard to Soviet propaganda, which is the cleverest propaganda in the world? It understands Russia. It does not understand other countries, but it understands the Russians. They are concentrating on stimulating sacrifies on the part of their people to build up these factories, and they are stimulating them with the belief that someone is. going to attack them.

In Germany you find the same thing. I hear that Herr Hitler is going to put 200,000 or 300,000 more people on the land there. They suffered and were beaten in the War because of food shortage; they were a beleaguered country. Italy could' not get coal; she could not get supplies, or had to get them from outside, and, when they were obtained, crushing prices had to be paid for them. Neutral countries were short of machinery and clothing for themselves, because all the countries that used to supply them had their energies absorbed in the War; and all the countries except ourselves were short of shipping, and could not get the necessary transport. All that burnt itself into the minds of the people of all these countries, and you will not get rid of the psychology created by it until the generation that went through the War has passed away. It comes out in all these conferences, and you have to recognise it. I deplore it.

I believe in open markets, but the open market has completely gone, as open warfare has gone. It is a war of trenches, every country building up trenches against every other country and against every other interest. In this conference of 66 nations, with everybody agreed that these things were interfering with the trade of the world, and that much of the trouble of the world depended upon them, not a sandbag has been taken off the parapet, not a strand has been broken of the barbed wire. We must accept that fact, whether we are Free Traders or Protectionists; but, whether it is Free Trade or Protection, it is not enough in itself—you must build some policy on it. What is it? I agree with my right hon. Friend that "public works" is not a right description of what you ought to do. The right hon. Gentleman gave a very negative answer with regard to that. Having agreed upon the principle that anything which is profitable, anything which is necessary, is not merely justifiable in the long run, but ought to be accelerated—that is one very fertile sentence which the right hon. Gentleman dropped—I ask him why it should not be done?

I am not going through the long list of things that might be done—slums, rural building, telephones, docks, harbours, canals; but take telephones. In spite of all that has been done by my right hon. Friend the Postmaster-General, we are still fifth in rank, I think, among the telephone users of the world. However, I am not going to dwell upon that; I am just going to dwell for a short time upon one thing alone, and that is agriculture. I am encouraged to do so by a speech delivered by the Lord President of the Council. I was really very interested in it, and I said to myself, "Does he mean it?" He will not be offended if I say to him that he 'has a habit of now and again stumbling on the truth and then picking himself up and going on as if nothing had happened. My opinion is that he should attach greater importance to his own speeches. This speech, particularly, is one to which I want to call his attention. His speech at Cambridge—interesting, as always, fresh, as always—is suggestive of a very different policy from the one which has been proclaimed by the Chancellor of the Exchequer. He does not say, "Where are your schemes?" He says, "I have got them in my mind." I wish he would translate them into action. He said—I have tried to say it many times: I believe we are a long way from having reached the production of which this country is capable in agriculture. That is true; I believe you could double the production and make a profit. But this is a still more remarkable statement: I believe we have hardly scratched the land as far as smallholdings and allotments are concerned. What does that mean? The experiments made by recent Governments, just before the War and immediately after the War, added something like 45,000 to our smallholdings, and I think a few hundred thousand to our allotments. The right hon. Gentleman says that we have barely scratched the problem, and I agree. I venture here in this House to suggest that we ought boldly to undertake the settlement of 500,000 families on the land. That is not inconsistent with the statement made by the right non. Gentleman. What does it mean? This is a figure which I have given many a time, and I think it is important. We have 7 per cent. of our population on the land, and the nearest country to us in that respect has 20 per cent. A country as highly industrialised as ours, namely, Belgium, has 20 per cent. Germany has over 30 per cent., and, although she is now, I will not say bankrupt, but very hard up—for the moment almost insolvent—she is going to plant another 200,000 or 300,000 on her land. If an extra 500,000 families were put on the land in this country, it would raise our percentage from seven to ten, that is to say, to half the percentage in the next lowest country in the world, or one-third of the percentage in a great industrial country like Germany. Is that an impossible proposition? I ask the Government to take it in hand.

I know it is said that you have not got the men to put on the land; but there are many men who have been brought up on the land and who are now in the 'unemployment list, or driving others into the unemployment list, in every 'industry. In South Wales I know what a number of people have come from the agricultural areas to the mines there, many of them out of a job, or keeping someone else out of a job. They have been trained on the land. Again, you have hundreds of thousands of youths in this country, some of whom have never done a day's work, because there is no day's work for them, and some of whom have only worked for a few years at some job. A young man of average intelligence can learn any trade; why do you not train them? But you are not going to succeed in that policy without a really determined scheme—a plan. I would call the right hon. Gentleman's attention to some thing which may have a greater influence upon him than anything that I may say. Does he read the "Morning Post "? I do. I always read its articles with interest, entertainment and admiration—very rarely with approval; but this morning I read it with marked approval. It says to the Government, "Your Conference is over. What is your policy now? You are slacking. You worked well for about seven or eight months and you produced a tariff. Since then you have done nothing." It is a paper that supports the Government. [Interruption.] It is a discriminating supporter—much better than the support they get from below the Gangway. Really, there is a good deal of common sense in that.

There are two things which the Government will have to do in order to face realities. They say that they have stabilised prices. Well, they have not. I can understand a Free Trade policy for agriculture—the farmer buys cheaply if he sells cheaply. I cannot understand a policy which is neither one nor the other. I cannot understand a policy which puts the farmer in a position in which he has to compete in some of his most essential goods against producers abroad who can sell butter very much cheaper than he can possibly produce it, and also mutton, lamb, fruit and eggs, while at the same time you tax everything he buys. That is an impossible policy, and the first thing the Government must do, if they are to have a real agricultural policy, is to reconsider Ottawa. They will have to reconsider the terms of that agreement as far as the agricultural community is concerned, otherwise they will have completely wrecked any effort which the Minister of Agriculture can make. It is all very well for the right hon. and gallant Gentleman to be the fairy prince of agriculture, helping Cinderella. As a matter of fact, I think it was the fairy godmother who really helped her. He can be the fairy godmother and the prince, too, but where is the golden slipper? [HON. MEMBERS: "Glass."] No, I have looked it up in Grimm. Where is the equipage which is to take Cinderella to her triumph? All that happens is that more facilities are given for the ugly sisters in the Dominions to take away even her rags. He must amend that situation. He can- not amend it by rhetoric. He can amend it only by action.

What is the next thing you have to do? Whatever the Chancellor of the Exchequer may say, if he is going to revive agriculture, he has got to find the cash, and on a considerable scale. You are dealing with a decayed industry, and anyone who has been trying to do anything with a dilapidated house knows what an expensive thing it is. When you are restoring a decayed industry, it is infinitely worse. It is no use asking who is to blame. The best thing is for each of us to make a catalogue of the sins of the other party, to put them together, and then they will be pretty long. There it is. It is an industry that has been neglected by the State because we were making more money at other things. What is the result? You have an inverted pyramid. You have a most dangerous state of things in this country, which will interfere with its stability if there is any trouble, and which very nearly imperilled its life in the War. You cannot restore an industry of that kind, neglected for over half a century, without the State coming in and supporting it with all its credit and strength. The landlords cannot do it, the farmer cannot do it; it is not in the industry itself. Just see what you have got to do. I will read the headings only: Reclamation of Waste Land—that is occurring in every country except ours. Reconditioning of Uncultivated Land. Increasing and Improving and Modernising Buildings—essential for effective agriculture. Settlement of Families on the Soil. Training Centres. Large Housing Programme. Afforestation of Waste Land. Marketing. You cannot do it merely by Act of Parliament. It all means money.

In all these things the Chancellor of the Exchequer says he can see no scheme that will be productive or in the interests of the country. I cannot understand it. The Government cannot answer proposals of this kind merely by gibes or sneers. Do let the Government once more enter into this proposition and face it with the boldness with which every other country in the world is beginning to handle its problems. You have got the problem of the Empire, the richest in the world. The Empire is not a hollow drum to beat; it is a gigantic estate to be cultivated. It is an outlet for our capital, for our enterprise, for our manhood, and the Govern- ment must really deal with it. I honestly cannot see any vision, any enterprise, any imagination. Where is the brains trust? The democracies of the world are now thirsting for leadership from their Governments. The Government here have a great majority and the power to pass any plan when after careful consideration they come down to the House with it. They have got very loyal support from a great many people who are very doubtful as to their inaction. 'If the Government come here with a programme of action, I am confident that they will get great support and a great rally from the House outside. Let the Government take heart themselves, and then put heart into the nation.

7.9 p.m.

Mr. HOROBIN

I feel rather like Noah as the flood subsided, but I can take heart of grace by remembering that even then a certain amount of work had to be done. I am not going to follow the right hon. Gentleman who has spoken on a subject of which he is an acknowledged master, the failure of conferences, nor to refer to the curious fact that, although he seems to dislike the Ottawa Agreements, the only part of them he seems to dislike is the Free Trade part. I shall address only one or two observations on a very narrow and destructive point, namely, the question of public works, and lend what support I can to the uncompromising statement of the President of the Board of Trade, which, as I understood it, was the origin of this Debate. On the last occasion on which I had the opportunity of addressing the House on this subject, I drew some analogies with American experience. I do not propose to do that to-day, partly because, in the light of the recent crash of prices in America, it would be a little like hitting a man when he is down, even though at the moment the President manages to prevent himself being counted out by interrupting the referee or ticker when it has counted up to 5.

A good deal of discussion on this matter has got side-tracked into a rather unhelpful statistical argument as to whether it is £300, or £400, or £450 borrowed that will put a man to work. On that I will say only this to the House. Taking the most optimistic and, to my mind, fantastic figure put forward by some economists, that £150 borrowed will put a man to work for a year, and on that we shall get £50 back by saving on unemployment, I make these comments. In the first place, does anybody really believe we shall be allowed to save that £50? If it means anything, the statement means that, when we borrow £150,000,000 for this purpose, next year £50,000,000 will be put back in the Sinking Fund. If this happened, we should be urged, instead of using the £50,000,000 as a set-off against the borrowing, to use it for restoring cuts and expenditure.

