Commons Sitting of 8 March 1933

Preamble
The House met at a Quarter before Three of the Clock,Mr. SPEAKER in the Chair.
ORAL ANSWERS TO QUESTIONS.

  ARMS TRAFFIC.
  Mr. MANDERasked the Secretary of State for Foreign Affairs the present position with regard to the export of arms to Bolivia and Paraguay and Peru and Colombia; and whether it is proposed to take the same individual action by this country as in the case of China and Japan?
  The SECRETARY of STATE for FOREIGN AFFAIRS (Sir John Simon): Following upon consultations between the Delegations at Geneva of the United Kingdom, France and Italy, a memorandum was submitted to the Council of the League of Nations on the 27th February, suggesting that steps should be taken under the terms of Article XI of the Covenant to recommend Governments to impose an embargo on the export to Bolivia and Paraguay of arms and war material. The Council of the League is now considering this question. This embargo would not become operative until certain States which are not Members of the League, including the United States of America, impose and apply a similar prohibition of export. As regards the dispute between Peru and Colombia, I would remind my hon. Friend that the League is now endeavouring to effect a settlement under the terms of Article XV of the Covenant. Hostilities have ceased, and no question of an arms embargo arises. The answer to the last part of this question is in the negative.
  Mr. VYVYAN ADAMSasked the President of the Board of Trade whether he is able to state the extent, character, and value of the existing contracts for the supply of arms to Japan and China, respectively?
  Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): I am unable to supply the desired information. There is no regulation which requires arms manufacturers and merchants to advise my Department immediately a foreign contract for arms has been secured. The jurisdiction of the Board of Trade commences only when application is made for an export licence.
  Mr. NUNNasked the President of the Board of Trade what are the terms of the embargo on the export of aeroplanes to China from this country; and whether it extends to aeroplanes designed to be used for civil and commercial purposes?
  Lieut.-Colonel COLVILLE: The embargo on the exportation of war material from this country to China and Japan does not apply to aircraft of any kind. While it is true that aircraft and aircraft engines are mentioned in the Arms Export Prohibition Order, 1931, an open general licence was issued on 1st June, 1931, authorising the exportation of aircraft and aircraft engines to all destinations other than Abyssinia. This open general licence still remains in force.
  Mr. PERKINS: Why is Abyssinia excluded?
  Lieut.-Colonel COLVILLE: As the result of international agreement, which I can hardly explain in answer to a question.
  Mr. T. WILLIAMS: Do we understand that it is permissible to export aeroplanes to Japan without licence?
  Lieut.-Colonel COLVILLE: Yes, any country except Abyssinia.
  Mr. MORGAN JONESasked the Secretary of State for Foreign Affairs whether his attention has been drawn to the suggestions made to the League of Nations' Council by the committee of three which was set up on the question of Bolivia and Paraguay as regards the type of arms on which an embargo to these two States should be placed; and whether such suggestions are being made use of in the negotiations concerning a League embargo against Japan and China?
  Sir J. SIMON: The answer to the first part of the question is in the affirmative. As regards the second part I have no doubt that if there was any indication of general agreement these suggestions would be borne in mind.

  LEAGUE OF NATIONS.

    BREACHES OF COVENANT.
    Mr. MANDERasked the Secretary of State for Foreign Affairs whether the question of the simultaneous withdrawal of Ambassadors and Ministers from the capitals of nations found guilty of covenant-breaking has been under consideration, as unanimously recommended as a possible step by the Assembly of the League of Nations on 4th October, 1921?
    Sir J. SIMON: No, Sir. I have no information that this question has been recently under consideration.
    Mr. MANDER: Can the right hon. Gentleman give me an assurance that neither this nor any other relevant consideration will be overlooked?
    Sir J. SIMON: We shall do our best not to overlook relevant considerations. I ought, perhaps, to point out that the Assembly's recommendations of the 4th October, 1921, to which my hon. Friend refers, were concerned with the application of Article XVI—a matter which has not arisen in connection with the Sino-Japanese dispute.

    CZECHOSLOVAKIA, RUMANIA, AND YUGOSLAVIA (TREATY).
    Mr. LLEWELLYN-JONESasked the Secretary of State for Foreign Affairs whether the pact or treaty recently entered into by the three Powers of the Little Entente has been registered with the secretariat of the League of Nations in accordance with the provisions of Article XVIII of the Covenant of the League; and whether any member of the League has raised the question that the engagements of this treaty are inconsistent with the terms of the Covenant and therefore contravene Article XX of the Covenant?
    Sir J. SIMON: As I informed my hon. and gallant Friend the Member for St. Marylebone (Captain Cunningham-Reid) on the 22nd February, I have not yet
    1158
    been notified of the registration with the League of the Part of Organisation signed by the representatives of Czechoslovakia, Rumania and Yugoslavia at Geneva on the 16th February. I have, however, read in the Press an account of a communication stated to have been addressed by the new Permanent Council of the Little Entente to the Secretary-General of the League of Nations at Geneva, informing him of the intention that this treaty shall be registered so soon as it shall have been ratified 'by the three contracting States. According to the terms of the treaty itself, the exchange of ratifications is to take place, at the latest, on the occasion of the next regular meeting of the Permanent Council of the Little Entente. This meeting is due to be held at Prague in May. The answer to the second part of the question is in the negative. In this connection I would draw attention to Article 10 of the Pact of Organisation, which reads as follows:
    " The common policy of the Permanent Council must be inspired by the general principles contained in all the chief instruments of post-War international policy such as the Covenant of the League of Nations, the Pact of Paris, the General Pact of Arbitration, the eventual Disarmament Conventions and the Treaties of Locarno. Moreover, nothing in the present Pact can be contrary to the principles and to the terms of the Covenant of the League of Nations."

    MANCHURIA.
    Mr. MANDERasked the Secretary of State for Foreign Affairs if he will propose to the Council of the League of Nations that immediate steps should be taken to work out the constructive plan for the future administration of Manchuria on the lines suggested by the report of the Lytton Commission as an alternative to Manchukuo?
    Sir J. SIMON: No. Sir. I fear no useful purpose would be served by the step suggested in the absence of the cooperation of the parties immediately concerned.
    Mr. MANDER: Does not my right hon. Friend feel that it is desirable to have some practical constructive alternative to Manchukuo to offer to the Japanese?
    Sir J. SIMON: The alternative suggested in the League Report, as my hon. Friend knows, is one which depends on the co-operation of the parties concerned.
    Mr. KIRKPATRICK: Is not this question an unwarranted insult to a nation which has always shown more desire to be friendly to us than any other nation in the world?

  EAST AFRICA.

