HC Deb 02 June 1933 vol 278 cc2243-71

11.8 a.m.


I shall not detain the House unduly in what I wish to say to-day. I am pleased to find that even at this late stage the Chancellor of the Exchequer has been good enough to be present. We desired to say something on the subject of the World Economic Conference a week ago, but owing to other circumstances that was not possible, and we are now taking this opportunity to ask the right hon. Gentleman to help us and the country by making clear what is not fully clear to us at the present time. No apology is required for bringing forward this subject. The peoples of the world are now conscious of daily happenings and are intimately concerned in the solution of the economic problems which vitally affect the life and prospects of all classes in all climes. In the new countries where men are engaged as producers of primary products there is as much anxiety as we find in the older communities whose institutions are in jeopardy. Those who produce suffer because the machinery of commerce is working badly. The fault does not lie in the field or the open spaces, on the high seas, in the depths of the mines, nor in the factories and workshops, but in the centres of control and Government.

It is believed that Governments can correct the faults of the economic system, and it is in this belief that we witness the coming of the first World Economic Conference which, appropriately enough, with its delegations, is to meet in London, this great city which owes its existence, its influence, its pride and pleasure, to commerce. The Conference is a sign of a new awakening and holds great hopes to those who want to see the spread of prosperity, security and peace among men. Is there some ground for such hope? Those who appreciate how high are the obstacles lying on the lines of the political divisions in view of the demands for political sovereignty do not expect easily to overcome the barriers which are put up to maintain economic sovereignty within the political frontiers of the world. Yet faith and necessity bring the delegations here. They will occupy separate accommodation on the floor of the Conference, they will consult in sections and in groups, but they are to be brought under one roof and must strive to obtain the largest possible unity if they are to gain even partial success.

The Conference is not yet aligned on a common front. Can we succeed in bringing all these forces on to the same lines in order that definite lines of attack may be followed. Military terms will creep in when speaking of the organisation of large and powerful forces, however inappropriate they may be. We speak of the objective and the attack, and for the moment we are not satisfied. Visibility is poor. The general staff is not in full agreement. There is a good deal of back-chat amongst the generals, but we believe that the main plans of the attack have been settled. According to the Committee charged with the preparatory work, the Conference is to examine (1) monetary and credit policy, (2) prices, (3) resumption of the movement of Capttal, (4) restrictions on international trade, (5) tariffs and treaty policy, (6) organisation of production and trade.

Judging from these points set down in the Agenda, one recognises that the attempt is to be made to reconstruct world trade and world conditions and to bring them to a state which will satisfy those who believe that the present economic system is worthy of being reconstructed and maintained; but we are not quite satisfied that that end can be achieved by following a discussion on these particular points. We are confident that the aim of the Conference, and the subjects of discussion must be widened so as to remedy one or two omissions which are vital to the very process of reconstruction, I would quote a few words from the statement by President Roosevelt, to show the significance of the omission and the inadequacy of the Agenda, and to show the view held by that very vigorous and very strong personality. The President shows idealism, good feeling and vision in the statement that he delivered to the world, and I quote these words: To these ends the nations have called two great world conferences. The happiness, the prosperity, and the very lives of the men, women and children who inhabit the whole world are bound up in the decisions which their governments will make in the near future. The improvement of social conditions, the public preservation of individual human rights, and the furtherance of social justice, are dependent upon these conditions. The World Economic Conference will meet soon and must come to its conclusions quickly. The world cannot wait deliberations long delayed. The Conference must establish order in place of the present chaos by a stabilisation of currencies, by freeing the flow of world trade and by international action to raise price levels. It must, in short, supplement individual domestic programmes for economic recovery by wise and considered national action. In that wise and intelligent statement there is a sign of hope from America which, without offence, we must say has been too long concerned and satisfied with her own prosperity and security in her position as detached from the rest of the world. But there is a significant omission in the report of the Preparatory Commission, and in the statement of President Roosevelt. The Chancellor of the Exchequer, I know, is entrusted with difficult negotiations and he will not find me adding to those difficulties by anything I shall say, but there is an omission which we cannot fail to note. Not one single word is said about Debts, intergovernmental debts, war debts, allied debts, debts of all kinds, and they really cannot be ignored and left out if the Conference is to achieve its purpose. We have an enormous national Debt which we are bEarlng without complaining, but which does not receive the attention of the outside world to the degree it deserves. We burdened ourselves with much debt in the prosecution of the war. We have to pay out enormous sums of money. Chancellors of the Exchequer for the last 10 years have carried on with titanic energy and courage the task of maintaining our national solvency. We have raised, on an average, nearly £800,000,000 a year for the last ten years, and have paid in interest and Sinking Fund on an average over £300,000,000 a year for the last ten years. We have actually paid into the Sinking Fund for redemption of Debt in that term of years £500,000,000, and yet the nominal Debt to-day stands higher than it did ten years ago, while the actual Debt value in commodities is twice as much as it was when the debt was contracted. That is the great burden which we are carrying upon our shoulders, but it is easier to carry because we can adjust it to our own person.

But the burden of debts which carry obligations across the political frontiers of the world are much more difficult, and it is not easy to ovErieok this important problem. I should like the Chancellor to say something on this point, if he can; I am sure there is a way of saying these things. Last December this House with remarkable unaimity approved of the payment of over £29,000,000 to the United States. There were very few reservations in the minds of anybody; it was held to be a question of national honour and national necessity to meet the obligation at that time, but there was a hint, most definitely, and I feel sure it was the feeling of the House, that when the payment was made it should be made fairly clear to the United States that the payment could not be repeated in the same form when every instalment became due. Now, we are within a few days when the next instalment has to be paid. Having paid £29,000,000, which cannot have helped America one bit, we have now to prepare to pay £19,000,000 on the 15th June. I should like the Chancellor of the Exchequer to say whether it is not possible to make some suggestion which will relieve us of the responsibility of defaulting and enable these payments to be the subject of agreement at the World Economic Conference, that they should discuss these payments which have burdened us so long and which are largely, almost mainly, responsible for the economic disturbance which we see all around us.