Quite bluntly, apart from theoretical arguments, the objection which a great many people have to a policy of public works is that we "have had some." With these gentry it is always the time to borrow and never the time to repay. They always say you must borrow in bad times and delay expenditure in good times. Let us come back to the years about 1929, about which we hear so much. I will give one figure from 1929, because they always make it loud and clear, they come and shout it in our ear. In those years before the crash the American federal expenditure went up from 3,000 million dollars a year to 13,000 million dollars in the years when, according to this theory, they ought to have been economising. It is perfectly true that, in those 10 years before 1929, they were repaying a certain amount of Government debt, but it was only a quarter of what they borrowed in 1919, and in the two years after the crash they again borrowed more than they repaid in the 10 years of prosperity. We are entitled to say we do not believe the gentlemen who advocate that we should borrow in bad times and repay in good times.

Let us come nearer home. Allowing for sinking fund repayments, the local authorities' debt in 1921 was approximately £595,000,000, and in 1928 it had risen to £1,051,000,000, or very nearly doubled. It is true that a very small proportion of that increase was due to trading assets. I submit to the House that the figures are irrefutable. As to the statements of hon. Gentlemen on those benches, it is all bluff when they tell us that, if we will only give them a little more money now, they will repay whole wads of money when prosperity comes. They do not mean it. The statement from the Opposition Bench seems rather extraordinary. First of ail, he blamed the assembled nations for not dealing with the international debts problem and not wiping off the present debts, and a few sentences later went on to blame them for not lending more money to Eastern Europe. Capitalists are simple and sometimes forgetful men, but they are not quite so simple and forgetful as all that. He went on to make equally fatuous remarks about international financiers drawing tribute from the rest of the world. It is not international financiers at all who are concerned. It is some old lady living at Cheltenham who has a few Argentine debentures, and not someone in the City, who is weaving these Edgar Wallace plots.

Let me come to another general point. As the Chancellor of the Exchequer has pointed out, we have been trying this business of spending money upon nonproductive works for a great many years. There were a number of people out of work in 1921, 1922 and 1923, and we borrowed a lot of money and set them building roads. Those men are out of work again now, but the money has been spent, and we and our children have to go on paying interest and sinking fund, that is, if the children are ever allowed to leave school and go and earn anything. We are staggering under this burden of debt. It is always the people who most object to the burden of debt —they find French and Russian words for describing someone to whom they owe money, rentier, and all the rest of it—who want us to borrow some more. I put it to the House that the Chancellor is perfectly justified in saying that, in vulgar phrase, we have had some.

It is not very often that I differ from the Chancellor, and, while I am about it, I may as well do it thoroughly upon one point where I only wish he had been truer to his own policy. We have had in the last few days some Debates upon an adventure by the Government into business. I refer to the coal and ail affair. There you have one of the few efforts that the Government, fortunately, has made in connection with public works. I am interested to see that when even this Government touches pitch it manages to get thoroughly defiled in an extraordinarily short space of time. I will not weary the House with any technical details, even if I could be certain of getting them right, with regard to this question, but it is very relevant to the weaknesses and the dangers of this whole policy of the Government interfering in business. Without worrying about details and figures—I do not think they are in dispute—this is in fact a subsidy. It will mean either that the Chancellor is giving up an opportunity of remitting taxation to the tune of about £1,000,000 in each of his four next Budgets, or that he will have to find some alternative way of raising that £1,000,000 in each of his four next Budgets. Here we are dealing with an effort of the Government to give away something like £1,000,000 a year which it either has and could give back to the taxpayer or will have to raise in some other way.

What are the facts that leap to the eye about this experiment? Let me take, first, the tariff side of it. We have heard a great deal at this Conference or elsewhere of the necessity of getting rid of excessive tariffs. Some of us have been inclined to wonder what an excessive tariff is. Now we know. The present tariff is 200 per cent. ad valorem and the Government is guaranteeing that in no case shall that tariff fall below 100 ner cent. ad valorem for four years. That ought to satisfy even the hon. Baronet the Member for Bournemouth (Sir H. Croft). But what chance we have of going to other countries and persuading them to lower their tariffs if that is our standard of reasonableness goodness only knows.

As far as I can work out the figures, if this project turns out as much as it is intended to turn out, the only chance of preventing our money going up the spout is that the works really go up in the air. There is one very good point about the scheme. The capital is not ours, so that, if the thing goes broke, someone else will lose it and we shall not. But, if the works succeed in turning out the amount of oil that it proposes to turn out, we shall, in fact, be paying something like £3 a ton subsidy for every ton of coal that the works use directly and indirectly. I do not see the President of the Board of Trade there, but I see his extraordinarily able assistant. The right hon. Gentleman has been explaining to the assembled nations of the world that it is extraordinarily wrong for them to cut to ribbons our trades, like shipping, by paying subsidies to their competitors. I am very pleased to see his sympathy with the unfortunate tax-fodder of Italy and France and the rest of them, but, if it is wrong that one of our trades should be spoiled by a subsidy that the Italians have to pay, why is it right that the oil industry, which is making profits, should be spoiled by a subsidy that we have to pay?

I come to another point. I raise this not primarily as specially relevant to this case of coal and oil. As public works go, this is a good thing of its kind. It might be worse. The Government have tackled this problem under pressure. I am sure they did not want to do it, but they felt that they must do something to show the strong hand, and they did this. If they wanted to put these miners to work, they could have got between four and five times the result in terms of miners' employment by using the money to buy coal and burn it at the pithead, just as the Brazilians are doing with coffee. That would at least have had the advantage of giving the children of Durham a nice Guy Fawkes bonfire for nothing. They could have got four or five times as many miners at work and taken off the market four or five times as much coal for the same expense as they are incurring in this way. But that would have been old-fashioned. So they go to some ingenious chemist, and he says: "I have £1,000,000, and we will spend the lot on pipes. I will take another £1,000,000 and put in a furnace and heat it up to 400 or 500 degrees Fahrenheit, and I will take another £1,000,000—altogether it is about £3,000,000—and I will put in a pump and pump it all up under some terrific pressure, then I will add a catalyst,. a sinking fund and a deficit, and there you have your highly modern synthetic petrol. You could have sent someone round the corner to a Shell-Mex shop to buy the same quality of petrol at half the price, but that is too old-fashioned and too unimaginative and too inactive for a modern Government to bother with.

On their own showing, the total amount of saving on unemployment will be about £800,000 in these four years, and it will cost us something in the nature of £4,000,000 in loss of revenue. These figures are not in dispute. If this thing is a success at all and turns out the oil, we shall lose £4,000,000 in revenue in the course of the four years, and by doing that by this huge and elaborate machinery of public works we shall only get the result that we could have got by spending £800,000.

I come to yet another point. Objections to the complications of the whole machinery of public works are legion. We are always hearing a lot about gluts. The Minister of Agriculture preaches many attractive sermons on the subject of gluts. Surely to goodness, if there is one thing in the world of which there is a glut, if there is one thing of which we want less, it is oil. In fact, if you read the accounts of the annual meetings of the oil companies, they are pouring the oil back into the ground when they have got it up under its own. pressure. The President of the United States is threatening to prosecute people because they will not stop turning out oil. While they are pouring oil away, or prosecuting people for getting it where it is cheap, we tax our unfortunate taxpayers in order to produce it where it is extraordinarily dear. That is the way you cure a glut. I do not profess to be a clever man. I know that the President of the Board of Trade and the Minister of Agriculture can explain almost anything—even themselves. If they can explain that, I shall be very grateful.

Take another aspect of the same thing. We are always hearing that the real trouble with the world is with the raw material producing countries. They are on their uppers. They do not know what to do with themselves because the price of their produce is falling. We had upstairs the Aga Khan speaking to a great and appreciative audience of supporters of the Government and explaining the importance of the Mohammedan area. He was showing that the Mohammedan area was a raw material producing area with great prospects for British trade. So we go and help them. The one thing that the Persians have to export is oil, and we own a good deal of it. The British Government are not satisfied with hitting their taxpayers in the neck. They want to hit themselves as shareholders in the neck. We fought an expensive war in the Near East to get hold of a mandate and to take pipelines from Persia to the Mediterranean. When we, have got hold of the oil in 1923-24—when we have discovered a way of getting cheap oil—we say, "That is all right. Now that at last we can get that oil cheap, now, when we are saying how important it is to safeguard the interests of our raw material countries, we will go to extreme expense and great risk to produce what you are having to pour away in order to get it at double the price."

One last aspect, and it is most important. The oil-producing and distributing industry is one of the outstanding industries that manage in some extraordinary way to carry on their business, to give regular and good employment to their workpeople, to improve year by year and to pay handsome dividends. I am sorry that the hon. Member for Putney (Mr. S. Samuel) is not here. I should like the opportunity of helping him to bring himself up-to-date, because he is on the wrong lines. He ought not to be paying his workpeople wages out of his profits. We ought to be doing it out of subsidies—out of the rates and taxes. He ought not to be managing his own business and making a profit. W,, ought to make him a market supply committee, or rationalise him and make his life a misery to him somehow. Once it was a good thing to look after your own affairs when you could borrow money cheaply and make a profit. Now we have altered all that. Now you raise the price of everything with the aid of rates and taxes and overheads so that you cannot make any profit unless you get 5 per cent. Then you muck about with the credit of the country so that neither the Government nor anyone else can borrow under 6 per cent. Then you have a scheme. That is the time to start borrowing money and to cure unemployment. If Shell-Mex and a few of the others want to be in the swim they will have to alter their whole system of running.

Whither is this country bring led? We had a Conservative Government a few years ago, and they pottered about with a few old age pensions and a certain amount of half-hearted Socialism, and the result was not highly satisfactory to them. I am not afraid that this Government will go the whole hog in public works, but they may easily go sufficiently far to spoil the chances of their own policy without going nearly far enough to satisfy or to get results on the lines of a Socialist policy. Within the last year or so, simply by carrying out old-fashioned methods, they have produced an increase of employment out of all proportion to anything that could have been done by public works, and have put 500,000 more men into employment. Taking the extremists' own figures, it would mean borrowing £50,000,000 or £60,000,000 to get those results. I beg of the Government to carry out to the strictest conclusion the line of policy which they have stated this afternoon, and which the President of the Board of Trade stated at the Conference. They have had their flutter, and as we are rising on Friday they cannot do any more harm for some time. There is something wrong in a capitalist society saying that it is not a capitalist society. You cannot run a capitalist society on Communist lines, but with strict attention to business you may be able to get a capitalist society to run itself in its own old-fashioned way. What you cannot do—and what would invariably lead to disaster—is to try and be leaders of a capitalist State, to be ashamed of what you are doing and of your party, so that your whole policy is based on the theory that Government action and interference is that to which you are really looking to get you out of the mess. As a matter of fact, your messes are always entirely due to the fact that this Government and other Governments over a long period of years have interfered in every conceivable way with business. Perhaps certain hon. Members, if they are ever returned, will desire to carry out a policy on those lines. But we should not indulge in these dangerous little flutters of going into a private bar for a nip although we pretend to be teetotalers. If they want that sort of thing, they must go the whole hog. For my part, I welcome the speech of the Chancellor of the Exchequer and of the President of the Board of Trade at the Conference, and I hope that they will continue to carry out in practice the policy therein outlined.