    APPOINTMENTS (INDIANS).
    Mr. T. WILLIAMSasked the Secretary of State for the Colonies whether any steps have been taken to ensure the appointment of Indians to superior posts in the Government Departments in Kenya, Uganda, and Tanganyika?
    The SECRETARY of STATE for the COLONIES (Sir Philip Cunliffe-Lister): No, Sir. In filling appointments the first consideration must clearly be the fitness of the applicant, and I should deprecate any arrangement designed, as the question suggests, to ensure that superior posts in East Africa are allocated to applicants from one particular part of the Empire.
    Mr. WILLIAMS: Are the Indians referred to in the question given an opportunity to demonstrate their qualifications?
    Sir P. CUNLIFFE-LISTER: Yes, Sir; everyone in the Service is given an opportunity of demonstrating his qualifications every day.

    FINANCIAL INQUIRY.
    Mr. LUNNasked the Secretary of State for the Colonies what action he proposes to take as the result of Mr. Roger Gibbs's Report on railway rates and finance in East Africa?
    Sir P. CUNLIFFE-LISTER: The Report is being considered by the Conference of East African Governors, which met at Entebbe on the 20th of February. I propose to await an expression of opinion from that Conference before taking any further action on it.
    Mr. LUNN: When does the right hon. Gentleman expect to have the report; and will it be published?
    Sir P. CUNLIFFE-LISTER: I could not publish a report from the Governors' Conference; that would, naturally, be a confidential report to me in the ordinary course.

    HONG KONG (MUI-TSAI SYSTEM).
    Mr. LUNNasked the Secretary of State for the Colonies whether, seeing that there are now three inspectors employed to watch over the treatment of the registered mui-tsai of Hong Kong, he proposes to publish periodically the reports of these inspectors?
    Sir P. CUNLIFFE-LISTER: The half-yearly reports which I receive from the Governor of Hong Kong, and which are based on information collected by the local inspectors, are placed regularly in the Library of the House.

  KENYA.

    LAND PURCHASE (NATIVES).
    Mr. MALLALIEUasked the Secretary of State for the Colonies whether, seeing that the Kenya Land Trust, under which natives occupy reserve areas, has been varied, it is his intention to permit in future British subjects of native origin to purchase from willing sellers land outside the reserve areas?
    Sir P. CUNLIFFE-LISTER: I cannot accept the implication in the earlier part of the question. The hon. Member is, moreover, mistaken in supposing that any restriction is maintained by the Government of Kenya on the purchase of agricultural land by natives, except in regard to the area known as the Highlands, which it is part of the, duty of the Morris Carter Commission to define.

    GOLD MINING DEVELOPMENT.
    Mr. MALLALIEUasked the Secretary of State for the Colonies whether gold, either alluvial or reef, has been discovered by prospectors in Kenya in any, areas of the reserve not open to prospecting; and, if so, how the prospectors gained access to those areas?
    Sir P. CUNLIFFE-LISTER: Gold has been discovered by prospectors in areas at present closed to prospecting. The discoveries were made before the areas were closed.
    Mr. MALLALIEUasked the Secretary of State for the Colonies whether, under the mining ordinance in Kenya, a grant of a claim gives possession of the area comprised in it for the period of its duration; and whether any mining claims

    1161
    have been granted in the Kavirondo reserve prior to or subsequent to the amendment of the Native Land Trust Ordinance?
    Sir P. CUNLIFFE-LISTER: No, Sir; the registration of a mining claim over a piece of land does not affect the ownership of the land. The holder of the claim has the right to enter upon the land, to prospect or mine thereon, and to remove therefrom and dispose of the minerals won. Compensation is payable by the claim holder to the owner or occupier for any disturbance of his rights and for any damage done to the land or to the improvements thereon. Claims have been registered in the Kavirondo Reserves both before and after the passing of the Native Lands Trust (Amendment) Ordinance.

    MALAYA.
    Mr. CAMPBELLasked the Secretary of State for the Colonies when he expects to be in a position to publish Sir Samuel Wilson's report on his visit to the Straits Settlement and the Federated Malay States; and whether the report will be issued simultaneously here and in Malaya?
    Sir P. CUNLIFFE-LISTER: I hope that it will be possible to publish the report to- wards the end of next month. The reply to the second part of the question is in the affirmative.

    ELECTRICITY SUPPLIES.
    Mr. LIDDALLasked the Minister of Transport whether, seeing that the grid scheme is now almost completed, he will, in order to provide work for the unemployed, take the necessary steps to ex- tend the benefits of electric lighting to all towns and villages throughout the country
    The MINISTER of TRANSPORT (Mr. Oliver Stanley): The duty of adequately developing electricity supply within their respective areas rests upon the various local authorities and the companies concerned. Development is steadily proceeding. My information is that, generally speaking, authorised undertakers are alive to their duties in this respect, and it is not unreasonable that they should have regard to the adequacy of the
    1162
    probable demand. The position is, however, closely watched by the Electricity Commissioners.
    Mr. LIDDALL: May I ask why, in the present situation, the Ministry of Transport does not itself take the initiative and promote schemes of work to supply the countryside with cheap electricity?
    Mr. STANLEY: It depends on whether the existing development is adequate to meet the probable demand.
    Sir PERCY HARRIS: Has the Minister in his possession a survey of the possible requirements and the potential development that could be carried out?
    Mr. STANLEY: Yes, Sir; we are watching the position very closely.
    Mr. LEVYasked the Minister of Transport what is, or will be, the total capital expenditure on the construction of the electricity grid; and when the work will be completed?
    Mr. STANLEY: I am informed that on the figures and information available it appears that the total capital expenditure on the construction of the grid will be approximately £27,000,000, exclusive of interest during construction, and that the work will be substantially completed during the present year.
    Mr. LEVY: Will a supply of cheap current be available generally?
    Mr. STANLEY: Perhaps my hon. Friend will put that question down.

  TRANSPORT.

    WATERLOO BRIDGE.
    Mr. JAMES DUNCANasked the Minister of Transport whether the contracts for the reconstruction of Waterloo Bridge will be offered by public tender; and whether they will be let subject to his approval?
    Mr. STANLEY: It is a condition of all grants from the Road Fund that my approval of any arrangement as to tenders and of any contract for constructional works should be obtained, but the procedure to be followed in inviting and accepting tenders for the reconditioning of Waterloo Bridge has not yet been settled.
    Mr. DUNCAN: Will the Minister assure the House that, when this question is settled, there will be open competition for these considerable contracts?
    Mr. STANLEY: No, Sir, I could not give that assurance. There have been cases where, owing to the special nature of the work, its delicacy and danger, tender has been restricted to selected lists, and has not been open.
    Sir WILLIAM DAVISON: When will this work, which has been delayed for so long, be commenced?
    Mr. DUNCAN: Will the Minister assure the House that, when this work is going to be commenced, the selected firms will all be invited to tender, and that it will not be left to one firm?
    Mr. STANLEY: As I have said, I cannot give any assurance to the House as to the procedure that will be adopted before I know what arrangements the county council propose; but I can give the House this assurance, that no arrangements can be entered into without my consent, and I shall not give that unless I am satisfied that full opportunity has been given for competition.
    Sir W. DAVISON: When is the work likely to be commenced?
    Mr. STANLEY: The work cannot be commenced without the action of this House.
    Mr. KIRKWOOD: Will the Minister tell the House if he is in favour of a reconstructed Waterloo Bridge?