I do not think, however, that the American Debt problem should be tackled as a single problem. It is part of the larger problem of world debts, and there are other countries which are suffering and which are handicapped in their economic outlook and prospects because of these liabilities. When the question of defaulting and repudiation is raised, one is tempted to ask whether these payments are expected to be made for all time, does anybody believe that they can be repeated and continued without end for so long as the nominal debts remain? One does not want to remind America that we made large advances to them during the 100 years, in which she has achieved the most stupendous economic and industrial progress; that she drew upon the old world for her human material and financial resources. This most striking example of human effort which the world has ever seen has been built up by the aid of the older countries of Europe, and the United States, therefore, should be quite clear on the question of default. There are debts due to this country from certain of the American States at the present time, they are forgotten almost, we want to forget them, but there must be the same disposition to forget debts. Once it is recognised that payment is almost impracticable there should be the same disposition to forget all round.

Let me examine for a moment the effect of these debts and obligations, and the effect of attempts to pay these debts. They have to be paid in gold, in gold francs, gold marks, gold dollars, gold currencies, and one of the first effects of the enormous efforts which countries make to discharge their obligations is the accumulation of gold by creditor countries. Gold, which before had been fairly widely distributed and which has operated as the measure of commodity values, became accumulated in a few countries. It was locked up and hidden away in those countries, kept out of circulation, and countries which lacked gold found it exceedingly difficult to obtain the means of payment. The value of the respective currencies of several debtor countries was lost. Inflation on a large scale took place. That inflation has been more or less stabilised in the case of France. French currency is now deemed to be one-fifth of its previous value as measured in terms of our currency. In the case of Belgium it is one-seventh; in the case of Italy it is about one-fourth. Germany had completely to reorganise in order to give any monetary value to the German mark.

This inflation of currency and the difficulty of making payments is very largely responsible for the fall in world prices. I think they are wrong who urge that the world can be put right simply by attempts to raise world prices and to ignore all other considerations. I am convInced about that. I think the House should devote itself to that problem today and during the days that remain before the World Economic Conference comes to an end. We find that at the present time wholesale prices in this country are less than they were in 1913. The average wholesale price of food commodities is now 92 per cent. The average wholesale price of materials is about 96 per cent. The gross average of the commodities scheduled, of which we have records, runs to about 95 per cent. of the value of 1913. That is a most significant and important consideration to all of us.

We do know that world production has slightly increased Since 1913, but that world values are lower than they were in 1913. We find that even with a higher production world wages, the earnings of producers of all kinds in all parts of the world, have failed to rise Since 1913. When we take into view the millions of men in all lands, men in the Antipodes and tropical climates, east and west and north and south, who are striving to produce for the benefit of the world, we find that their earnings, because of the fall in prices, are no greater than, if as much as, they were in 1913. If world earnings are no greater, how can the world bear this enormous burden of debts imposed upon it in the last 15 or 20 years? In order to escape from the perils of low prices nations seek to build tariff walls to protect themselves. There is no greater fallacy that that policy.


Is the hon. Member in favour of abolishing tariffs?


Yes, quite definitely.


Does he speak for his party?




We voted against them when you voted for them.


I also voted against them.


Quantitative regulation is now being tried. But the effect of all these expedients is to reduce the volume of world trade, and the decreased flow of goods in a time of greater productive possibilities must lead automatically to a still further lowering of prices. The figures of world trade have been given to us, and they are astounding. Compared with 1929, despite these makeshifts and expedients, already the value of world trade has gone down from 100 in 1929 to 35 in 1933. I will put it in another way. The value of all the trade that crossed national frontiers, land and sea, in 1933, was only 35 per cent. of the value of the trade that crossed the same frontiers in 1929. It is down to one-third in the course of four years. The volume of trade has fallen also. We find that although prices have fallen more rapidly than the volume has fallen, there has been a diminution of 25 per cent. in the volume of world trade in those same four years. Men working to produce the world's wealth are receiving less remuneration and their purchasing power is reduced.

In addition there is the action of Governments. I come now to the action of this Government, the responsibility for which they must carry and a responsibility which they must remove from their own shoulders at the earliest possible date in the interests of this country's trade. We have in operation an embargo upon Russian trade. Russia is a country with 160 million people, people like ourselves, human being struggling through the confusion of modern-day politics to find a way out appropriate to themselves, a way compatible with their own history, suitable to their territorial and geographical position. We should have no quarrel with them on that account, provided they conduct themselves towards us as we should conduct ourselves towards them. We insist on that. But there is a petty quarrel between this country and Russia, a thing of false pride more than anything else.

I was told by the President of the Board of Trade this week that the embargo could be lifted immediately if a certain thing happened. One wonders why we sit here and allow unemployment to be increased in this country simply because we cannot make up our mind to do what simple people would do anywhere. Two people, each with his own pride, one waiting for the other to concede the point first. Why cannot we say that Russia and ourselves can resume full international trade by simultaneous action— the lifting of the embargo and the release of the prisoners at the same time. It is simply a matter of false pride and because of it we are losing export trade to the value of £10,000,000 a year with behind it the regular employment of from 50,000 to 60,000 of our people. We are losing that trade because we cannot afford to do the big thing and the sensible thing even in the difficult conditions of the world of to-day.