7.35 p.m.

Dr. McLEAN

I am unfortunate in having to follow my hon. Friend the Member Central Southwark (Mr. Horobin) who succeeded in making economics interesting and indeed somewhat amusing, and I am afraid that what I have to say will, by comparison, be extremely dull. We have been discussing the national and international aspects of the utilisation of public works to provide employment and to aid the revival of industry. I wish to make one or two remarks on the economics of the matter and upon certain practical considerations. The fundamental requirement is that the public works to be constructed shall have an economic background. By that I mean that the works will result in such increased production for which there is a more or less assured market as will justify the capital expenditure and also meet the interest and maintenance charges. The proposals put before the World Economic Conference referred to works giving an assured economic yield, which can only mean that they must have an economic background such as I have described. The words "an assured economic yield" are contained in a resolution of the International Labour Conference to which the chairman of the International Labour Office called the attention of the Economic Commission of the World Economic Conference. The resolution was in these terms: To set on foot immediately large-scale public works giving an assured economic yield, particularly in those countries where funds at present are remaining unused. The International Labour Office Report on Unemployment and Public Works issued in 1931 contained recommendations based upon the theory that public works should be advanced in times of depression and retarded in the following boom. The object was to help to maintain prices during depression, and then to reduce construction in the boom so as to keep down prices. The report was based upon the conditions of normal times and upon the understanding that at such times there exists a sufficient number of public works which may be advanced. Inquiries which I made at Geneva in 1931 confirmed this fact, and also elicited the important fact that the works were intended to have an economic background, and further that they were supposed to form part of a development plan for the region. It is evident that there are public works outside the economic category, which are more social in character, such as slum clearance and public health works. The Government have recognised this distinction.

Considering first the national aspect, it has never been shown that there exists any large-scale scheme of public works in the United Kingdom awaiting construction—works which have an economic background sufficient to justify the authorities in undertaking them. In this category I would include works such as the proposed Forth Bridge, the Forth and Clyde Ship Canal, the Humber Bridge, railways main line electrification, and the Severn Barrage. In the case of the Severn Barage the Committee definitely reported that the economic background would need to be studied before any decision was taken regarding construction. With regard to land and drainage proposals, it will often be found that the economic value of the land when reclaimed has not been considered. In the United Kingdom we have already advanced our programme. of construction to what appears to be the economic limit. Perhaps when complete town and regional planning schemes have been provided under the Act of 1932, based upon the national industrial development surveys now being carried out by the Board of Trade, there may be disclosed further economic schemes of public works of importance, the construction of which may be advanced.

In considering the international aspect of the problem, the question before the World Economic Conference was the construction of national programmes of public works in other countries, and we were invited to assist financially by means of loans. The vital question with regard to foreign countries is whether, and by what means, it was proposed to control the expenditure of any loan so that it would be used only upon works having an economic background. Our experience with loans for development in other countries has been somewhat discouraging, even in the case of the Dominions where one might have thought that. some control would have been possible. For example, the British Financial Mission to Australia in 1928 reported that they were unanimously of opinion that in recent years Australia had spent too much money unprofitably on development schemes which were undertaken without sufficient regard to the probable financial and economic results. Again, in Sir Nicholas Lockyer's report in 1926 on the financial position of Tasmania there was much the same sort of criticism of the large developments under loans which took place in the island. There were examples of railways, roads, power stations and other works which had been constructed too far in advance of requirements without any thought evidently of the markets for the products of the de- velopment. The result, of course, was financial disaster. There was difficulty in meeting the interest and maintenance charges, which one knows from engineering experience may sometimes amount to a very considerable figure. This method of development is contrary to the finding of the World Economic Conference, which is, I believe, that production and development must be co-ordinated in respect of the market available. In all these circumstances it is difficult to see how the Government could possibly have taken up any position other than that contained in the statement made to the Conference by the President of the Board of Trade on the 13th July. The statement was in clear terms and, translated, would be understood and appreciated by all our foreign friends.

7.45 p.m.

Lieut.-Colonel KERR

I have listened with great interest to the speeches that have been delivered and I am glad to find that there have been few speeches that have not really been constructive. I hope the ideas that have been put forward by right hon. and hon. Members will be of some help to the Government. I feel very strongly that at a moment like this, in the crisis of our nation, we should put forward our ideas, as I know the Government would wish that even humble Members like myself should do, because it is quite possible that there may be something useful in them. There is one point, which I think is of the greatest importance, that has not been sufficiently pushed home during the Economic Conference and it is this, that we do not in this country push the idea enough that we are the greatest buyers in the world. Our position in that respect is a very strong one and I feel that if we were bold enough to put forward that position sufficiently we could call the tune a great deal more than we have done.

The President of the Board of Trade and the Parliamentary Secretary have done splendid work in bringing about the Agreements with Denmark and Argentina, but we ought to have had more of our own way. Why should we not say something like this: "We will buy from you but we will only buy from you if you buy from us an equivalent." I would like to see reciprocity exercised far more in regard to other things. One gets a list and one sees the difference in the amount that we buy from other nations and the amount they buy from us. There are very few instances in which there is not an enormous difference in favour of the other nations. If the keynote of the World Economic Conference had been reciprocity between nations, and if the nations would agree that if they sold to a nation they would buy from that nation, surely there is no limit to the trade that might be conducted in the world. If we say to a nation: "We will help you with your unemployed by buying from you, on condition that you will do exactly the same thing from us," we should do far better. The Government ought to bear more in mind the fact that we are the great consuming market of the world, and to push home that we will not buy from nations who will not reciprocate.

I am very delighted to find that the Government are against public works which are not of a remunerative character. If the Government embark on public works of any sort—I do not mind what they are—and there is no financial profit in those works, it means that ultimately the burden is going to come upon the shoulders of the already over-weighted taxpayers. Therefore, I most cordially congratulate the Government on taking a very strong stand in that matter. I should like also to say a few words in regard to the Empire. I do not know whether hon. Members are aware that there is a sort of invasion going on within the Empire. During the last week I have had sent to me the particulars of certain charters which exist in Canada to-day which are supported by various nations whose nationals are already in Canada, and who receive assistance from their Governments to settle in Canada. These arrangements are very well organised. Information is given. These particular nations assist their nationals to go to Canada, they finance them when they go, they settle them and look after them afterwards. So far as I know there is no organisation backed by this country as those organisations are backed by their respective countries.

I was told the other day, and I believe I am right in the figures, that 55 per cent. of the people in Canada to-day are non-British. That is a very serious position and it is increasing year after year. In the last 10 years there have been 600,000 non-British people settled in Canada. I do not know how many people have gone from this country in that period, but it must be very much less. When this sort of subtle invasion is going on, it is a matter in which the Government ought to take the greatest possible interest and do their utmost to remedy. Here is justification for the Government spending money. Here is public work that could be done in promoting some sound, large organisation to assist in settling our own people in the British Empire. If we do not populate the British Empire with our own people we shall gradually find that it is becoming less British and less patriotic. Therefore, I hope the Government will think sympathetically in that direction and see if something cannot be done to populate the Empire with our own people. There is a danger that other nations who are congested and who wish to expand, if they see this great Empire of ours suffering from want of people, from want of settlement, with enormous resources entirely undeveloped, will begin to get jealous and say: "Why should we not have some of it?" In the end there will he very great danger of war as a result of that condition. I urge the Government to try their best to see if they cannot formulate some very large scheme, which could begin in a small way, that would assist in developing the Empire and in populating the Empire by British people.

7.52 p.m.

Marquess of HARTINGTON

I am very glad that the Father of the House has returned to the House. I do not intend to deal with his Grimm's Fairy Tales or with the even more fantastic imaginings of his own mind, but I should like to put a few practical considerations regarding his agricultural policy. He told us that his proposition was that the Government should settle 500,000 families on the land. Before embarking on such a policy we ought to consider exactly how, where and at what cost those 500,000 families are going to be settled. Are they going to displace those experienced farmers who for years have been losing on farming the best land in England, even with all the experience that they have behind them, or, alternatively, are they going to be put on those deer forests which used to be such a favourite subject of the right hon. Gentleman?

Mr. LLOYD GEORGE

If the Noble Lord will look into the matter he will find that the only people who have done fairly well in the last few years are the smallholders.

Marquess of HARTINGTON

Yes, under favourable conditions in some cases, with public assistance, they have done moderately well, but these things are governed very largely by economic considerations. Where conditions are favourable to smallholdings you will find smallholdings growing up, but where they are not favourable to smallholdings you will find that the land is farmed in large units. We shall make a big mistake if we attempt to dispossess the existing farmers, who in many cases are finding it very difficult to make money, or if we embark upon the reclamation of land that is at present not under cultivation. The agricultural community would be interested to know what subsidy it is proposed to pay to these 500,000 families of smallholders. Are they going to be subsidised to compete with people who find it difficult to make a living or are they to be left to take their chance with the present prices of agricultural commodities? These are practical considerations.

The real problem about agriculture is the question of price. So long as agricultural prices remain where they are agricultural problems will remain exceedingly acute. The right hon. Gentleman gave a long list of the requirements of agriculture—new holdings, water supplies and so forth. Not a single one of these things would present any permanent difficulty if the price of agricultural produce began to rise. They could be dealt with quite easily. They could be dealt with to some extent if the agricultural industry was relieved from the crushing burden of Death Duties, but even without that, if we could see any substantial rise in the price of agricultural produce all these needs of agriculture could be met in a comparatively short time. The problem of agriculture is that prices are too low and until that state of things alters it is no good talking about putting additional population on the land. I believe that proposal is the most fantastic of all the proposals put forward by way of public works, but not very much more fantastic than some of the others.