    RAILWAY AGREEMENT.
    Sir FRANK SANDERSONasked the Minister of Transport whether, in view of the urgency of the matter, he is now in a position to give his approval to the agreement entered into in September last by the London and North Eastern Railway Company with the London Midland and Scottish Railway Company and the Great Western Railway Company covering traffic competition between the three companies, which was submitted to him for approval in September, 1932?
    Mr. STANLEY: I have the agreement to which my hon. Friend refers under consideration, and hope to be in a position to give my decision in the matter at an early date.

    RAILWAY RATES (COMPOSITE CHARGING).
    Sir F. SANDERSONasked the Minister of Transport whether he is aware that the rates tribunal decided last year that a system of composite charging which had been introduced by the railway companies at the instance of traders to meet road-motor competition was illegal; and whether, as this system of charging has helped the trading community generally and also the railway companies in their attempt to meet competition, he will take steps to permit the railway companies to continue this system of charging?
    Mr. STANLEY: I presume that my hon. Friend refers to the decision given by the Railway Rates Tribunal in connection with oil cake forwarded from Avonmouth Docks. The position created by this decision is under consideration, but I am not yet in a position to make any pronouncement upon it. I understand that the railway company concerned have lodged an appeal against the decision to the Court of Appeal.
    Mr. LINDSAY: Before coming to any decision, will the hon. Gentleman consult all sections of the trades concerned and not one only as there is considerable difference of opinion among the traders concerned.
    Mr. STANLEY: I shall certainly take all steps necessary to enable me to come to a decision.

    ROAD GRANTS (NORFOLK).
    Mr. CHRISTIEasked the Minister of Transport if he will state the reasons why the county of Norfolk, with a highway rate of 9s. 9¼d. and a total rate of 13s. 6d. in the pound, is not allowed the same grant of 75 per cent. for road maintenance which is given by the Ministry to Monmouthshire, whose expenditure on highways is equivalent to a rate of 3s. 2d. in the pound and whose total rate is 11s. 8¼?
    Mr. STANLEYI am unable to verify the rate figures quoted by my hon. Friend. The grant of 75 per cent. which was made to the Monmouthshire County Council in 1931–32 was a special measure of assistance towards an estimated expenditure of £14,228 on the reinstatement of certain classified roads and bridges which had been severely damaged

    1165
    by flood. Apart from this special case, there has been no difference in the rates of grant towards road maintenance given to Monmouthshire and Norfolk.
    Mr. CHRISTIE: Does my hon. Friend realise that Norfolk has to administer an area of over 1,000,000 acres more than Monmouthshire?
    Mr. STANLEY: Yes: I have no doubt that if Norfolk were unfortunately to be afflicted with a flood, full weight would be given to that consideration.

    RAIL AND ROAD CONFERENCE.
    Sir CHARLES OMANasked the Minister of Transport whether he can give any information as to the date on which the Government Measure implementing the conclusions of the Salter Report will be placed before the House?
    Mr. STANLEY: The Government have already indicated their intention to introduce before Easter a Bill to provide for the licensing and better regulation of the transport of goods by road.
    Sir C. OMAN: Will the Minister throw a kindly eye on my own little Bill dealing with some small portion of that subject?
    Mr. STANLEY: Perhaps my hon. Friend will wait to see the introduction of the Bill before he decides whether my eye is kindly or not.
    Mr. CLARRYasked the Minister of Transport whether, in taking into consideration any action with regard to the Salter Report, he will consult the Report of the National Transportation Committee (United States of America), issued on 15th February, 1933, which was appointed to deal with the road and rail problem in the United States?
    Mr. STANLEY: My attention has been drawn to the report to which my hon. Friend refers and I will give it consideration. He will realise, however, that the conditions of transport in the United States of America are, in many ways, not comparable with those in this country.
    Mr. CLARRYasked the Minister of Transport whether, before implementing all the recommendations of the Salter Report, he will set up a further committee to consider what railway economies can be achieved by the abolition of parallel lines, regional con-
    1166
    solidations, and elimination of all railways where the transport services rendered can be provided more efficiently by road operators?
    Mr. STANLEY: No, Sir. Apart from the fact that the course suggested would inevitably lead to considerable delay, I doubt whether, for the present at any rate, a further committee would be the best means of securing any additional economies which are possible in the direction which the hon. Member has in mind.

    OMNIBUSES, STOKE-ON-TRENT (COUPON SYSTEM).
    Mr. HALESasked the Minister of Transport whether his attention has been called to the application by the corporation of the city of Stoke-on-Trent for the omnibus companies to produce their books on the hearing of an appeal to him against the decision of the traffic commissioners abolishing the coupon system; and whether he will adjourn the appeal until the said books have been produced?
    Mr. STANLEY: I would refer my hon. Friend to the answer given yesterday to a similar question by the hon. Member for the Burslem Division (Mr. W. Allen).

    OMNIBUS FARES, DURHAM.
    Mr. LAWSONasked the Minister of Transport whether he is aware that fares have been raised on some of the routes in the Chester-le-Street, Birtley, Pelton and Washington areas of county Durham; whether such increases brave been sanctioned by the commissioner; and whether, as these increases are a hardship upon those living in an area so long afflicted with unemployment, be will have inquiry made with a view to restoring the fares previously paid?
    Mr. STANLEY: Traffic Commissioners have power to attach conditions to road service licences for securing that fares shall not be unreasonable and that, where desirable in the public interest, fares shall be so fixed as to prevent wasteful competition with alternative forms of transport. I have no power to intervene except in the event of an appeal being made to me by a person entitled to do so.
    Mr. LAWSON: Is the hon. Gentleman aware that increases of fares have occurred in these groups and that large numbers of surplus omnibuses have been

    1167
    taken off the routes, with obvious advantage to the companies? Have the public any representative present to speak on their behalf?
    Mr. STANLEY: The hon. Gentleman must be so well aware of the effect of wasteful competition that he realises why these increases are permitted.
    Mr. LAWSON: I ask whether these fares have been increased on these routes where the population has been very hardly hit. Is the hon. Gentleman aware that they have been increased?
    Mr. STANLEY: I am not aware officially, because, until representations in proper form are made to me, I have no authority in the matter, but I understand that in certain cases the Traffic Commissioner has permitted increases to prevent wasteful competition.

    NEW FOREST (ELECTRICITY PYLONS).
    Mr. HALL-CAINEasked the Minister of Transport whether he can state the present position of the controversy over the proposed erection of pylons in the New Forest area?
    Mr. STANLEY: I am not in a position at present to make any announcement in the matter.