Then, we had a little row with Ireland; with people of our own flesh and blood, people some of whose representatives still sit with us here, people many of whom live in this city and work with us day by day. They are trying to solve their own economic problems in a fashion which is peculiar to themselves but what they believe to be the right and necessary fashion. I am told that Polish and German coal is being mined by Polish and German workmen to be sent into Ireland in substitution for the coal which we formerly sent there from this country before this silly business started. We ask that the Irish position should be reconsidered in order that 4,000 or 5,000 British miners may again be set to work to produce coal for our next door neighbours across the Irish sea. This kind of thing has to come before the World Economic Conference. The Irish delegation and the Russian delegation will be there. No longer can we continue the pretence of unity of purpose when we are dividing on such narrow dividing lines. This war of attrition which takes the form of tariffs and regulations and embargos cannot bring the country anywhere. There are no possible victories in a trade war of this kind. All countries will lose. Victories cannot follow on a course of this kind.

I would like to end upon a note which could perhaps come only from this side of the House. We are now about to witness the first World Economic Conference. It will be a precedent of great hope and augury for the future economic organisation of the world. It is, despite all that can be said, an inquest on Capttalism. Capttalism is breaking down. From the ends of the earth men are hurrying to this city to see if they can revive and restore the present economic system. Sir Arthur Salter, an expert who carries a great weight, has told us that we must prepare for an alternative system here and elsewhere throughout the world. I am convInced of that as I can be of anything. World success at this Conference will depend upon the readiness of the world to approach, to accept, to embark upon the alternative system which must result from this and similar conferences. Where do we stand in this country? Are we prepared to concede something in order to win the success for which we hope? How far are we prepared to go? The Chancellor of the Exchequer is to lead the British deputation and I do not question his ability. I have always had a very high estimate of his intellectual qualities. But I make an appeal to him. I understand his family motto is "Je tiens ferine." I have no doubt he will keep it ever in mind. We ask him to show firmness and persistence in this most difficult situation—firmness expressed not by rigid clenching of the fist and refusal to respond to the friendly pressure of another hand, but firmness that will hold to the main principles of conciliation, co-operation, and mutual recognition. We ask him to be firm always in the determination to join hands in the common task. We ask him to resist every temptation to grasp a temporary advantage at the expense of losing his grip on the greater good which we all desire. I fear I have spoken too long. I ask the Chancellor of the Exchequer and the other members of the delegation and those who consult with them, to go to this Conference in a spirit of adventure, in a spirit not of irresponsibility, but of the larger responsibility which the world situation requires from them.

11.40 a.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

We have listened to a speech which has been characterised throughout by lofty tone and by a statesman-like sense of responsibility. I desire to pay my tribute to the patriotism and the good feeling which has characterised the hon. Member's introduction of this most important subject. If there was any part of his speech to which I felt disposed to take exception, it was that passage in which he seemed to assume that wherever a dispute arose between this country and another country we should submit to whatever injuries might be inflicted upon us, and that we should respond to attacks made upon us by others, simply by turning the other cheek and refusing to take any measures of retaliation. Perhaps we may some day arrive at a state of affairs in which that will be the common practice among individual Christians, but I rather doubt whether the hon. Member who gives expression to these pacific sentiments would be quite so pacific if he himself were exposed to insults or injuries. At any rate I should not like to rely upon it.

Much as all of us, I am sure, regret the economic warfare which has arisen between us and other countries, still we must maintain that warfare so long as it is the other countries who have taken the aggressive and are unwilling to make any sort of reparation or restitution for the wrongs they have done to us. This Government must stand up, not merely for the legal liberties and commercial rights of its people, but for the rights and security of their persons. We cannot view with indifference attacks upon our nationals in other countries when those attacks are really directed towards internal political conditions.

The hon. Member has invited me to give some further information as to the views and policy of His Majesty's Government in entering upon this most important World Economic Conference. If all the nations who are going to attend the Conference were thoroughly agreed as to what they wanted to do, and how they wanted to do it, there would be no need for a Conference at all. The very fact that we are holding a Conference is based upon the supposition that there is not complete agreement, and the purpose of our meeting is to explore the differences which may exist between us and see how far it is possible to bridge them. I submit to the House that if each nation were to begin by laying down, in definite, specific and rigid terms, what it was going to the Conference to get adopted, that would be the worst possible way to approach this task of diminishing such differentiation of views as exists between us. It has always been the practice of British Ministers, to whatever party they might belong, before entering into a Conference to be somewhat reticent about the things that they were going to put forward. At the same time, I do not think there can really be very much doubt in anybody's mind as to the purposes of the British Government in taking part in this Conference, and, if I may say so, it is rather the methods to be adopted that I should desire to say little about than the objectives, which are already public and which I can very easily summarise once again. Those objectives, fortunately, are common, so far as I know, to most of us in this House, and the agreement which exists here extends to outside this House.

I have seen in the last few days a Memorandum which has been prepared by the General Council of the Trades Union Congress upon the work of the World Economic Conference, which I understand is very shortly going to be made public. I read it with great interest, and, somewhat to my surprise, I found very little indeed in it to which I should be disposed to take any exception, while, on the contrary, there are many passages in it that would seem to me to be almost exactly expressing the views of His Majesty's Government, so that I feel that we may consider that in this Conference we shall be representing nearly the whole nation in the objectives at which we are aiming. I go further, because we discussed these subjects at Ottawa, in conference with the other nations and countries of the Empire, and there again we found that there was the closest possible harmony between us.

I should, I think, be disposed to classify these objectives under three headings. The Agenda which the hon. Member quoted has more than three headings, but I think, for my purpose, I can reduce them to a smaller number than those which he read out. I should put them under the three headings of "Price levels," of "Currency considerations," and of the "Abolition or reduction of the barriers to international trade." I think everything can be really comprised under one or other of those three heads. I take, first, the question of price levels. The hon. Member pointed out that in the last four years international trade has shrunk to a third of what it was, and that prices have fallen to a half, a fall unprecedented in economic history. The result has been most disastrous. In the agricultural countries—indeed, in all countries where agriculture is practised—there has been a very severe fall in the standard of living and, of course, a corresponding drop in purchasing power. Some of the most important customers of the industrial world are the agricultural producers. Probably they are responsible for quite half, possibly even more than half, the demand for industrial goods, and when you find great agricultural countries such as the South American countries or some of the agricultural countries in Europe suffering from a condition of things in which the prices which they obtain for their production has dropped to one-half what they were four years ago, it is not surprising that that is reflected in the distress of the agricultural countries and in producing of no fewer than 30,000,000 unemployed throughout the industrial world.