I rose for the purpose of saying how whole-heartedly I support my right hon. Friend the President of the Board of Trade in his firm, definite and unequivocal statement that he will refuse to countenance additional schemes of public works. I can scarcely say how delighted I was with that statement. It is almost the only statement from any member of the Government or of 'any recent Government in regard to which I have found it possible to express entire satisfaction. I hope the Government will not whittle down or modify that statement. What do these proposals about public works amount to You say to the taxpayer: "My poor fellow, things are very bad for you. We are very sorry that times are so bad, but we will take what money you have left and spend it for you on something that you do not want, on something on which you would not spend the money yourself, on something which you cannot sell or export or exchange for something which you do want." There is not one of these various things which the ordinary machinery of commerce in the City of London could not bring about if they had what the hon. Member for Tradeston (Dr. McLean) describes as an economic background.

By an economic background one means that you examine the thing first and find out if it is going to pay. If there is money in it we may be perfectly certain that the ordinary resources of the capitalist system will, sooner or later, embark upon it, if they are assured that those resources are safe, that they are not going to be interfered with or despoiled by this Government or subsequent Governments, and are not hampered or interfered with by this House. This House does not always encourage public works. Only two or three days ago we discussed the Adelphi Estate Bill, and hon. Members opposite, and I am sorry to say certain hon. Members on this side, opposed that Bill. In that Bill there was involved public work of considerable magnitude, which hon. Members did everything possible to obstruct. It is that spirit in the House of Commons and in various Governments which has done a great deal to restrict expenditure on such enterprise.

I believe that there is none of these schemes of public works that could not be brought about if people had tolerable Security in their property and enterprise and if they could feel tolerable confidence that they were not going to be interfered with and their operations destroyed by the Government. I hope that the Government will adhere firmly to their decision not to embark on these new schemes. The right hon. Member for Darwen (Sir H. Samuel) gave us examples as to why it should not be done. He included practically everything that has been done by any Government, and, except in the case of roads, he showed clearly that in the case of almost everything else, the subsidising of coal or corn or beet, the Government have always gone wrong. That is not mere accident. The fact is that there is not scope for the Government. If there is an economic background these things can be done by other people, and there is no room, for the Government to butt in. There is only one important scheme of public expenditure which requires doing if there are many people who believe in public expenditure on relief works, and that is a substantial addition to every county asylum throughout the country.

8.2 p.m.

Sir GEORGE GILLETT

In his profoundly interesting speech the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) referred to the very limited outlook of some of the nations of the world and used it as an argument to suggest that it was not desirable to go on with the present policy of conferences. He said that the World Economic Conference was absolutely dead. I am sure the right hon. Gentleman is not one of those who says that because certain things seem to be dominant that we have, therefore, to accept things as they are and make no attempt to change them. If questions of disarmament and economic questions are to be solved it is essential to have conferences. If you are going to replace war by something else in the nature of law it must take time and also take the form of gathering the nations of the world together in conference. Many of the economic problems we are facing to-day can only be solved by a conference between the leading nations. The right hon. Gentleman said that it was a great mistake to go on with the idea of holding the conference after America had gone off the Gold Standard. It is easy after the event to say what ought to have been done, but I would remind the House that at the time when the Conference was meeting some Of the leading bankers of this and other countries, including the United States, met in order to see whether it was possible to arrange a temporary understanding in regard to the stabilisation of exchanges.

Apart from the question of War debts and debts the greatest hindrance to trade revival throughout the world is the condition of the exchanges. I do not want to criticise the American policy but the moment America embarked upon the policy she is attempting to carry out today and it became impossible for her to agree to a stabilisation of the exchanges, she praztical killed the Conference; and we shall only get going again when we have solved the question of the exchanges. I am not certain that the Conference is absolutely dead, because when we heard that New York had gone off the gold standard we said that nothing worse could happen than to have a. struggle on the exchanges between the great nations of the world. Yet to-day we are left absolutely in the position that traders have no guarantee as to what will be the action of any nation in regard to its exchange position. That is a serious position which will have to be faced.

While I welcome the statement that one day we shall go back, in some form or other, to the Gold Standard, it may be many years, I confess that the argument of those who have suggested some other form of standard has not convinced me of the possibility of such a system. The whole question of the exchanges has been made more difficult by the statement of the American President; we do not know whether he has it in mind to go back to the Gold Standard or not. Mr. Cole in one of his books has stated clearly that we cannot expect to have a stable price level and also an exchange which is going to be a stable exchange between the nations of the world; we shall have to make a choice between one or the other. But to a great exporting nation like ourselves the first essential is to have a stable exchange amongst the nations of the world. The profoundly interesting attempt that is being made in America to reorganise trade and industry has led some people to suggest that we may do something of the same kind. Such a course is absolutely impossible for this country. We have this extraordinary fact in connection with the action of America, that while Germany, France and Italy were literally forced off the Gold Standard the United States deliberately gave it up at a time when they were holding the largest supplies of gold in the world, and when they had a favourable trade balance. They considered that by a threat of inflation they would raise prices and at the same time allow a depreciation of their money, which would also assist in raising prices. It may be possible for America to do this and carry it out successfully, because if any country can stop a fall in their exchange when they want to do so the United States are in that position with their large stores of gold. We have, therefore, to bear this consideration in mind, that if we followed the same policy. as the United States we should have to guard against the danger of a collapse of our exchange such as would bring us face to face with a very serious position.

Notice taken, that 40 Members were not present; House counted; and 40 Members being present—

Sir G. GILLETT

I was calling attention to the question of a rise in prices and that the policy of the President of the United States in taking action to raise prices in America is being used by many as an argument for this country to follow the same policy. One of the difficulties that we have to face at the present time is that those who are supporting a rise of prices in this country are not at all clear as to what they have in mind. If you read the statement made by the Chancellor of the Exchequer you will discover that he refers to wholesale prices, while other hon. Members desire a rise not only in wholesale prices but also in retail prices. I wonder whether many of those who support a rise in prices realise what they are asking for. If we are to have a rise in prices to get back to the level of 1928 we should have to put up our wholesale prices by 40 per cent. and our retail prices by 22 per cent. Our policy in going off gold was not followed by the usual rise in prices which would have taken place because the fall in the gold prices of the world to a large extent neutralised the rise which would automatically have taken place, but the nation whose currency is depreciated technically should have a rise in prices. We escaped that rise and, therefore, the worst evils connected with a depreciated exchange passed us by.

Many people have not realised the dangerous position in which we were placed as a result of being forced to go off the Gold Standard. I trust that the Government are not going to be too easily allured by the idea that we are going to benefit to a great extent by a too hurried rise in prices. It is not going to be of benefit to this country to have a too great rise in prices. A limited rise is probably beneficial. I was impressed by a letter which Lord Bradbury wrote to the "Times" the other day, which placed before us the policy which it is desirable this country should follow. A question also raised by those who are anxious to see a rise in prices is what is to be the monetary policy to bring it about. If we compare the deposits in the leading banks of this country with eight years ago we find that they have risen from £1,600,000,000 to £1,900,000,000, but advances have fallen. Investments, on the other hand, have risen from £300,000,000 to £500,000,000. The argument is often advanced that if you have plenty of money it will have an effect on industry in course of time. Technically that is correct, but it may take a considerable time before it has any effect, and the first result is what we have witnessed this year and last year, that these sums available for industry are only used to a limited extent. It is that which has accentuated the feeling among many people that in some way or other the policy of the Government might accelerate the further use of the large sums of money that are to-day lying idle upon the London money market. I think I may place myself in the category of those whom the Chancellor of the Exchequer referred to as supporters of the Government who think that something on these lines might be done to a moderate extent.

There is one point that has not been mentioned to-day. The only hope ultimately of a real recovery in this country is in the increased confidence of the business world and of our people generally. That confidence we have already strengthened to a great extent by the fact that the Budget is balanced, and by the fact that the financial and banking system of the country has withstood the storm. But we have also to bear in mind that during recent years the national income of this country has fallen by some hundreds of millions, while the national expenditure and the expenditure of the municipalities have remained stationary. Therefore the percentage of money that is being taken for national purposes out of the national purse is heavier than it was. I shall not go into the question whether a change of system, Socialism and so forth, would cure the evil. I talk only of the system as it is.

While you are dependent on private enterprise to supply the wealth of the nation, there is a danger point beyond which you cannot go in taking money for public works. I believe that the policy of the Government in regard to public works should not be the spending of a lot of their own money and putting out great Government loans. The money market to-day is rather overburdened with the amount of Government stock on it. If you put out a great deal more the only result is that you gradually increase the cost of every loan that the Government have to raise for other purposes. Some organisations have been started recently and they were referred to by my right hon. Friend the Member for Darwen (Sir H. Samuel). They are bodies like the Electricity Commissioners and the London Passenger Transport Board. Some such body, I believe, might provide a great impetus in the housing of the working classes. That work might be carried out if there were formed some organisation of a semi-public character which could take up the improvement of a great deal of property that does not necessarily come under any scheme connected with slum clearance, but property which is overcrowded and unsatisfactory, and insanitary to a. certain extent, though it may not come under legal condemnation. I believe that some form of public utility organisation with a certain limited backing from the Government, such as assistance in guaranteeing the first loan, might start a, great piece of housing work without any very great expense to the Government compared with the large sums of money that are being expended now. If the Government will do for the traffic of the country what they have done for London traffic they will find that a new organisation of that kind would automatically begin to develop on certain definite lines.

I cannot help thinking that there are methods of helping industry, not by direct Government grant, but by Government initiative. For years traders have been complaining that there is a deficiency in our financial system in regard to export credits overseas. They complain that they can get only short-time credit, while competitors in Germany and elsewhere get longer terms. Cannot the Government take up that matter? If I want to send goods to Dublin I can go to the export credits department and get insurance to a limited extent, so long as the Government are satisfied with the guarantees and so forth, but if I want to send goods to Ulster I am told that the Government scheme does not work there. It would be the same if I wish to send goods to Yorkshire. It is a small matter, but it shows how, instead of having great sums of money, running into hundreds of millions, spent on roads and public works of that kind, the Government might take up some of these organisations, semi-Government organisations, which are required at the present time. They could take advantage of the great sums of money that are now waiting on the money market. I see no reason why we should not accelerate the process of getting that money into use.

I welcome the statement of the Chancellor of the Exchequer in regard to the policy of the Government in connection with exchange. I believe there is nothing else that can be done, except to wait until America has had an opportunity of seeing how her new policy is working, and until America can say to us that she is ready to come definitely to an understanding. That is the crux of the position. It is most unfortunate that just at this time in the history of this country and the world we should have to wait for that understanding. But I believe that the work of the Prime Minister in trying to bring nations together, whether for the purpose of disarmament or for curing our economic ills, is absolutely sound work. I do not think that failures or difficulties should daunt him in going on with it. To give up would be a policy of despair, and the country would be disappointed.