    KENSINGTON GARDENS (SHRUBS).
    Sir W. DAVISONasked the First Commissioner of Works if he will take steps to have shrubs planted on the garden side of the public lavatory recently erected at the end of the Flower Walk in Kensington Gardens, so as to conceal this building from the Flower Walk in the same way as has been done on the other side of the building facing Kensington Road?
    The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): Yes, Sir. I am giving instructions for some additional shrubs to be planted on the garden side of the building.
    Sir W. DAVISON: Is my right hon. Friend aware that there are no shrubs between the lavatory and the pathway, and the pathway is a bare piece of grass with no shrubs—at least there were not any on Sunday?
    Mr. ORMSBY-GORE: Shrubs are planted between the Flower Walk and the new buildings, and so the public convenience is already masked.
    Sir W. DAVISON: Is my right hon. Friend aware that there may be some misunderstanding? There is a bifurcation of the path, and there are no shrubs between the path immediately in front of the lavatory and the pathway.
    Mr. ORMSBY-GORE: That particular path leads to the lavatory.

    POST OFFICE (TELEGRAPH POSTS).
    Mr. T. GRIFFITHSasked the Postmaster-General if he can give an estimate of the damage done to telegraph posts, etc., during the recent storm in South Wales and other parts of the country
    The ASSISTANT POSTMASTER-GENERAL (Sir Ernest Bennett): I am afraid that the full extent of the damage cannot be ascertained for some time, and that it will not be possible to form any reliable estimate for at least another fortnight.
    Mr. GRIFFITHS: Are the Post Office authorities considering the advisability of putting up steel posts instead of the timber ones that they have to-day? Does he know of the firm that is putting up steel posts in India and in parts of this country, and will he make inquiries?
    Sir E. BENNETT: Obviously that does not arise out of the question on the Paper.
    Mr. MORGAN JONES: May we take it that the damage that recently occurred in South Wales is being attended to?
    Sir E. BENNETT: We are proceeding as rapidly as possible and employing on it a large amount of labour. Directly the estimate is in my hands I will send it to the hon. Member.

    DISTRICT AUDITS, NORTH WALES.
    Mr. LLEWELLYN-JONESasked the Minister of Health whether, in connection with forthcoming changes in the staff of the North Wales audit district, he will take steps to ensure that the auditors and some of their assistants have a competent knowledge of the Welsh language?
    The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): My right hon. Friend is taking the necessary steps, in connection with the forthcoming changes referred to by the hon. Member, to ensure that there shall be an adequate number of officers with a competent knowledge of the Welsh language available for the purposes of district audits in North Wales.

    COAL INDUSTRY (FLOODS, DON VALLEY).
    Mr. T. WILLIAMSasked the Secretary for Mines how many working days have been lost at Wath Main and Bentley collieries during the flood periods in 1931 and 1932, with the total loss of wages incurred?
    The SECRETARY for MINES (Mr. Ernest Brown): I must remind the hon. Member that I am precluded by Subsection (2) of Section 21 of the Mining Industry Act, 1920, from publishing any information with respect to a particular undertaking, unless the owner of the undertaking so agrees. I regret, therefore, that I cannot give the details asked for, but if the hon. Member particularly desires I can approach the owners with a request for permission to publish the information.
    Mr. WILLIAMS: As these floods have been so frequent in the last year or two, ought we not to know the extent of the losses incurred as a result of them?
    Mr. BROWN: I say if the hon. Member desires it I will approach the owners.
    Mr. WILLIAMS: I shall be pleased if the hon. Gentleman will get the information.

    HIGHWAY THEFTS, SOUTH KENSINGTON.
    Sir W. DAVISONasked the Secretary of State for the Home Department the number of highway robberies which have taken place in South Kensington during the last six months; in how many cases have the robbers been arrested and convictions obtained; and what steps are being taken to deal with this menace to the public safety in this part of London?
    The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Gilmour): I am informed by the Commis-
    1170
    sioner of Police that during the six months ended the 31st January there was one case of robbery with violence and 31 cases of bag-snatching in the South Kensington district. There has been one arrest which was followed by a conviction. It would obviously be undesirable that I should indicate the arrangements made to deal with the situation, but I am informed that this type of crime has recently decreased considerably in the district in question.

    INCOME TAX (CO-OPERATIVE SOCIETIES).
    Mr. T. WILLIAMSasked the Chancellor of the Exchequer how many witnesses were heard by the committee to inquire into the position of co-operative societies in relation to Income Tax; whether the evidence is to be published; and, if not, will he state the reason?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha): The full list of witnesses is to be found in the appendix to the Committee's report (Command Paper 4260). As regards the second part of the question, the evidence is voluminous and publication would be costly. As at present advised, I do not see sufficient ground for incurring this expense.
    Mr. WILLIAMS: May I ask the hon. Gentleman whether, seeing that there are in excess of 6,000,000 members of co-operative societies who are likely to be involved in any taxation, they ought not to have the privilege of seeing the evidence?
    Mr. HORE-BELISHA: I have no doubt that they will not be debarred from that privilege, because any societies who think that the evidence which they have given is of interest to their members will probably publish it.
    Mr. WILLIAMS: Is the hon. Gentleman aware that the co-operative societies are not responsible for the Committee; and will the evidence be placed in the Library and made available to Members?
    Mr. HORE-BELISHA: It was not the intention of my right hon. Friend to incur the expense of printing what would be some hundreds of pages of evidence, and past experience shows, as I have told my hon. Friend, that those societies who

    1171
    think that the evidence which they have tendered is of interest to their members will publish it.
    Mr. WILLIAMS: As Members of this House are likely to be called upon to deal with this case shortly, ought not such evidence to be made available to them in the Library?
    Mr. HORE-BELISHA: If it is represented that any hardship is involved and that societies do not think that it is advisable to publish the evidence which they have tendered, I will consider the suggestion of any hon. Friend.
    Mr. BUCHANAN: Could not the hon. Gentleman make the evidence available to Members? After all, this is likely to be a very important piece of legislation. It is causing a great deal of public comment, and are not Members entitled to have evidence, both for and against, on the matter? Some of us are in the dark, and will the hon. Gentleman kindly see that he does not shut out one side or the other?
    Mr. MARTIN: Does not my hon. Friend think that if 6,000,000 members each guaranteed to take a copy it would pay for its publication?
    Mr. HORE-BELISHA: In reply to the hon. Member for Gorbals (Mr. Buchanan), it is not the intention of my right hon. Friend to deprive anybody of access to any useful parts of the evidence which were tendered. The House will realise that much of the evidence was redundant, and to print it verbatim would involve us in disproportionate expenditure of public money. It has been the practice in the past for societies to publish the evidence, and I have no doubt they will do so in this case.
    Mr. BUCHANAN: Apart from that, some of us are deliberately excluded from many of these things, but we are Members of Parliament and have rights, and so have members of co-operative societies. In view of the fact that we are Members, cannot the hon. Member, on a matter which is of tremendous public importance, see to it that those of us who are affected are given equal rights in having the evidence?
    Mr. HORE-BELISHA: I have already informed the House that my right hon. Friend will naturally consider any repre-
    1172
    sentations which are made, but the arguments tendered in evidence were duplicated many times, and most of them are contained in speeches by those who are interested in the report. But I have said that I will consider the matter to see if there is any hardship.