It is these considerations which have appealed to His Majesty's Government, as they have evidently appealed to the Trades Union Congress, and have convInced us that the first objective ought to be the raising of world prices to a more satisfactory level and, if possible, their maintenance at something like that level. Now how is that to be done? I have always myself held the view that you could not expect to raise prices by monetary action alone. I have always thought that there were other vital factors entering into the question which could not be neglected and which must, therefore, be taken into account in any effort to bring about an improvement in prices. I am sure that the revival of international trade is essential to the increase of prices, and again I feel that the revival of international trade is largely bound up with the possibility of obtaining political tranquility and the general restoration of international good will and international confidence. Then there is the question of trying to get a closer adaptation of production to consumption.

I cannot help feeling that there is still a great deal of confusion in the minds of many people about this idea of the regulation or adaptation of consumption. It is constantly spoken of as though it consisted solely in restriction of production, and theorists say that, although restriction of production might produce some temporary alleviation of the situation, ultimately it must be a bad thing. Put in that way, yes, but that is not the reality up to which we have to face. The reality is that there is over-production, at any rate at the present time, and that the restriction that is required is restriction of over-production. The question of consumption is the other side of the same picture. If you increase the capacity for consumption, then you do not require to restrict production, but you may have to expand it, and the process is not solely one of restriction; it is restriction or expansion according as the capacity for consumption varies. The idea that anybody wants to restrict production and leave consumption to take care of itself is an entire fallacy. By all means do everything you can to increase the expansion of consumption, but to allow production to go on unchecked, unregulated, and unplanned in these modern conditions, when in many cases it can almost at a moment's notice be increased to an almost indefinite extent, seems to me to be absolute folly if it is possible to adopt any alternative. By this regulation and planning of international production through agreement among producers themselves, I believe that we can do perhaps more than in any other individual direction to raise prices as we desire to do.

The second objective has relation to currency. What we want to do is to protect the principal currencies of the world from fluctuations having no relation to their intrinsic value, the extent of which cannot be foreseen but which come upon us suddenly and unexpectedly. Fluctuations of that kind are fatal to the ordinary processes of trade. We have done what we can in this country by the instrument of the Exchange Equalisation Account to avoid these unnecessary and undesirable fluctuations in sterling, and of course we shall continue to do that; but we hope in the International Conference, by the exchange of views, to arrive at some agreement among ourselves as to further steps that can be taken leading ultimately to what, of course, we must regard as a complete essential for the thorough restoration of international trade, namely, a stable international money standard. On the nature of that standard no doubt we shall find ourselves in disagreement with hon. Members opposite, but I am not sure that the disagreement is not one rather of practice than of theory. They desire, having raised prices, to keep them stable. So do we. They think that that can be done by a standard linked to a price index of commodities. We do not think that a standard of that kind would be accepted by the nations of the world or would inspire them with sufficient confidence.

As far as I have been able to judge, there is only one standard which is familiar to everybody, and which would, I think, inspire confidence throughout the world provided certain conditions are observed. That is, of course, the gold standard. Whatever may be the theoretical views about the best standard, obviously in this workaday world we have to try and fix a standard which will be accepted and worked by the nations as a whole. There, I think, we shall find that we must fall back on gold, and in that view the nations of the Empire agree. But before we can go back to any Gold Standard—I am not now, of course, suggesting that we should go back at any particular parity when we do go back—before we can go back at any parity to the Gold Standard we must be satisfied that practical means are going to be taken to insure that the Gold Standard will work and will not be subject to those defects which brought it to the ground not so very long ago. That is a matter of the utmost importance, and I earnestly trust that it is one of those matters to which the Conference will give very serious attention.

The third objective, as I have said, is the removal of abnormal barriers to international trade. I put among those the exchange controls, which are now to be found in some forty countries of the world and which make trade absolutely impossible. We know why these exchange controls are imposed. They are imposed in countries which are nervous about their currencies for the protection of their currencies. They are a symptom and in order to get the symptom removed we must remove the cause, and until we can get some sort of revival of confidence, until we can get the reserves of central banks strengthened where they are weak, and some revival of international lending, I do not see very much prospect of the speedy removal of exchange controls. There again, a meeting of creditor and debtor nations alike will give unexampled opportunities of discussion, and I cannot think that we shall part without having made some substantial and great advance towards a solution of that very difficult problem.

Second only to exchange controls, are restrictions and quotas, which are not like the regulated production of which I have been speaking on a definite international plan with the assent of other countries; they are arbitrarily put upon industrial products as a sort of measure of protection of a severe kind. I think that I see some yielding in the rigidity of the views as to the necessity of quotas of this kind, and I am not at all without hope that we may find that other nations that have tried this experiment will, for the purposes of better understanding and better feeling between nations, be prepared to relax them. FiNaily, there is the question of tariffs. Some hon. Members seem to think that there is an inconsistency in the attitude of the Government who have been occupied many months in building up tariffs and who now desire other nations to reduce their tariffs. I see no inconsistency myself except of a verbal kind, because everything depends on the size and height of the tariff. We have tried the experiment of leaving ourselves completely open to the importation of foreign goods while others built up walls against us. The result very nearly landed us in disaster, and I think there can be few now who would like to go back, in these days, to the conditions, so called, of Free Trade, but really only of free imports which existed a few years ago.