8.20 p.m.

Mr. BOOTHBY

The time is short and my remarks must be telegraphic. Therefore the hon. Member who has just spoken will forgive me if I do not follow him in his interesting remarks. I am sorry that he has gone back from the position that he used to take up in the good old days when he and Mr. Dalton used to advocate almost uncontrolled inflation, and that he is now a disciple of Lord Bradbury. The end of the hon. Gentleman's speech seemed a good deal more hopeful than the earlier part of it. On the subject of public works I would like to quote to the House passages from a letter which I have received from the Secretary of the Building Industries National Council: Given reasonable indication of probable demands, the building industry can make adequate provision ahead, and can eliminate costs and penalties which must inevitably be incurred when demand for labour and supplies is subject to violent fluctuations and obscured by uncertainty. The whole outlook is befogged by uncertainty to-day, due to the confusion created by differing authoritative statements as to the Government's intention in respect of public works programmes generally. Quite apart from the question whether a public works policy in any form is accepted by the Government, the building industry feels that the public and the industry are entitled to know what the Government's policy is, and earnestly appeals to every member to press for a clear and unambiguous statement from a responsible Minister. The matter is one of far-reaching national importance, entirely transcending party considerations. There is a certain amount to be said from that point of view. An industry like that has been bedevilled by uncertainty as to what the Government policy really is, not only on public works, which is a mere item although an important one in the general economic policy of the Government, but on everything. I am a little disappointed this evening because I do not think that the speech of the Chancellor of the Exchequer gets us any further. We do not know any more now about the policy and intentions of the Government covering the whole economic field, than we did this morning. As time goes by, I am more and more impressed by the danger—inherent perhaps in the Government's own constitution—that it is a Government without a theme. It had a theme when it took office at a time of supreme crisis in order to save the country. Later it had a theme from which right hon. and hon. Gentlemen who sit opposite differed openly, when it was carrying through a protective policy. Now it does not seem to have a theme to meet the completely changed conditions in the world of to-day. That seems to me very dangerous.

The Chancellor of the Exchequer preaches inflation to the extent that he says that it is desirable to raise prices. But he practises deflation. In fact the policy of the Government during the last six months has been one of deflation as I shall endeavour to show. The President of the Board of Trade still talks in the language of the economic nationalism of the nineteenth century. Meanwhile, the Minister of Agriculture, in a corner as it were, is carrying through with immense gusto a policy of almost violent economic nationalism. The Lord President of the Council looks on, as a kind of benignant referee, while Members of the Cabinet are playing these different economic games in their respective departments and spheres. One Minister says that the Government are in favour of national development, of raising prices, of public works; another Minister says they have choked down the whole idea and takes active steps to do the exact opposite.

In trying to diagnose the trouble I have come to the conclusion that it is to be found, to a large extent, in the lack of effective leadership at the very top. I think it is time that somebody asked the Prime Minister, who very seldom makes an appearance in this House, to state clearly whether he has any idea of where he is going or what, ultimately, he wants? I have been a close and earnest student of the observations of the Prime Minister during the last 10 or 12 years. During that period he has occupied, in one office or another, a commanding position in British political life. I have not yet been able to discover an occasion on which the right hon. Gentleman has given to the party which he happened to be leading at the moment, or to the country as a whole, a clear lead on any of the vital economic questions which are disturbing our minds at the present time.

I discovered an article which he wrote only three or four years ago in which he actually said that the present system was breaking down because it was a capitalist system and as such was bound to fail, and that the only hope for a solution of our economic troubles and difficulties was the application of Socialism to our national life. I wonder does he still hold that view, or, if he does not, what has caused him to change? Perhaps he was never sure. Even when he was the head of a Socialist Government the right hon. Gentleman did not attempt a quarter of the Socialism which Mr. Roosevelt is actually putting into operation to-day in the United States.

To deal with immediate issues, when the Prime Minister was under Mr. Roosevelt's influence in Washington he made a clear declaration that public works would create conditions favourable to business recovery. Then since he got back to this country he has authorised my right hon. Friend the President of the Board of Trade to make the perfectly clear and unequivocal statement that we have terminated our schemes and that we will not reopen them. As the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) has pointed out, the President of the Board of Trade is nothing if he is not lucid, and when he makes statements on policy we know where we are. But those two remarks, however my right hon. Friend the President of the Board of Trade may try to conceal the fact, are directly contradictory. The manifesto signed and issued by the Prime Minister in Washington is a direct contradiction of the statement made on behalf of the Government at the Conference. I do not see how that fact can possibly be concealed. I would only say, that it is rather unfair, to the building industry, for instance, to be faced with successive Ministerial declarations of that kind. What we want is a clear authoritative statement on economic policy from someone who can give it, either the head of the Government himself, or, possibly, the Lord President of the Council.

The Prime Minister seems to have gone back from the public works idea and the idea of expansion, during the last few weeks. He appears to be less enthusiastic about it now than he was previously. But I do not think that either he or the President of the Board of Trade ought to judge the whole idea and conception underlying public works and public development by the miserable and petty efforts made by the Socialist Government of 1929 and 1930. Those efforts were made under conditions differing fundamentally from the conditions of to-day. They were made with completely free imports, accompanied by violent deflation. They were on a very petty scale and in those circumstances never had any chance of success. Until recently the Prime Minister and the President of the Board of Trade obviously based their main hopes on international economic co-operation, and therefore on the World Conference. The Conference has failed and the right hon. Gentleman and the Prime Minister have been compelled, through no fault of their own, but by the march of events, to adapt their minds and their policy to a world the predominant feature of which is economic nationalism.

What is their policy going to be in the changed conditions? What are they going to do about it? That is the question which has been proposed by the right hon. Gentleman the Member for Carnarvon Boroughs. I personally believe, as my right hon. Friend knows, that a measure of inflation is necessary among other things in this country, and that a certain amount of carefully controlled and regulated expenditure on national development and public works must play a part. Such a measure is necessary for two reasons—first to relieve us of the burden of internal debt which has become intolerable, and secondly, to maintain the balance of the national Budget in the future. I could not help being amused at the direct contradiction which appeared in the speech of the Noble Lord the Member for Western Derbyshire (Marquess of Hartington). He said that agriculture was being smashed, and that that was due to low prices and to the burden of Death Duties. Then in the last part of the speech he declaimed vigorously against public works of any sort or kind. The only possible way to raise prices and diminish the burden of Death Duties is by an expansionist policy in which public works must play a part, although I admit not necessarily a predominant part. I have given my reasons for that belief so often that I do not propose to repeat them now. But the only alternative to a policy of what I call controlled inflation, is to repudiate a large part of our internal debt and to make economies running up to about £100,000,000 a year. If the Government are prepared to do that, we shall have to consider their proposals very seriously but I see no other alternative except successive unbalanced Budgets and the indefinite continuance of a burden of direct taxation which will cripple indus- try and make a real industrial revival in this country almost impossible.

I do not suggest for a moment that we should follow the United States Government, either slavishly or even go so far as they have done in certain directions. I think we should pursue an absolutely independent economic policy of our own, independent of the United States and independent of Europe, designed primarily in the interests of this country and secondarily in the interests of the British Empire. I suggest that, if the Chancellor of the Exchequer and the President of the Board of Trade are serious when they say that they think a rise in wholesale prices is desirable, they will have to pursue a very different policy from the policy that they have pursued during the last four or five months, when the idea of international economic cooperation was, shall I say, in the ascendency, because what they have in fact done, while proclaiming that they want to raise prices, which clearly involves inflation in some form or another, is that they have maintained taxation at a crushing, a crippling level, in order to balance this year's Budget on paper. They have virtually pegged sterling to the gold bloc during the last six months, and they have guaranteed loans to Austria and Palestine, but no loans at all on any substantial scale for internal development, either good or bad, in this country; and whatever else this policy may be—it may be desirable in the long run—it is not inflationary and it will not lead to a rise in prices. If they continue with that policy, they ought not to pay lip service to the principle which President Roosevelt is always advocating, namely, that world recovery is ultimately dependent on a rise in world commodity prices.

Meanwhile, we cannot get away from the fact that we have a decaying agricultural industry in this country. I do not agree with everything that my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) said, but in the main he is right in drawing attention to agriculture as possibly the root problem which confronts this country at the present time, and in saying that we have never had for the last 20 years, and have not now, a policy adequate to deal with it. We have grave unemployment, we have shocking housing conditions still, whatever anybody may say, and we have not yet evolved a policy adequate to deal with any of these questions, yet we have the finest industrial and agricultural population in the world, the finest agricultural land in the world, the finest farming land, and we have the finest opportunities for development overseas in the Crown Colonies of the Empire. Can any hon. Member say that in his unbiased opinion either this Government or any Government since the War have taken sufficient advantage of those advantages and opportunities which we possess? I do not think so.

I humbly suggest that this nation wants leadership more than anything else, and it has not had leadership of the kind to which it responds best ever since 1918. We have seen the response of the United States to leadership—whether their policy is right or wrong is another matter—during the last few months, and we should not do well to disparage the efforts which President Roosevelt has been making to haul, not only America, but the whole world out of the economic depression. Failure in the United States can only bring greater misery here, and we ought to wish him every success in the efforts which he has been making, even although we may not agree with all the steps that he is taking. The Prime Minister, in the Government, has a finer machine, from both an economic and a political point of view, to operate in this country. He has, if I may say so, a much more stable people, and I seriously suggest that now, in the wake of the International Conference, when people are feeling a little bit uneasy about the future and want to be encouraged and given some hope, which is what we all live on in the long run almost entirely, is the time for the Government to come out with at any rate a clear policy and give a definite lead to the people of this country.

8.40 p.m.