    ECONOMIC SITUATION (GOVERNMENT POLICY).
    Mr. MABANEasked the Chancellor of the Exchequer whether the Government, in pursuing its policy of scientific expansion, intends to confine its activities to particular schemes or to proceed in accordance with a comprehensive national economic plan; and whether, in the latter case, it will be possible in the near future to indicate the scope and nature of the plan?
    Mr. HORE-BELISHA: I cannot add anything to the very full account of the Government's policy which was indicated in the speeches made by the Prime Minister and by the Chancellor of the Exchequer during the Debate on the 16th February.

    BRAZIL (BRITISH INVESTORS).
    Mr. RANKINasked the Secretary of State for Foreign Affairs if he will direct His Majesty's Minister at Rio de Janeiro to ascertain the details of the official proposals offered last week regarding the British-owned defaulted obligations of the Brazilian provincial and municipal authorities, and to represent that those proposals shall include a readjustment of the tramcar and ferry fares in which British investors are involved by reason of their interests in the Leopoldina Railroad and Leopoldina Railroad Terminal Company?
    Sir J. SIMON: I have received a report from His Majesty's Ambassador at Rio de Janeiro in regard to the matter with which the first part of my hon. Friend's question is concerned. These proposals do not appear to be such that they could be applicable to a readjustment of the fares of the Leopoldina Railroad Company and the Leopoldina Railroad Terminal Company, in regard to which I would refer my hon. Friend to the reply which was returned to the hon. Member for Aberdare (Mr. G. Hall) on the 13th June last.
    Sir ARTHUR MICHAEL SAMUEL: But is not the present occasion of arranging with the Rio de Janeiro authorities about their defaults on their Loan obligations also an opportunity for negotiating with those same authorities respecting the other default on their obligations to British investors in relation to the adjustment of tram and ferry fares on the Leopoldina systems?
    Sir J. SIMON: It did not appear to me that the matter dealt with in the first part of the question was at all the same subject matter as that referred to in the second part. Therefore, I must refer to the answer which I gave on the 13th June.

    BARBADOS (COTTON GROWING).
    Mr. WILLS (for Mr. HANNON)asked the Secretary of State for the Colonies the latest available information relating to the development of cotton growing in Barbados; and if the Cotton Growers' Association in that Colony will receive the sympathetic support of his Department through the Colonial Development Fund or otherwise?
    Sir P. CUNLIFFE-LISTER: As a result of the conference of West Indian Sea Island cotton growers held in Barbados in the spring of 1932, steps are being taken for the formation of a West Indian cotton growers' association, the object of which will be to regulate production and to stimulate the expansion of the use of Sea Island cotton. The movement has my sympathetic support, and I am in communication with the West Indian Governments concerned with regard to the steps to be taken to further the work of the association. I hope that the energetic efforts which are being made by certain Lancashire and Cheshire spinners and manufacturers in Nottingham and Manchester, with the co-operation of the West India committee, to expand the market for this high-grade product, may prove of considerable benefit to Barbados and other West Indian islands which produce the crop.

  TRADE AND COMMERCE.

    COTTON INDUSTRY (JAMAICA).
    Mr. WILLS (forMr. HANNON)asked the Secretary of State for the
    1174
    Colonies if his attention has been called to the representations made by the Imperial Association of Jamaica to the Governor of that Colony on 20th February list, urging the menace in the Jamaica market to British Empire-manufactured products owing to the increased volume of imports of cheap cotton piece goods, artificial silks, and rubber shoes from Japan; and if he contemplates any measures to safeguard inter-Imperial trade in Jamaica?
    Sir P. CUNLIFFE-LISTER: Yes, Sir. As my right hon. Friend the President of the Board of Trade has stated in reply. to several recent questions, the matter is under active consideration by His Majesty's Government.

    COLONIAL SUGAR.
    Mr. WILLS (for Mr. HANNON)asked the Secretary of State for the Colonies the general effect of the substantial increase in the preference on sugar on the cultivation of sugar cane in the West Indies; if he has any information as to whether the competitive power of Colonial sugar producers in world markets has restored general confidence in those islands; and if he anticipates a steady expansion in the production of Colonial sugar in the future?
    Sir P. CUNLIFFE-LISTER: The increased preferences granted to Colonial sugar last year were intended to assist the Colonial producers to obtain a price sufficient to cover their bare costs and to maintain their production, and I understand that the preferences have, in general, had that effect in the West Indian sugar-producing Colonies and that greater confidence has been restored in those Colonies; but they were not designed to encourage an expansion of the industry and no substantial expansion is expected in the near future.

HOUSE OF COMMONS (SIR, JOHN ELIOT).
Mr. MICHAEL BEAUMONTasked the First Commissioner of Works whether any public money is to be expended on the erection of the proposed memorial to Sir John Eliot in the House of Commons?
Mr. ORMSBY-GORE: No, Sir.

LOCAL EXPENDITURE (UNEMPLOYED).
Mr. MORGAN JONES (forMr. THORNE)asked the Minister of Health whether he will issue a report in connection with the deputation he received from the Liverpool Corporation; and if he is aware that at least 50 other local authorities in necessitous areas have been urging that the expenditure incurred by assisting able-bodied unemployed should be a national charge and not a local one?
Mr. SHAKESPEARE: My right hon. Friend is sending the hon. Member a copy of an agreed notice published after the deputation. As regards the second part of the question, my right hon. Friend is aware that a certain number of local authorities have expressed views to the effect stated.

EDUCATION (SECONDARY SCHOOL FEES).
Mr. MORGAN JONES (forMr. THORNE)asked the Parliamentary Secretary to the Board of Education if he will issue a White Paper showing the alterations which have been made in the scale of secondary school fees by various local educational authorities?
The PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Ramsbotham): My Noble Friend will be glad to do so as soon as the arrangements of all the local education authorities have been approved.
Mr. JONES: When will the hon. Member be able to tell the House when we may anticipate that this White Paper will be available? Are the negotiations coming to an end?
Mr. RAMSBOTHAM: Quite shortly, but I cannot exactly say. I hope in the course of a few weeks.