We do not ourselves desire to make our tariffs of a prohibitive character, and we are quite certain that the continual raising of these walls, until they form no longer a check, but a complete barrier, to the passing of trade over their tops, is a policy which has been injurious not only to countries against which those barriers have been erected but to those which have tried to be self-sufficient within their own walls. After all, creditor nations ought to realise, they must realise anyhow, that commercial debts can only be paid in goods and services, and unless they are prepared to take goods and services they cannot expect to have those debts paid. The revival of trade depends, in my opinion, upon the acceptance of these three main objectives by the Conference. I have very little doubt that there will be a wide measure of agreement upon the main issues; but I daresay that when we come to measures to be taken we may find that a good deal of work will have to be done before we can line up with one another.

There was one observation made by the hon. Member for the Gower Division (Mr. D. Grenfell) which struck me as being particularly happy and to the point when he said delegates would be coming to this Conference with faith and of necessity. That is perfectly true. Necessity drives us all, and all of us realise that now, even after the tremendous shrinkage which there has been, that the shrinkage has not yet ceased, and unless we can put aside something of our prejudices, unless we are prepared, each of us, to give something in order to secure agreement from others —if, in short, this Conference fails to achieve the purposes which have brought it together, amid the expectations and hopes of all the world, then, indeed, it would have been well that the Conference should never have been called. We might despair of emerging in our own time from the depressions and hardships and sufferings from which we hope this Conference may deliver us.

The hon. Member said there was one omission from the Agenda of the Conference. He felt the problem of War Debts was not one which was capable of complete isolation, but was one of the many factors, including debts of other kinds, which affected all and ought to be treated with other factors. The separation of War Debts from the Conference Agenda was inevitable I think, for after all a war debt is not a debt by the Conference as a whole, it is a debt between individual nations and other nations, and can only be settled by negotiations and discussions between debtor and creditor. What have the other 30 or 40 nations to do or to say upon the subject of War Debts? It has to be discussed between the parties concerned. The hon. Member asked me whether I could not make some suggestion which would free us from the necessity of default. The Government of the United States is in full possession already of the views of His Majesty's Government. They were expressed officially in a communication which we made to them when the December instalment was paid. They have Since been further developed in the conversations that took place between the President and the Prime Minister, and if I say nothing more now it is because at this moment any word of mine, however innocuous the intention, might be the subject of misunderstanding on the other side of the water, and I am not prepared to take any risks of saying anything which might, however inadvertently, prejudice the chance of a satisfactory solution of this very delicate question. But I think we should do well to assume that our difficulties are fully appreciated by the American Government, and that there is no desire on their part to do anything to emphasize those difficulties or which would prejudice the success of the Conference. That is all I feel I can say on the subject of war debts.

The Conference itself, the very greatness of the emergency, the desperate nature of the situation will, I think, put all the delegates in a mood in which they will be disposed to do their best to make the Conference a success. For myself, it is in a spirit of optimism and of confidence that I shall go to the Conference, and I trust the House of Commons will feel that it can approve the account which I have given of the general objectives which we shall pursue, and that it will be prepared to trust us to do our utmost to see that those objectives are attained in whatever way may seem possible to us as the Conference proceeds.

12.15 p.m.


I had not intended to intervene in this Debate, but, after what the Chancellor of the Exchequer has said, I think that those who represent the different views in this House should express their encouragement and good will to the representatives of His Majesty's Government in the very grave task which devolves upon them. In all quarters of this House we have a deep sense of the enormous difficulties that must confront the Conference, and the immense importance to this country, to OUT Empire and to the whole world of achieving a successful result. I believe that the sentiments of the whole country were admirably expressed in the noble form of prayer which was issued by the Archbishop of Canterbury a few days ago to be uttered by the whole nation before the Conference meets. The Chancellor of the Exchequer, as leader of the United Kingdom Delegation, has upon his own shoulders the heaviest responsibility of all. I think that the House today would be well advised not to press him for any further statement with regard to the question of the War Debts. He knows quite well the feelings which animate this House, and, I think, the country. The President and the people of America are also aware of the sentiments which are entertained here, and no good purpose would be served by any debate, I believe, on this subject at this juncture.

With respect to the objectives of the Conference, on the whole I find myself in concurrence with what the right hon. Gentleman has said, but the question arises whether His Majesty's Government will be able to pursue those objectives with sufficient zeal and energy in view of their own commitments at Ottawa and elsewhere. I noted that the right hon. Gentleman to-day disclaimed any rigid protectionist views, and, indeed, asserted that tariffs which tended to be prohibitive were harmful; but unless a tariff is intended to exclude foreign goods for the sake of giving employment to the people of the country around whose shores it is imposed, what is the use of the tariff? And, as the right hon. Gentleman and his friends have always been strongly advocating the exclusion of foreign goods in order to give employment to our own people, what he has said to-day is really in contradiction of the principles of his own political creed. However, if he now admits that it is an evil and a hardship to a country to exclude from its shores foreign imports, that so far is a gain, and I hope he will bear in mind that view, rather than the contrary view he has so often expressed, when he comes to conduct the affairs of our Delegation at the Conference.

The right hon. Gentlemen mentioned that one of the prime objectives was to secure the removal of restrictions upon exchange, and in that everyone will agree, but the purpose for which restrictions are imposed, namely, the protection of currency, cannot be achieved as long as a country is not allowed to sell its products. It is because various countries in the world are not able to sell their products at remunerative prices, and so obtain an adequate supply of foreign currencies, that they are compelled to impose restrictions on exchange, and, unless greater freedom is restored to international commerce, those restrictions on exchange cannot be re- moved. If it is attempted to remove them temporarily, the same conditions will return, the same threats will arise to the currencies, the same instability of any standard that is adopted may be repeated, and the present situation will not be relieved. Therefore, the freedom of international commerce is an essential preliminary to any removal of exchange restrictions or the establishment of any stable international exchange.