Mr. GURNEY BRAITHWAITE

The House always listens with great interest to my hon. Friend the Member for East Aberdeen (Mr. Boothby) on these financial and economic problems, and had time permitted, there is much that I should have liked to follow along the lines which he has opened, but I hope he will excuse me for the same reason that he excused himself from following the hon. Member who preceded him, because I know the hon. Gentleman opposite is anxious to rise shortly in order to wind up the Debate for the Opposition. I wish to concentrate upon what I believe to be a real peril which faces the industries of this country as a result of the grave events which the House has been debating to-day. The hon. Member for East Aberdeen has said, as he is entitled to say, that President Roosevelt has embarked upon a courageous policy, and that he wishes him success. But just as the hon. Member is entitled to make that statement, so are those of us who think that the actions of President Roosevelt are likely to end, not only in disaster for his own people, but in unfortunate results in this country as well, entitled to give expression to those views. The Roosevelt policy has been described as a new and courageous one. Courageous it certainly is, just as a man who jumps over a precipice is courageous. Whether the action has fortunate results for the wife and children whom he leaves at home is another matter. But so far as the policy being new is concerned, I suggest that it is a policy as old, outworn, and discredited as many other policies which we on these benches have opposed from time to time.

Quite frankly, I see great danger to the manufacturing industries of this country during the next few months, and possibly before this House reassembles, and one of those dangers I am anxious to put before the Government. I think it likely that President Roosevelt's policy will result in a greatly increased production of manufactured goods in the United States. I think it is also likely that, try as he may, he will fail to absorb sufficient of his 12,000,000 unemployed, or whatever the figure may be, to create the necessary consuming power for that production. I can see America with a huge glut of surplus goods in a few months' time which have to be sold at knock-out prices somewhere; I can see this island as an attractive dumping ground for those goods; I can see the depreciated dollar, depreciated perhaps to six dollars to the £, being made the engine for the successful dumping of those goods and eliminating, almost in the twinkling of an eye, the duties which have been built up by our Government for the protection of those industries.

I think that those of us in the House of Commons who see that possibility have our plain duty before us to-night, to warn the Government and to ask them to be prepared to take the necessary action. It is true that President Roosevelt is making heroic efforts. He has appointed a brains trust, and I note that of the five gentlemen composing it four are journalists. We might look with some trepidation upon the Government of this country summoning to their aid a brains trust consisting of Lord Beaverbrook, Mr. James Douglas, Mr. Hannen Swaffer and Mr. Randolph Churchill. That seems to be the king of machine that President Roosevelt is summoning his aid Badges and slogans are being issued promptly as the result of his wireless appeal, but slogans are not likely to get all those unemployed in America into work. One can see the backwash of overproduction resulting in further goods being thrown on to the British market, and my appeal to the right hon. Gentleman and to the Government is this. I am sure that whatever political differences we may have in this House, we all rejoice at the fact that there are roughly 460,000 more of our people at work than there were 12 months ago. I want the Government to see to it that they remain at work. I believe that an American crash is inevitable and that it will be the biggest crash which has taken place in the civilised world as we know it.

Reference has been made in the Debate —I believe by the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) in his interesting speech—to the fact that our Government can take counsel with the Empire statesmen who are already in this country. We all know that there are difficulties between this Government and other Empire Governments over the Ottawa Agreements and other matters, but I think that much might be done through co-operation between our Ministers and Ministers from the Dominions to try and take action to deal with this menace, and if possible to hammer out some kind of currency agreement. The Government should now prepare machinery for definitely protecting our manufacturing industries against the consequences of de-valued currencies in the form of dumping by taking powers to impose sliding scale duties on the basis of those operating in some other countries. Despite the grave events of the last two months and the collapse, be it temporary or permanent, of the Economic Conference, there are definite signs of improvement here at home. We hear a great deal of talk about the evils of economic nationalism, a phrase of which we have heard a lot during the past 18 months. But I have never felt that economic nationalism as such is necessarily a bad thing. I believe economic self-sufficiency to be a bad and harmful theory, but economic nationalism in reasonable doses will, I think, do no harm to a country in the position of this country.

There is no hope at all of effective cooperation with the United States while it remains in its present mood. Sooner or later the Government of the United States will have to conform to the thesis set out in the Note of the British Government to them in December last in connection with the War Debt. In the meantime, His Majesty's Government can, by acting boldly, retain the advantages for our industries which their tariff policy has given them, and they should be prepared seriously to protect those industries against the consequences of deliberately de-valued foreign currencies. The plight of the people of the United States must call forth the sympathy of all hon. Members. The position of that huge country, faced with a situation bordering upon panic, with something like 12,000,000 unemployed, not one of whom is receiving one half-penny of assistance from the State, is one with which the people of this country will look upon sympathetically. The people of this country, however, also look to their elected House of Commons and to the Government to see that they are preserved and protected from so lamentable a fate.

8.48 p.m.

Mr. ATTLEE

The hon. Member who has just sat down has pointed out certain dangers that this country may incur through the stern economic conditions in the United States and the efforts that are being made to set that country on its legs again. The point that struck me in his speech was that his remedy to save us was, I gather, to be tariffs. It certainly struck me that any possibility of tariffs would be an extremely weak defence if the conditions were as he represented them. The hon. Gentleman drew a picture of the terrible plight of this great continent—a country which has been developed on the strictest lines of capitalism, in which private enterprise has been given the freest range, and in which governmental interference has been extraordinarily weak; a country with every advantage of a virgin continent, producing almost everything that its people could need; and a country which has drawn its people from the most civilised nations of Europe. Yet that country has come to such an appalling smash. The speech seemed to me to chime in with the note of the whole of this Debate. I am afraid that the Debate hitherto has been such that it really gives the right hon. Gentleman the President of the Board of Trade a great opportunity. I have here a copy of the Building Trades Bulletin, in which they describe the Government's policy as being confusion worse confounded; and it contains this note: Let us hope that the forthcoming Debate will bring a clear statement of Government policy. I think with all respect for the Chancellor of the Exchequer, that he has been in to bat and he has been dismissed with an extremely small score, and that it now remains for the President of the Board of Trade to go in and play a captain's innings. He has to meet a very varied assortment of bowling. I do not think that he has hitherto been subject to any body bowling; the body bowling directed by the hon. Member for East Aberdeen (Mr. Boothby) was directed against the Prime Minister, and he scored several hits. The general note of the Debate has been a profound pessimism, and even those who wished to congratulate the Government seemed to do it in a very peculiar way. We had a curious speech from the hon. Member for Kidderminster (Sir J. Wardlaw-Milne), who kept throwing roses at the Government, but every rose contained a thorn. He congratulated the Government on what they tried to do at the World Economic Conference, although he did not know what it was. He congratulated the Chancellor of the Exchequer on his Equalisation Fund, although he did not know for what it was going to be used. He congratulated him on buying gold, but he could not think why on earth he wanted it. It was, I think, one of the most earnest speeches I have heard as an exhibition of faith. Here was an hon. Member, a loyal and devoted follower of the Govern- ment, trying to do his best to justify faith without any works.

We have not heard very much on this subject of works. The right hon. Member for Darwen (Sir H. Samuel) supported a works programme, but I never quite know how long the right hon. Gentleman will march along with us. I can remember when he used to sit over there developing very big works programmes. Then he and his friends switched off on the great economy stunt that led to the report of the May Committee. At the same time, the right hon. Gentleman has so many qualifications that, although it is true that the motto of the Liberal party is no longer laissez faire, I think it is still laissez balancer. We never know on which side the right hon. Gentleman will come down or, if he has come down, how long it will be before he climbs back. On the whole, the right hon. Gentleman joined in the general chorus of wanting the Government to get on with the job.

We had an extraordinary speech from the Noble Lord the Member for West Derby (Marquess of Hartington). There the President of the Board of Trade really found a devout follower. He praised him; he thought his declaration against public works the best thing he had heard for a long time; but he wanted an economic background—I think his phrase was—and did not like his interferences with economic laws. He did not like housing subsidies, because he thought that if anything was worth while it was done by private enterprise, but it is curious that through all these months we have never heard his voice upraised when all these uneconomic efforts have been made in agriculture. It was a curious study of a mind. You may subsidise tomatoes, but you must not subsidise houses. You can subsidise wheat growing, but must not subsidise a bathing pool. You may subsidise, in one way or another, anything for agriculture, but you must not do anything for the workers. That is a very curious economic background. That, except for the vigorous attack of the hon. Member for East Aberdeen (Mr. Boothby), with which I agree, really made up the chorus—to-day, as we have all been warned, is to be specially a back benchers' day, and I am not going to take very long—and the general chorus cannot have been very encouraging to the Government.

So we come to the Chancellor of the Exchequer, We did hear something from him. He admits that we must introduce some new system, but he did not tell us what it was. He seemed to think that President Roosevelt was right to take a new line, but he had absolutely nothing to suggest himself. I was left puzzled—and again I hope the President of the Board of Trade will explain it—as to his attitude towards public works. I do not know whether he means that they should bring a profit to somebody, or whether he means that they are to be for the good of the community; I do not at all know what his real idea is with regard to works, either public or private. Let me give an instance. I believe that if I suggested that we should put up a big public garden somewhere, for the benefit of the workers, to be done by unemployed labour, with a State subsidy of £125,000, that that would offend against his criterion. On the other hand, this House has just given away £125,000 of value to some private landlords to erect some buildings on the Adelphi site. That is not considered by this House to offend in any way against that economic background.

We on these benches have a different economic background altogether from that. We are considering all the time what is best and most useful for this country. We consider that a vast number of works going on in the country to-day are absolute waste; or if they are not absolute waste they sin against the order of priority. For instance, the other night no one on the Government benches suggested that there was anything wrong in a nation like ours allowing money and labour to be expended on pulling down some beautiful buildings that are fully occupied in an area where there is a vast amount of surplus property and a vast amount of surplus office accommodation. No one suggested that there was anything uneconomic in that, although at the same time everybody knows that the proposals for slum clearance and housing are totally inadequate. That is where we entirely differ from this Government, because we look at the nation as a whole, and the Government never gets away from the criterion of private profit. Its whole attitude on this subject of public works betrays a mind that is absolutely steeped in an obsolete system. Still the idea comes out—it came out most clearly, perhaps, in the speech of the hon. Mem- ber for Finsbury (Sir G. Gillett) that everything in the world must depend upon private profit.

We claim, and we shall be interested to have it denied, that your capitalist system is breaking down entirely to-day because of the failure of private profit as a motive power, and that it has utterly failed to get anything like a planned world. It is admitted that the World Economic Conference was composed, with the exception of one or two persons, wholly of people brought up in the capitalist philosophy, and inevitably every single one of them was thinking of his own particular interests. The result is that they all go away entirely discontented; the one person who has gone away satisfied is M. Litvinoff who, being more socially minded than anybody else, managed to make some successful arrangement for his country. It rather points to the entire failure of the capitalist system when all the capitalist countries meet together and the only one who gets anything out of the meeting is a Socialist. The reason is perfectly obvious—that when your countries meet together not a single country can look at matters from the broad point of view of the whole world.