NATIONAL INDUSTRIAL COUNCIL
Mr. MANDER: I beg to move,
"That leave be given to bring in a Bill to establish a National Industrial Council; and for other purposes connected therewith."
This Bill has been introduced several times in past Sessions. It is intended as a contribution to the more effective functioning of our constitutional machinery.
1176
I think it is generally felt that some new centralised machinery for the complicated situation of the present day is required, as the present machinery is inadequate, in view of the fact that we are no longer living under the easy-going conditions that used to exist in the past. In the year 1919, just after the War, a national industrial council was summoned and was very widely representative of both employers and employed. At that conference a remarkable amount of agreement was reached between both sides but, owing to the slump which supervened, it was not found possible then to carry any of those measures into effect. At a later stage, during the last few years, the Mond-Turner negotiations took place, and one of the results of those negotiations was a recommendation that a national industrial council on the lines suggested in this Bill should be set up. Unfortunately, nothing has as yet eventuated, although it was recommended both by the representatives of the employers and the employed. Various distinguished Members of this House have also from time to time put forward suggestions on the lines of the proposals of this Measure.
At the present time there is an Industrial Council in existence in Belgium, Canada, Czechoslovakia, France, Germany, Holland, Italy, South Africa, Spain and the United States. Shortly, the object is to set up what is in the nature of an industrial parliament. It would, of course, he wholly subordinate and subject to this Parliament and would act in an advisory capacity to it. It would, I believe, save a great deal of time in regard to the Measures brought before Parliament, by eliminating many causes of controversy and enabling our work to be carried through in a more effective way and with a shorter use of time. It is proposed that there should be 300 members of the council—40 Members of this House, 20 Members of the other House, 100 representatives of employers, 100 representatives of employés and 40 ex-officio members. There would be also a smaller body elected by it, a sort of executive council, which would meet once a month. The object of the council would be, first of all, to act as the normal channel of communication between the Government, the Minister of Labour and organised labour on both sides in this country. Whenever the Minister wanted to make any intimation to industry, or

1177
to ask for advice, he would go as a matter of course to this highly representative body.
Secondly, such a council would save the time of this House to a very considerable degree. What is contemplated is, that when any Measure dealing with industry was introduced into this House it would be submitted to the National Industrial Council for detailed consideration, where it could be dealt with in a much more practical manner than it can be in this House. Many controversial points would, of course, remain, but they would be isolated from the others. A good deal of the non-controversial matter in the Bill could be put into very good technical form, in an agreed form, and when the Measure came to this House we should have left a number of points of principle which were controversial and which we should have no difficulty in deciding. The other matters where there was agreement could be put before us in a. form acceptable to those who would be most affected by any legislation. I might suggest, for example, such a Bill as the Factories Bill or the Unemployment Insurance Bill. The latter Bill will, no doubt, be very controversial, but even in that Bill there must be a considerable amount of matter.
In the third place, the council would have the duty of acting as a conciliation body when disputes were breaking out or were likely to break out. The Trades Union Council to-day, through its committee, is doing and has done a great deal of useful work in mediating in disputes, but excellent as that work is it is hampered by the fact that only one side is represented. If you had employers as well as employés coming as a mediation body to intervene at the right moment in disputes, still more effective results could be obtained, and it would be less necessary than now to call on the Minister of Labour to intervene in what is, after all, the concern of industry in the first place and not that of the Government. I hope the House will feel that at a time when we are realising more every day the necessity for national planning in all spheres of activity this project, which I have only been able briefly to outline, is well worthy of their detailed consideration.
It may be asked, why cannot this body be set up on a voluntary basis? I agree,
1178
and recommendations to that effect have been made. If the effect of the introduction of this Bill results in stimulating interest once more and in bringing about the voluntary setting up of such a body, it would be far preferable, and I should feel that I had not intervened in vain. Certainly, this Bill would not interfere with that project, but it might help towards it, and then a Statute would become unnecessary. If we had such a body we should know that in future when we acted in this House in industrial matters we were acting with the full knowledge of the considered opinion of those best fitted in industry to give it and, from the technical point of view, best able to give us their advice. Moreover, by having a Measure of this kind we should be taking a real step forward in maintaining industrial peace throughout all the industries of this land.
Question put, and agreed to.
Bill ordered to be brought in by Mr. Mander, Sir Robert Aske, Mr. Bernays, Mr. Richard Evans, Mr. Dingle Foot, Sir Percy Harris, Mr. Granville, Mr. Kingsley Griffith, Major Lloyd George, and Major Nathan.

NATIONAL INDUSTRIAL COUNCIL BILL,
" to establish a National Industrial Council; and for other purposes connected therewith," presented accordingly, and read the First time; to be read a Second time upon Wednesday next, and to be printed. [Bill 69.]
MESSAGE FROM THE LORDS.
That they have agreed to:
Austrian Loan Guarantee Bill, without Amendment.

WIDESPREAD POVERTY.
3.30 p.m.
Mr. MAXTON: I beg to move
" That this House recognises that the widespread poverty of the people cannot be removed within the framework of the capitalist order of society, which is not progressing towards prosperity but heading for collapse, and condemns the present policy of the Government as foolish trifling with a serious situation."
This is the third time I have had what is humorously described as the luck of the ballot. On the first occasion I introduced a Bill to nationalise the Bank of England, which your predecessor in office, Mr. Speaker, ruled out of order. On the next occasion I introduced a Bill to provide a living wage for all workers in this country. On that occasion, it achieved a Second Reading, but the Labour Government which was in power at the time was unable to offer it further facilities. I am just wondering, after these two failures, what the prospects are for the Motion I have brought forward to-day. The House will observe that on the two previous occasions I was carrying out the advice which is always given by senior Members of this House to junior Members, to try and be constructive. The Motion before the House to-day shows clearly that I have abandoned the folly of my youth. It is purely destructive in its nature. It represents a change that has come over my own way of thinking as a result of my experiences in this House and in the country.
I have been driven to the conclusion that before we can start to solve the central problems confronting the people of this country, the first and necessary thing is to persuade the people of this country that their faith and belief in the existing social order must go; a definite idea must be arrived at, that society, if it is going to be a secure and decent thing for the mass of the people, must be built right from the foundations on entirely different principles from those which are operating to-day and which have operated in the past. I notice that there are three or four Amendments on the Order Paper, and I gather, therefore, that there is not complete assent in the House to the point of view which I have indicated and to the Motion which embodies that idea. The Motion reads
" That this House recognises that the widespread poverty of the people cannot be
1184
removed within the framework of the capitalist order of society, which is not progressing towards prosperity but heading for collapse, and condemns the present policy of the Government as foolish trifling with a serious situation."
One of the Amendments seems to question the existence of this widespread poverty. The Amendment which comes from the Liberal party suggests that we should set up an inquiry to find out whether the widespread poverty really exists. I had the benefit of a private conversation with one hon. Member whose name is attached to this Amendment, and he asked me how I was going to prove the existence of this widespread poverty. I said that I was going to cite private conversations that I have had with Members of this House. In this House I perpetually hear hon. Members say "I used to be fairly well off, but I am a poor man nowadays." But the type of poverty that I am concerned with is not the type of poverty that they are worrying about. The majority of the people of this country think that the man who is drawing a salary of £360 per annum as a Member of Parliament is a very wealthy man. Make no mistake about that. To the mass of the people of this country the man with an income of approximately £7 per week—
Mr. HALES: Less Income Tax.
Mr. MAXTON: Less Income Tax, and less a lot of other deductions, is regarded as being in a different world from anything they have known. That probably is as good evidence as one need produce to give some indication of the poverty of the mass of our people, but I am going to bring in support of my claim that poverty is widespread the evidence of observers other than myself, and evidence which is different from the statistical evidence of which everybody in this House is well aware. Three millions unemployed is a figure, and as a figure it is a little worse than two and a half millions, but not so bad as seven or eight millions in other countries. But it is only a figure, it is arithmetic, and the constant repetition of these figures creates a kind of mind in the politician which puts the human aspect into a secondary place. I have here a typescript copy, which I got only yesterday, of a speech delivered over the wireless the night before last by a gentleman called Mr. Howard Marshall. I do not know him, but from