With respect to quotas, the right hon. Gentleman expressed the hope that other nations which have adopted the quota system will realise how unwise it is. But why only other nations? Only to-day there was circulated to Members of the House a Bill for the application of the quota system to yet another important commodity, that of fish, and as soon as we resume we shall be asked to pass into law a complete and an elaborate system of quotas to be applied to that commodity. The Minister of Agriculture—I have quoted these words in the House before, but they must be quoted again and again, in order to enable the House to realise the essential inconsistency with which the Government enter this Conference—the Minister of Agriculture, speaking at a meeting of the Council of Agriculture for England a few days ago, said: He was certain that the Government was on the right lines. The organisation of the producers at home and the restriction of imports from abroad were the two cardinal points of their policy, and the restriction by every means, whether by tariff, embargo or quota, would be used. Is it possible for that policy to be declared by one Member of the Cabinet consistently with what we have heard from the Chancellor of the Exchequer to-day?

On the question in general, I demur from one observation of the Chancellor of the Exchequer, that the task was the adaptation of world production to consumption. I think that that is putting the matter the wrong way about. It should be rather an effort to expand world consumption to meet the new capacities of production. If there is glut, there is glut because of poverty, and the problem is rather to relieve the poverty of so large a part of the world's population in order to increase consumption, and thereby the difficulties of glut and excess of production would be automatically removed. May I say that I observed with great interest one observation by the hon. Member who opened this Debate in a speech which, if I may be allowed to say so, fully merited the encomiums passed upon it by the Chancellor of the Exchequer. He said, in answer to an interruption of mine, that he and his party were in favour of the abolition of tariffs. That deserves to be noted and recorded, for hitherto hon. Members opposite have repeatedly declared that they were neither Free Traders nor Protectionists and were indifferent to that controversy, as though it did not matter whether we had Protection or Free Trade. It is one thing to say, as we all say—as I say myself—that neither Protection nor Free Trade would be, in itself, a remedy for our social evils, a thing that I have repeatedly asserted, but it is another thing to say that it is a matter of indifference whether we have one system or the other, or that one is not better than the other. At all events, to-day the hon. Member and his colleagues have definitely said that, so far as tariffs are concerned, they are against them.


We voted against them when you voted for them.


The right hon. Gentleman opposite will surely not forget that this party has been more consistent than his, in not taking part in the Government's tariff policy?


No, Sir, I do not think so. I and my colleagues resigned from the Government on the question of tariffs, and we voted for no Measures except of a purely temporary and exceptional character, for a period of a few months, in order to meet a temporary glut. Hon. Gentlemen opposite have repeatedly given the impression to the country that this was a matter in regard to which they themselves were indifferent. Very many of their colleagues in the constituencies have supported particular tariffs for particular industries, such as iron and steel, in which some of their members were specially interested.

There is a further point, with which I can deal in a word. The Chancellor stated what were the objectives of the Conference. He mentioned several of them, but he omitted one which was re- ferred to in the statement issued by the Prime Minister and President Roosevelt, at the end of their Conference in Washington. I referred to it upon a previous occasion, but no reply has yet been given by the Government. In the statement which dealt with the purposes of the Conference and declared the views of those two statesmen, this sentence appears: Enterprise must be stimulated by creating conditions favourable to business recovery, and Governments can contribute by the development of appropriate programmes of Capttal expenditure. That is a policy which many of us have advocated for a long time past, which advocacy had to be suspended temporarily at the moment of the financial and economic crisis two years ago. In our view the policy should have been resumed long Since. The right hon. Gentleman has not even referred to it. DO the Government as now constituted believe with the Prime Minister that Governments can contribute by the development of appropriate programmes of Capttal expenditure to business recovery? If so, what steps are they proposing to take? Are they giving their minds to that aspect of the problem? Are appropriate programmes of Capttal expenditure being developed? If so, what are they, and upon what lines? The House and the country would be very interested to know whether the policy of the Government in that regard is the policy which has been previously declared by the Chancellor of the Exchequer, namely, in substance, that Governments can do very little by Capttal expenditure, that they would only discourage private enterprise, and that the advantage to employment would be extremely small, while the strain upon the national resources would be very high. Is that still the view of His Majesty's Government, or is the view that which was expressed by the Prime Minister in agreement with the President of the United States, that such expenditure is desirable, and that appropriate programmes ought to be elaborated?

For the rest, let me end as I began by expressing what I am certain is a sentiment of every hon. Member, of whatever party or view, that the deep good wishes of the whole House and the whole nation go out to those who represent this country at the Conference, and to the representatives of other countries, with the earnest hope that they will be able to find some means of rescue from the plight in which our own country and all the countries of the world are now suffering.

12.29 p.m.


The right hon. Gentleman the Member for Darwen (Sir H. Samuel) has managed, as usual, to skate across the thin ice. He started his speech with the expression that "on the whole" he approved of what the Chancellor said, and, as everybody expected, there followed the expression "but." He has now carefully laid the tracks, so that when the World Economic Conference is over he can either turn to the Chancellor and say "I warned you, I told you so," or else he can say to the country, "I supported the Chancellor; what a great success it has been" —an admirable performance and very like many that we have seen before. He made some comment on our attitude towards tariffs. We have always said, and we say now, that we cannot cope with the present situation either by tariffs or by Free Trade. It is a matter of indifference to us which method Capttalism tries to follow. Neither of them will bring Capttalism out of the wood, or to a successful issue. That is the attitude that we take at the present time.