The right hon. Member for Carnarvon Boroughs really followed much the same line. For all his speech the right hon. Member is as much a slave to the present system as is the right hon. Member for Darwen or the Chancellor of the Exchequer or the rest of us. When it was boiled down, the speech of the right hon. Member for Carnarvon Boroughs amounted, really, to economic nationalism. I agree with him that we ought to develop our country. Where I disagree with him is in his diagnosis of the situation. It seemed to me that he did not carry his history far enough, or it was a very selected history. He gave a history of the conferences—of Lausanne and of Ottawa. There were many conferences before Lausanne. There was Versailles. I think his reading of what has happened to the world left out Versailles altogether. His idea was that all this extravagant economic nationalism was the result of the War generation; on the contrary, it is the post-War generation—not the generation who suffered from the War, but the generation who suffered from this awful peace. The real trouble is that after the War everybody was hoping for reconstruction. We got, on the other hand, an attempt to rehabilitate an obsolete, out-of-date Capitalist system.

To turn to the immediate prospects and the question of what is the programme of this Government. The Government have now taken to referring us back always to something that was said in the past. If we ask what the Government policy is, they say, "It is the appropriate measures." If we ask what are the appropriate measures, we are told, "You will find that they were outlined by my right hon. Friend at some other date." Let any Member of this House go through the speeches made by the leading members of the Government in general Debate. I leave out for this purpose the Minister of Agriculture, who has been diligently cultivating his own particular patch of the garden. Take the Prime Minister, the Lord President of the Council, the Chancellor of the Exchequer and the President of the Board of Trade, and look through the speeches that they have made while this Government have been in power. You will not find a coherent economic outlook among the lot of them. You find that all those gentlemen are perpetually hanging between two things. On the one side they preach economic nationalism, and on the other side, and sometimes in the same Minister, they go in for inflation and deflation at the same time.

I want to ask one or two questions of the President of the Board of Trade, and particularly I would like to ask whether he entirely agrees with the statement made by the Chancellor of the Exchequer. The Chancellor of the Exchequer was asked whether his policy was to develop our internal purchasing power with a high-wage system, so as to make this a great market for our own goods, or whether he proposed to have a deflationary system and a low-wage system so as to conquer foreign markets. He did not answer that. He was pressed to answer it, and again he did not answer it, but he said that he wanted to raise prices. He explained that he meant a rise in wholesale prices, and that that would not mean a rise in retail prices except to a very small amount. I should like the President of the Board of Trade to explain that, because he is always very interested in prices. I want to know who, at the present time, is getting that large difference between wholesale and retail prices. I do not know whether the right hon. Gentleman was in the House when the Chancellor of the Exchequer spoke, but he recognises that the producers of primary products are not getting enough. It is not suggested that we who consume those products should pay much more. but that it is possible for those producers to get a good deal more. I wonder whether the right hon. Gentleman will tell us where that is coming from. He will be able to tell us, I am sure, whether it is coming from the shipping, lines or whether it is coming from the middleman, and, if the latter, why they have allowed the rapacious middleman to make this enormous amount if it is to make all the difference to stabilisation. Is it the fact that the amounts which are going to the middleman are so large that they will make all the difference to the amount of purchasing power circulating in the world, rehabilitate those primary producing countries and set us going again? If that is so, who is getting those amounts?

If the right hon. Gentleman will answer that question, perhaps he will answer also the question put by my hon. and learned Friend the Member for East Bristol (Sir S. Cripps) and tell us what is the Government's policy with regard to wages. Is it their policy that you should have high wages and shorter hours, or is it their idea that we should have low wages? Does he believe that the way to meet conditions now existing in the world is to try and increase the purchasing capacity of the peoples of the world, so that they will be able to consume more of the goods that are produced or does he believe in the policy which is actually being pursued, the policy of scarcity; that is to say, cutting down supplies of goods? We should like to know, because at the present time we have one thing practised and another preached. What is the good of raising prices if you are to have a low-wage system and people, because of the enhanced prices, are not able to buy any more? The Chancellor of the Exchequer is an extremely clear exponent of economics, but it has been suggested that since the policy of the Government is floppy, there is a certain inconvenience in the right hon. Gentleman being too clear. He is always clear, but he is very good at escaping from making too definite statements. It does not matter to me so much, but he must realise that industries are hanging on his words. The Building Industry National Council want to know what is the Government's policy, and not only them, but everyone is asking: "What is the Government's policy?"

The President of the Board of Trade should remember that we have been buoyed up with hopes for months that the. World Economic Conference was going to be a great success, or a success of some sort, and that it would produce a policy. The World Economic Conference, w are told, is not absolutely dead, brut is adjourned. When this House is adjourned, nothing more is ever heard of the matters that have been under discussion. It seems likely that the World Economic Conference will follow Parliamentary practice. The point is that that hope is absolutely gone. The right hon. Gentleman is asked to produce confidence in the country. What is he going to do? What is the policy? It looks as if the ship of State was a drifter with nobody at the helm, and that it is drifting on to a lee shore. I hope that the right hon. Gentleman can give some encouragement to a House which has shown in every quarter a desire for information as to what, if anything, is in the Government's mind.

9.12 p.m.

The PRESIDENT of the BOARD of TRADE (Mr. Runciman)

I have listened with very great care to the speech which has just been delivered by the hon. Member for Limehouse (Mr. Attlee). So far as I understand his argument—it did not strike me, by the way, that it was a continuous argument—he wanted to know from us what were our definitions of proper wages, the right level of prices, and how much of the difference between wholesale prices and retail prices was swallowed by the middleman, and he dragged shipping in. He wanted some information on the subject of shipping.

Mr. ATTLEE

The Chancellor of the Exchequer suggested that there was this large amount available between what the consumers paid and what the producers got, and we wanted to know where that amount was that could go to the producers.

Mr. RUNCIMAN

It has not any bearing upon the subject that is under discussion to-night.

Mr. ATTLEE

Why did the Chancellor drag it in?

Mr. RUNCIMAN

If the hon. Member wants to have my technical opinion upon the subject of shipping, I ought to charge a fee. I follow the example of the lawyers in that.

Sir S. CRIPPS

Lawyers do not charge a fee for information given in this House.

Mr. LANSBURY

Is the President of the Board of Trade entitled to treat the House in this fashion? He is there as a Minister of the Crown, and a salaried Minister, and we have asked him as a Minister of the Crown to give us information.

Mr. DEPUTY-SPEAKER (Sir Dennis Herbert)

I do not think that the right hon. Gentleman will go too far.

Mr. RUNCIMAN

I say at once that I am not going to discuss here to-night the difference between wholesale and retail prices.

Mr. LANSBURY

The Chancellor did.

Mr. RUNCIMAN

I am not going to, and the right hon. Gentleman will have to content himself with what I say. I propose to deal with the main subject of the Debate and with matters not of theory but of practice. I shall point out before I proceed any further that in this Debate we are attempting to deal with two subjects. One is the 'Government's policy in reference to home markets, and the other is the course of business at the World Economic Conference, the stage which is now reached, and the arrangements which may be made. Each of these is a subject of considerable importance. May I deal, first of all, with our national policy here at home? The course of the Debate has shown a certain amount of anxiety, which had previously found its way into the Press, as to whether or not the Chancellor of the Exchequer, the Prime Minister and myself meant the same thing when we were talking about capital works. I hope the speech which has been delivered already by the Chancellor of the Exchequer has made the point quite clear. He has stated unequivocally that, when I spoke at the World Conference, I was expressing the view of himself and the other members of the United Kingdom Delegation, and of the Government as a whole. The suggestion has been made by (my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George) that the Prime Minister held views regarding capital expenditure which were not identical with ours—

Mr. LANSBURY

He did in America.

Mr. RUNCIMAN

I do not know that the right hon. Gentleman is entitled to say what did actually pass in America. There has been no official report of that, and, in a matter of this kind, I think it is scarcely good enough to quote the Prime Minister unless the actual words are before us. I do know what he has said definitely in this country, both in the Press and at this Box, and there is no doubt that he felt, just as we felt, that the capital expenditure of the last 13 or 14 years has made very little impression —certainly no permanent impression—upon the problem of unemployment. That is a fact which we cannot overlook, and, when the subject is dealt with, whether in the World Conference or elsewhere, we should be foolish to ignore the experience which we have already gained at very great cost.

My right hon. Friend the Member for Carnarvon Boroughs very soon left that subject in order to explain to us his reasons for believing that the World Conference had ended in failure, that it left the state of the world blacker than it has been at any time since the War, and that to make any attempt at economic disarmament in Europe at the present time was really to ignore what he regards as the facts of the case. I think my right hon. Friend takes too gloomy a view of the state of the world. As a matter of fact, in the weeks during which we have been meeting at the World Conference we have come face to face with a great many of these economic problems in their most acute form,-and perfectly frank statements have been made by the various delegations representing the several governments. They made quite clear, directly they came down to the discussion of details, what their main fears were. I hope I am not misrepresenting any of them when I say that one thing that was uppermost in their minds was that, in being asked to disarm, they were being asked to give up their only means of defence against fiscal and economic policies which might endanger their own internal trade. They declared quite frankly that they were not prepared to give up their right to impose prohibitions if in their country there might be a violent influx, due entirely to depreciated currency, of goods sold at prices well below their cost in the importing country, and they stated one after another that, until they were assured of something like stability in foreign ex changes, they did not regard it as safe to embark on any great diminution of their prohibitions, quotas, or tariffs. Those, undoubtedly, were facts, and we accepted them.

If we had had our way, we should certainly have made progress, both bilaterally and multilaterally, towards a reduction of trade barriers. We take a different view of the state of our trade from that which is held by the representatives of a good many other countries. Whatever may be the case elsewhere, it is quite certain that we here cannot exist, with our present population, unless we are able to cultivate and expand and foster by every means in our power the export trade of this country. It is very easy to make a gloomy survey of industry here, but let us keep in mind one fact, and that is that, in most of the export trades, with the exception of coal and cotton, there has been a very distinct improvement during the last 12 months. We want to see that accelerated. Our interests lie mainly in the export trade. The home trade, very largely owing to the Government's policy, is able to take care of itself, but we want to make sure that the export trade is likely to expand and be able to maintain the great population which used to depend upon it in the past.