1185
inquiries I have made I am led to believe that he has undertaken a survey of the conditions of the people of England on behalf of one of the big Conservative journals. He has been giving wireless talks on his experience since, I understand. In this talk he described his visit to Glasgow. He described the constituency that I represent in this House. He said:
" It is a vast problem, then. I saw representative types of these insanitary houses in various parts of the city, and there is no doubt whatever that they should come down at once. They are tall blocks of houses, many of them with dark spiral stone staircases, and on each floor there are passages where you will find several rooms let to separate families.
" Darkness—that is your first impression —dark stairs, dark landings and dark rooms. Aged—that is your second impression. One house I saw in Dalmarnock, half of it below street level, was 300 years old. Naturally it was damp and decrepit in every way."
Mind you, this is a description by a Tory:
"The Glasgow people fight with splendid spirit against their conditions. The woman in this house had kept it wonderfully clean. Practically every family has its brass nameplate on the front door, and every plate I saw was brightly polished.
" But it is not the houses alone that are unsatisfactory. It is the way they are grouped and crowded together, so that you may dive through a narrow passage and emerge into a dirty courtyard where, as often as not, there is an open ashpit where refuse of every kind is kept. These courtyards, and the houses which lie behind those which front the street, are called back lands. As an example of what they are like let me tell you of one I went into near the Broomielaw, which is the sailor town of Glasgow. The courtyard here was small. On three sides of it were tall tenements. Beyond was a factory wall. There was thus scarcely any through ventilation. On one side was the communal wash-house, which served all the houses, a tiny, extremely squalid place, with wire-netting over the window. Through this netting I could see a woman at the copper. Outside the washhouse—and this is what worried me—right alongside the open ashpit, was her baby in its pram. It's a dreadful thing living here, said the woman. Look at those children.' There were three or four youngsters digging up the filth which had collected between the paving stones in the court. A woman complained that the flies from the midden in the courtyard made it impossible for her to open her window in the summer. There was a widow with six children who managed to joke about her semi-basement room in a house like a Mediaeval castle, though she ended up by
1186
saying, For pity's sake get us out of here.' "
That is the terrible document of a newspaper man sent to write up interesting material for his newspaper. It is obvious that he has been convinced that the people are living in very terrible conditions indeed. There carne to me yesterday, also by the post, a letter from an old friend of mine:
" Dear Jim,—I notice that you are going to tell the House of Commons something about poverty on Wednesday. While I know that you are thoroughly conversant with the subject, 1 do not think you will find anything worse than the one before me as I write. My landlady, aged 53, is in bed. She is a mental and physical wreck. Night and day for the past 10 weeks we have sat up awaiting the end, which indeed will be a mercy. The woman is dead, all but the opening and shutting of her eyes. This awful condition has been brought about by poverty.
" Including the father and mother there are eight in this family, four sons over 14 and two still at school. The eldest, now a man of 26, is a weakling, has never worked and receives no relief. He was some months in a sanatorium and was discharged as cured. He came home quite fit for light work, weighing eight stone four pounds. The second son, aged 22, has been idle three years. The third one, aged 17, is an apprentice slater, wages 10s. weekly. The fourth one, aged 15, to augment the family income took a job going with milk; hours 6 a.m. to 12 a.m., wages 6s. The father is a labouring man. When working his wages never exceed £2 a week. When the means test was put into operation "—
by us here—
" the only son drawing any relief was reduced to 11s. per week. The father then had a spell of unemployment and the mother found great difficulty in making ends meet. Then one day I observed what was to me a great plot for an O. Henry. At one end of the table sat the young man; at the other end sat his mother. They were both trying to assure each other that they were well. They tried to persuade each other to take a little nourishment which the mother somehow bad obtained. As I witnessed a scene, I knew how ill they both were.
" I took the young man to the medical officer of health. As a discharged patient from a sanatorium, I thought it was the medical officer's duty to prevent this man from falling a victim to the scourge. I was wrong. The medical officer could do nothing until another doctor certified the patient. The man's weight had now gone down to seven stone two pounds. In a poverty-stricken home it was hard to pay for a private doctor, but more sacrifice had to be made to get the man medically attended. Eventually I got the private doctor to give me a line to the medical officer stating that

1187
the man was threatened with tuberculosis. The medical officer, apparently with economy in mind, would do nothing until the man was X-rayed and consumption revealed. I was sent to Ruckill Hospital. Daily in that place you will find, as I did, queues of young men affected by the means test sent for examination because tuberculosis is suspected. My visit to the hospital went for nothing. The plates did not show consumption. I took the man home, not as one wanted, but to tell a distressed mother that her son was unfortunate and could not get sanatorium treatment because his health was too good. Is not that a hellish condition? A mother has to feel sorry because her son has not consumption. At the end of a month I went back to Ruckill. I do not know what the plates foretold this time, but the man got away to a sanatorium for two months. When he came back his mother's health was in a precarious state and it meant another mouth to fill without an extra penny to do it. It drove the woman crazy. She lies now in the condition I have already stated."
The letter goes on to describe further depths of misery and suffering, but I leave it at that. I do not wish to harrow the minds of the House or my own feelings on this matter, but I hope that I have brought back into this Chamber a full sense of the human aspect of our work here and a full realisation of the terrible human consequences of the things which we may do or leave undone here from day to day. I turn from that, assuming that the House now accepts as proven the existence of widespread poverty in our land, of poverty which we cannot wipe aside by saying that it is not so bad, and that there is nobody who is not managing to get along somehow, and that kind of thing. That is not human. That is not defensible and as is shown by the previous quotation which I gave the conditions that are to be found in Glasgow are to be found in every other big city in our land.
Since I have been in this House successive Governments have gone on the assumption that they were dealing with a temporary condition of things out of which one day we were going to emerge into the bright sunshine of prosperity. We always talked, and we talk still, of the day when normal conditions will be restored. I cannot remember during my life any normal conditions that I want to see restored as far as working-class life is concerned. We are suffering here from a variety of that type of thinking which has always been found where people look back to some golden age of the past. We
1188
look back to-day to some golden age when people were well off. I do not know when it was. I cannot remember any time during my boyhood or early manhood when people were really well off. There is no normal situation such as a situation of prosperity for the mass of the people.
During the whole of last century while capitalist industry was expanding, when British industrial and manufacturing prestige was practically unchallenged in the world, when we were penetrating into every corner of the globe, when the. Empire was expanding, the people at home were in desperate poverty always. To pass through this period of disturbance into smoother waters, as far as I can judge, is really the aspiration not of the common people but of the capitalist class, who, certainly, can look back to a time when profits were easy to make, when businesses were easy to build, when new enterprises were easy to project and carry to success. That is what is being looked forward to as the "normal times" and the "good old days," and, undoubtedly, there were great days in the last century for private enterprise, but there were no great days for the common people.
Mrs. COPELAND: In those days you had more people employed.
Mr. MAXTON: I am just wondering where the interruption connects with what I was saying. It is true that there were periods when a larger proportion of the then population was employed than is the case to-day, but they were employed under conditions of abject poverty. I have waited for 10 years for this temporary phase to pass. Every year responsible Ministers of the Crown have told me that prosperity was to come in the following year. Whatever kind of Government sat there, next year was always going to be the great year of delivery—until a couple of weeks ago when the Chancellor of the Exchequer, with very great bravery and great wisdom, postponed his prophecy from next year until a date 10 years hence. That is much safer. It is longer before your lie is proved. It was honest and brave to say it, but the statement was essentially untrue, because there is not going to be prosperity under the capitalist system at the end of the 10 years, any more than there has been prosperity at the end of