If there is to be control of foreign trade, far more hopeful lines of control, even for Capttalism, are the lines upon which the right hon. Gentleman the Minister of Agriculture is proceeding, where you have a quantitative control which when the time comes wilt be ready and adaptable to a proper Socialist programme. Therefore, those are lines which we are glad that the Government are adopting. We were delighted to find the Chancellor of the Exchequer has now been converted to the idea of conscious planning and production. The right hon. Gentleman says that he had it long before I did. I accept his statement. The only thing is that he has been very shy in bringing it out. I naturally agree, if he says so, that he had it long ago. We believe that planning should have a different aim to the one in which he believes, but we are in common on planning. The machinery of planning, which the right hon. Gentleman and his col- leagues are now apparently going to build up, will be useful for the purpose of conversion to Socialism just as it may be useful to State-controlled Capttalism.

I do not want to Bay anything more about the speech of the right hon. Gentleman the Member for Darwen. I want to deal with one or two points made by the Chancellor of the Exchequer. I do not want to enter into any controversy as regards the first point with which he dealt, which was the Russian dispute. Unless we are going to have some world tribunal to decide upon the merits of disputes of this sort, we shall always be coming up against difficulties in which there are two countries taking different views on a particular subject matter, whether stupidly or unwisely; but they do, in fact take different views. Unless there is some method of bringing those two countries together and resolving the difficulty, we shall go drifting on, as we are drifting on now in regard to Russia and Ireland. We are not suggesting to the right hon. Gentleman that he should always give in to every pressure of every foreign country. Nothing of the sort. If the right hon. Gentleman was dealing with a private matter of this kind and he got into a situation such as this, he would not allow, may I say his family, to suffer because he could not bring himself to try to make some reasonable settlement with the other side. We are not asking anybody to make an unreasonable settlement. Try to make a settlement which is reasonable. Surely, when he is not dealing only with his intimate family but with the large family of the nation to which he is in a semi-parental position, it is just as important to make an effort to come to a settlement and to meet the other side—not on the other's terms, but on terms which will be acceptable, eventually, to both sides. So far as we understand at the moment, both sides are holding off from any sort of negotiation or talks, or anything else about the matter. It is a situation that it likely to go on and cause suffering to the families of both nations for some time to come.

The right hon. Gentleman told us that he thought it would be fatal for the delegates to the Conference to commit themselves beforehand to any of the details of what they proposed to suggest, and I do not think we wanted him in any way to commit himself to any details; but what rather alarmed us, and still alarms us, is the fact that this country has allowed the initiative to pass altogether to America. Apparently, we are now only to follow the suggestions made by President Roosevelt. He is, no doubt, a remarkable man, but is it necessary for him to have the monopoly of initiative at the World Economic Conference? Anyway, the impression that has been given by the reticence of the Government up to date has been that they have no ideas of their own, that they are prepared to follow along the line of suggestions given by President Roosevelt to the Prime Minister, and that they themselves have no constructive policy. The right hon. Gentleman has told us to-day of the objectives, with which I think most people were fairly familiar before, of the Conference in the broadest possible terms. I want to say one or two words about two of those objectives.

In the first place, the right hon. Gentleman spoke about the price level, and mentioned that he had had some communication from the Trades Union Congress—which I have not seen, of course—saying that they broadly agreed with the proposals which the Government were putting forward. No doubt that communication deals with the situation and the programme of the World Economic Conference itself; it is not a suggestion of policy by the Trades Union Congress, but is, no doubt, a commentary upon the preparatory work which the Programme Committee has done, with suggestions in that direction. I want to examine this question of the raising of the price level rather from another aspect, namely, from the point of view of the underlying objective which is in the right hon. Gentleman's mind.

As far as I can understand it, his policy is based upon what the hon. and learned Member for Central Nottingham (Mr. O'Connor) told us about the other day, that is to say, the absolute necessity for the maintenance of profits arising from productive industry. If the right hon. Gentleman is approaching the question from that angle, then he is necessarily approaching it, as I think, indeed, he has implied in his speech, from the angle of restriction. He says he believes that there is over-production at the present time, in other words, that it is necessary to have a restrictive policy in order to decrease the amount of goods on the market, so that the price may be raised, profits may be higher, and a greater inducement may be offered to the manufacturer to produce the goods, or to the cultivator of the soil or the miner to produce the various raw materials. It is in that fundamental approach that we profoundly disagree with the right hon. Gentleman. We believe that, even in a Capttalist world, it is no good trying to start from that end. It is necessary, as we understood President Roosevelt and the Prime Minister agreed in America, to try first to inject purchasing power into the system by means of forced expenditure of some sort or another, and it is by means of pumping in the consuming power to start with in order to meet production that a revival of the price level will be brought about, if a revival of the price level is believed in. Of course, that is a vital difference, not only as regards technique, but as regards result—


Does the hon. and learned Gentleman really believe that the fundamental principle which he is now enunciating is of any earthly use at all; and does he, further, think that production will continue unless profits are made?


Certainly; I do not find the slightest difficulty in believing that production will continue without profits being made. It is a very simple and easy thing to understand if one studies any co-operative undertaking; and I understand that one of the troubles of the hon. Gentleman and his friends is that these co-operative undertakings, where there are no profit-earning shareholders and no profit-earning directors, have become so powerful that he is afraid of them, and desires to see them suppressed.


Surely, the profits of the co-operative societies are the very thing that the hon. and learned Gentleman objects to being taxed.


No; I am afraid the hon. Gentleman cannot have been present at any of the Debates on the subject. The whole question was whether the mutual surpluses should be taxed. I assure him that they are not profits. He will find, if he studies the matter, that there is an essential difference between industries which are run for the benefit of the shareholders and industries in which all the consumers share the surplus. That is a very simple but fundamental distinction. I do not, however, want to be drawn off on to that question at the moment. What I was attempting to point out to the House was that in our view any attempt on the lines suggested by the Chancellor of the Exchequer to raise price levels is bound to fail, because he is putting the cart before the horse. Even if it were possible, by price manipulation, to bring about a system of distribution of commodities—which is the fundamental difficulty—it certainly could not be brought about by starting with restriction of production rather than by starting to increase the circulation of consuming power, as President Roosevelt has pointed out.