Of course, my right hon. Friend the Member for Carnarvon Boroughs was quite right in laying stress on the extension and prosperity—the increasing prosperity, let us hope—of home agriculture, and I doubt whether as much has been done for home agriculture in any one Session in the lifetime of any Member here as has been accomplished by the present Minister of Agriculture during this very Session of Parliament. We are on the right lines. I do not know what was in the mind of my right hon. Friend, except, indeed, that he believed that we ought to spend more money on reclaiming waste land, on afforesting waste land, and on settling on the land. All of these are undoubtedly sound economic propositions if you can get a return out of them which is commensurate with the capital involved. We have had in this country a good deal of experience of afforesting waste land, and anyone who has gone into it in detail must know that an enormous amount of money has been sunk for which we shall never get any return, either by way of interest or income, or in supporting the population, or even in supporting smallholders who, for about three months in the year, can find employment at afforestation. I would not grudge any expenditure that would lead to an increase of our population on smallholdings or new plantations, or to the reclamation of land from whatever source. That would be a kind of expenditure which would be well worth while. Although it might not bring in an annual return of pounds, shillings and pence in our own time, it will help to support a larger population, and to that extent I am in full agreement with my right hon. Friend. I think that that would come well within the four corners of our national policy, no matter who may be directing the affairs of the country.

Mr. DAVID GRENFELL

Would the right hon. Gentleman recommend that policy to the Chancellor of the Exchequer, rather than a policy of cutting down?

Mr. RUNCIMAN

My hon. Friend is really out of date, if I may say so. These matters have been under consideration by the Chancellor of the Exchequer, and are now being carefully studied in detail on technical grounds by the Government. These suggestions, to which I have listened with very great care to-night, are really all stale. I do not know that there was anything more in the speech of my right hon. Friend with which I need detain the House. So far as I am personally concerned, I have been asked again and again, both here to-day and on other occasions, what were the grounds for the speech which I delivered at the World Conference. I am quite ready to tell the House in greater detail than I told the Conference itself. I spoke there very briefly. I hope that I never speak too long, and certainly at the Conference I tried to pack into a very short speech all that I had to say on the subject.

What did I say, and what was the ground for it? I was prompted to deal with the subject somewhat emphatically and, I hope, clearly by reason of the request which had been put forward in the course of the meeting of the Economic Commission. At least two very eloquent and moving speeches had been made by the members of the Commission. They were both voicing the. schemes of the International Labour Office. They both had in mind what had already been done by the committees which had sat on this subject, and I have no doubt that the whole of the Commission knew perfectly well that the programme that had been set out could not possibly be either initiated or carried through without the flotation of loans in France, in Great Britain, or conceivably in America. Now, when we were asked, as we were inferentially, to provide funds for schemes of a nature which we had already tested in this country, we should certainly have been very foolish to allow the impression to go to the Conference that we were going to_ play an indiscreet and reckless part. I do not criticise the work of the Committee. They were undoubtedly doing the best they could with the material before them, and there was no harm in their expecting they could raise loans in this country. The harm that would have been done by letting them remain under that false assumption would have been very great indeed, and would have been lacking in candour. We had to tell them we would not provide money from London for these schemes.

Some criticism has been made of the Prime Minister because, in answer to a question the other day, he referred to schemes from Eastern Europe. I turn up the report of the Committee and take the whole of the schemes in Annexe 1 of the report. The first two items both concern Austria, which is Central Europe. It may not be Eastern Europe, but it is not Western Europe. The next three schemes are from Bulgaria, which is Eastern Europe. Then there are two from Greece, which is certainly not Western Europe, and two from Hungary. Then two from Latvia and a vague suggestion of schemes from France, the only Western example. Then follow eight classes of schemes from Poland and three from Yugoslavia, and that is the lot. Surely the Prime Minister was justified in describing these as schemes from Eastern Europe. Although it may not be a very scientific description of the geo- graphy of the schemes, it certainly did convey to anybody who knew what had been passing in the Committee exactly what was meant.

If we were asked to deal with these schemes why should we not, first of all, see what we had been doing in that direction? I turn up the final report of the Unemployed Grants Committee covering the period from December, 1920, to August, 1932. During that period schemes had been approved for grants amounting all told to £190,000,000, of which £113,000,000 was non-revenue producing. If they had been in that classification, it is quite clear there would be no interest paid on the loans we might have been induced to raise here. We cannot raise loans without some provision for the service of the debt. The remaining £77,000,000 came under revenue-producing and, of these loans, the three biggest items were water supply, dock and harbour improvement and equipment, and electricity supply. The others were of minor importance, but those were the three big ones, and the only ones amounting to anything very much in the way of revenue-producing items. Between them, those three covered one-third of the gross total, and no more.

I turn from that table to another of greater importance, the table which concerns the repayment of these loans. There are a great many people who talk glibly about the floating of loans for capital works, but who do not seem to realise that one of the main considerations in connection with these loans is that they should be repaid. When were the loans made in the period 1920 to 1932 to be repaid? Their repayment was to cover a period running up to 1963-64. The biggest amounts were to fall in the periods 19;32-36, 1936-41, and 1941-46. That deadweight debt has to be provided from somewhere or another. One of the disadvantages of our schemes is that they have created this deadweight debt, partly borne by the local authorities and partly by the Exchequer.

We were justified in asking whether the schemes had, in fact, been worth while from the point of view of the unemployed. I cannot believe that anyone, going through those details, will not come to the conclusion that this was the most expensive way of dealing with that and that in practice it had been found to be a failure. I will mention only one set of schemes covering capital expenditure. Let me turn to the schemes outside the Unemployment Grants Committee. The Chancellor of the Exchequer mentioned this afternoon that since 1920 there had been £120,000,000 spent on telephones. No one can say we were not generous on that. Then there was £130,000,000 spent on road schemes. On works of public utility, which, I take it, are the better class of these loans, covering docks, railways, electricity, etc., about £40,000,000 was spent. In addition to this £70,000,000 was guaranteed by the Government under the Trade Facilities Acts. Those were the major schemes. There were a number of smaller schemes on which sums were also spent on land settlement, land drainage, etc., all of which enabled us to test out this way of dealing with economic problems and providing work for the unemployed. The truth was that we in this country had more experience of this method of dealing with economic problems than had any other country in the world. Nothing like so much has been done anywhere. If you turn to America, they are only just beginning. They are learning. On the Continent of Europe they have nothing commensurate. They have not even attempted to cover the wide field we have done. In those circumstances, it would be unfair to the Economic Conference not to have given them the advantage of our experience. What I did say was said in the plainest possible language.

I put that aspect upon one side, because I do not think any discussion of the exact phraseology used in this House, or in the Conference or in the newspapers matters very much. What does matter to us on the eve of the Adjournment is to know whether the work which up to the present has proved productive is likely to be continued. I say "has proved productive" because we have a record of improvement in this country which is not to be paralleled anywhere else. My right hon. Friend the Lord President of the Council, speaking on Saturday with that moderation which is one of his most marked characteristics, understated the figures of those who have been put to work during the last 12 months under the influence of Government policy as well as the recovery brought about by the energy of those engaged in trade. He said that 12 months ago employment was bad, but in ate course of 12 months the number of persons employed, apart altogether from the unemployment figures, had risen by 461,000. My right hon. Friend might justifiably have said that since January last the number of those actually at work had increased by 500,000. How much could have been done under any of these schemes of public works? At the very maximum there was no period during which these schemes were in operation when the total number of persons employed on them came to more than 114,000. I understand that some organisation outside has been challenging the figures of the Minister of Health which I repeated. I have never found the Minister of Health inaccurate. He has one of the coolest brains in the House, he is one of the most exact statisticians, and I trust his figures implicitly, and, if he tells me that 114,000 is the maximum which at any time we were able to employ under these national schemes, I accept his figures. I will not compare them with the 500,000 who have been put to work since January.

It would be indiscreet to say that that is entirely due to Government policy. It was not. It was due very largely to the people who are themselves, engaged in trade, with their representatives abroad, those who have been labouring at home under new schemes, inventors of new processes and new machinery. It is a very remarkable fact that the number of persons employed has been going up. You cannot explain that away, and I believe this improvement which we see at home is going to continue.

There are four tests which can very easily he applied to the condition of an industrial country. First of all is there any increase in its postal turnover? That is a very good test, for activity of trade is reflected at once in the postal returns. Undoubtedly the turnover in the Post Office has been going up rapidly and is still rising—a very good sign. The next is this. There is no industry in the country that is not dependent to a, large extent upon the use of chemicals in its processes. They are a most important raw material. We know more or less the output of chemicals and, from all the most exact information that I can obtain, there appears to be a, continuous rise in the use and manufacture of chemicals by the big combine, Imperial Chemical Industries, and the other companies associated with it. That is a very good sign. It shows, at all events, that in the greater trades where chemicals play a very large part there is renewed activity and an increased demand. Railways have been mentioned. There is undoubtedly an improvement in the railway traffics, not as great as we all hoped for or expected, but railway problems are complicated in a way that no others are and, at all events, the traffics are better.

I understand that the coastal shipping trade is really doing better than for many years past. That should be a great satisfaction to the hon. and gallant Gentleman opposite. We ought to take credit for that. That is all to the good. Some of my friends who are engaged in banking and merchant banking in the City tell me that during the last month they have had more commercial bills through their hands than they have had at any time for some years past. There is no reason why there should not be continuous improvement. If you ask what the Government are going to do during the Recess, they are going to continue along the same lines of policy which have brought about these results. If you ask me what we are going to do with regard to tariffs, we shall continue our negotiations for bi-lateral settlements and, if we have to use multi-lateral means to secure hi-lateral agreements, we will use them or any other justifiable means. If you ask me what we are going to do with regard to the prohibitions and quotas which are hampering us in Europe, we will use our persuasive powers, so far as we have them, with the representatives of other countries and we will hold out to them the hope of increased trade with us if they are prepared to lend their hands to increased trade on their side. These things must be reciprocal and, if they are reciprocal, I have no doubt that we shall be able to make offers which are attractive. Negotiations are going forward with some of the smaller countries in Europe. In a short time I hope we shall have disposed of the whole of those which are regarded as of secondary importance because of the size and the volume of their traffic. Every country that comes into arrangements with us now, I hope, comes into a new relationship which will mean not only an extension of our traffic but an increased confidence in what we can do for each other in the future.