The other point upon which I want to say a word is in regard to the question of currency. The right hon. Gentleman has told us, of course, that he is eventually going to get back on to gold, subject to many conditions being complied with. As far as we are concerned, we cannot regard with any equanimity the possibility of seeing the Gold Standard as a permanent measure of international values. The right hon. Gentleman, I think, rather sympathises with the view that we take, but he says that the Gold Standard is the only one with which people are familiar, and so it must be adhered to. That may be a typical Conservative argument, but it is not a very helpful argument when the Gold Standard has so sigNaily failed to deal with the difficulties of the post-War world. Directly it came up against any critically difficult time, it broke down, very largely because the different countries of the world, when they were up against some national difficulty, misused the Gold Standard. They did not play the game according to the rules, and, unfortunately, there was no referee to haul them up. If ever a gold standard of this sort is to be inaugurated again, it will be essential to have a referee who has the power of hauling up anybody who disobeys the rules, because, however perfect a system may be devised, it will never be possible, we believe, to get any of the international arrangements to operate, whether economic or disarmament or anything else, until countries are prepared to surrender some portion of their national sovereignty in the international interest. I know there are very few countries that are prepared to do it, perhaps hardly any, but the more one sees of international conferences and attempts to arrive at international agreement the more one appreciates that, until that fundamental difficulty is got over and people are prepared to give up something of their national independence or sovereignty in order to get the far greater good of international agreement, whenever times of difficulty come, whatever the agreement is, it is liable to be and is in fact torn up, just as in the other matter that the right hon. Gentleman dealt with, the question of international indebtedness.

There was a time when we in this country and other countries talked about the high standard of national honour, when the idea of debt repudiation was looked upon as something that could only be associated with possibly some South American republic or some Eastern European State. People would have held up their hands in horror at the suggestion of this country repudiating a debt for which it was liable by international law. But now we all talk with complete equanimity about not paying on 15th June the £19,000,000 that we owe to America. The Government itself said so in December last in the document to which the right hon. Gentleman referred us to-day. He said this country is not going to pay its debts. The last time it paid it as an instalment of an ultimate settlement. That, in fact, was itself repudiation. This repudiation is not only taking place all over the world in the form of debt repudiation, but, of course, it is also taking place in the form of depreciation repudiation—repudiation by France of four-fifths of her external debt and repudiation by America in the last few weeks of her external gold bond liabilities. It is just as much repudiation as someone saying, "I do not intend to pay you what I owe you." When one is considering the general question of the morality of debt repayment, it seems that the two views nearly always Colncide according as to whether one occupies the position of debtor or creditor. When people owe us debts, whether it is Ireland or Russia or some other country, we express the greatest indignation at their not keeping to their word. When we owe other people debts, we have the best excuses in the world why we should not pay them.


We have always paid.


Certainly, but when we are talking about repudiation we always have the best excuses in the world. I am not minimising the excuses. In the international situation to-day it would be folly for us on 15th June to pay up this debt to America in full. I do not think there is any possible justification for it. What I am suggesting is that, if the whole world is going to embark upon this wholesale repudiation at the whim of the person who owes the debt, who can make a good case or a bad case for it, surely it is time that the World Economic Conference very seriously considered the setting up of some permanent body which should deal with this question of international debt settlement. It has long ago become necessary. We long ago had to set up a bankruptcy court in order that fair dealings might be had by creditors of all sorts and kinds and in order that you might discharge a person from a load of debt once and for all after he had been through the bankruptcy court, and it is only in that way that businesses have been able to survive and the Capttalist system has been able to go forward at all. I am not suggesting the necessity for an international bankruptcy court in so many words, but, unless we can get some form of tribunal which is going to settle between different nations fair dealings in reference to debt payments—because repudiation is taking place in commercial and other debts and difficulty has arisen and has long been prevalent in Germany—we shall certainly get so much friction and so many difficulties arising as regards exchange and currency and other matters in the international field that any possible good that may come out of the World Economic Conference will be entirely thrown away.

After all, we were told by the Prime Minister that it is a condition precedent to the success of the World Economic Conference that the debt question should be settled, that he and Mr. Roosevelt had agreed that that was so, and now here we are 10 days before the Conference starts and 12 days before the date of repayment, and all that the right hon. Gentleman can tell us is that America is in fall possession of our views. We hope, of course, that something may be done before that date, but, if some decision which is not acceptable to everyone is to be sprung upon the two countries and the World Economic Conference at the very beginning of its meetings, it is going to be an extraordinarily serious risk so far as the Conference is concerned, and I feel it would have been far better weeks and months ago to take the risk of upsetting feeling in America be firmly and decisively stating what we intended to do and what our views were. There would have been time for the excitement to die down before the Conference, and it might have done far less harm. However that may be, I hope the right hon. Gentleman will have success in the negotiations which I am sure are going on and which certainly have our greatest goodwill behind them so far as he is concerned.

We have watched carefully the course of the Disarmament Conference, and we are as convInced as ever that the one essential thing for the success of conferences of that sort is a real determination to co-operate. Machinery and suggestions of every sort and kind can be brought out and put before the Conference but, unless there is the will to override all class and vested interests in the consideration of the problems that come before the Conference, it is impossible in our view for any good to come out of it. The right hon. Gentleman said at the end of his address that necessity had brought this Conference together. I hope he will remember that necessity knows no law, and that the Conference will be free, and will have the courage, to consider alternative means of bringing about a solution of the world problem, because, if they omit to consider those means which we believe to be the right and only means of getting world co-operation, we feel that they will be inevitably destined to failure.

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