1189
the previous one-year periods. The only difference is that there is the hope that you will not be called to account so soon for the failure of your prophecy.
I want to put our Socialist view of the situation. We believe that we are living in a revolutionary age, one of those periods in the history of the world that have been repeated again and again in which one form of economic or social order, having worked reasonably well and satisfied the needs of the people for a certain time, becomes obviously unsuited to the existing conditions. Everybody becomes dissatisfied, and evidences spring up of the decay and deterioration of the system. There are any number of evidences to-day of the deterioration and decay of this system. The institutions of the last century, monarchical or Parliamentary, are falling into disrepute in every corner of the world. Legal procedure, conceptions of political liberty, ideas of political tolerance—all these, if not gone, are suspect even in our own land. Financial institutions are ceasing to have the confidence and regard of the people. Large-scale fraud and dishonesty begin to evidence themselves among those who are controlling and directing large enterprises. We have only to look at our newspapers to-day to find that in our own land there are some gangs who regard it as reasonable and intelligent to organise definite commercial crime for the sake of enriching themselves.
In every corner of the globe we find exactly the same thing. Last night we were trying to set right the affairs of Newfoundland from here. Some other time we hear about a Kreuger in Scandinavia. Another time we hear about corruption and graft of one kind or another in the United States of America. All the evidence goes to show that the moral codes which supported the institution are falling rapidly into disrepute. All these revolutionary ages have always terminated in the uprising of same new class with new demands and new ideas which make a definite break with the past in this country as in other countries. The outstanding example in this land was the Cromwellian revolution, when a new class springing up felt it necessary for their progress to curb the power of an autocratic monarch and to devise a political machinery that should place power in the hands of the rising influx.
1190
Similarly, there came along the rising manufacturing class which developed in Lancashire and Yorkshire, and made Free Trade its great political principle. We are at another revolutionary age, more fundamental than those which have taken place before, and that revolutionary situation has not developed merely in Great Britain, but is to be seen in every corner of the globe. We boast that England always faces these difficult situations more capably, more courageously and more benevolently than any other country in the world. If that be true, never was there a time more than now to demonstrate its truth.
What have we done? When the crisis came upon us in 1931 in an acute form a Government was there capable of perceiving it, because it was there before and it is here now. But in 1931 it had been thrown up in a clearer and more acute form. The disease has been there all the time. In 1931 the temperature was high. It is capable of going higher and higher. What was the real essence of the crisis of 1931? I have seen nothing presented so clearly to the mind as the statement which was made in a special issue of the "Economist" about a year ago by Sir Henry Strakosch, who said that, taking all the consuming power of the world in 1929 as being represented by the figure 100, the commodities in the world to meet that consuming power of 100 was represented by the figure 84, or roughly 10 months' supply. In 1929 there were in the markets of the world goods sufficient to maintain all the people of the world at their then rates of consumption for the ensuing 10 months, supposing not one stroke of work was done during that period. Then, he said, by July, 1931, that figure of 84 had increased to a figure of 230. That is, in July, 1931, there were in the markets of the world goods sufficient to maintain the people of the world, on the standards to which they were accustomed, for two years and three months following, supposing no stroke of work was done in the interval.
Then came the crisis. From the beginning of history men had dreamt of an age of plenty, a period at which mankind would arrive when all the problems of material existence would be solved. There would be abundance and there would be ease. It arrived in July, 1931, and immediately the statesmen cried,

1191
" Crisis ! The world's markets are glutted with goods. Tighten your belts and face privation." Since that time this House of Commons has been guided by this Government, which contains within its ranks the most distinguished statesmen that the three parties in this State has thrown up in the last 25 years, all of them with a free mandate, because the electors said, "Do anything you like. There is the power, and take it in lumps. Suspend the normal workings of our Parliamentary machine. Alter the British Constitution in any way you please. Change our whole basis of taxation. Alter our whole method of international trade. Impose more severe taxation on us, and reduce us all to a lower standard of life, but make the system work so that we will all get back into jobs again." The House of Commons has not interfered in any serious way. The Government have been allowed to do everything that they wanted to do and could think of doing. After 18 months of continually imposing heavier and heavier privations on the people, the last state is worse than the first.
The one thing on which, the Chancellor of the Exchequer based his claim to be meeting the situation was the fact that now money can be got at very low rates of interest. That is the success of the Government—there is now money available at very low rates of interest. But that is nothing to be proud of. That is an additional evil symptom. You get your unemployed machinery and, of course, there follows surely and certainly, as the night the day, the unemployed man. And just as the unemployed man means low wages to the employed man, so unemployed money means low rates of interest for money that is employed. That should not be taken as a sign that we are moving towards prosperity, but as another sign that we are moving towards collapse. From this side of the House, and sometimes even from the other side, there have been calls for some amelioration of the lot of the people, which, has always been met with a blunt refusal.
The basic cause of the trouble is that the people are poor, and every proposal that is made to make them less poor is rejected with scorn. Whether it is the unemployed man, the sick man or the employed man on low wages, there is a refusal to do anything to alleviate the
1192
conditions, and always the reply, which I am accepting, that it cannot be done without bringing the system down in collapse. That is the answer. If you ask for the absorption of the 3,000,000 unemployed by distributing the labour over the whole community by reducing hours, it cannot be done. If you ask for better benefits for the unemployed, we cannot afford it. If you ask the Government to maintain the housing subsidy, and to make a big drive to get everyone in a good house, it cannot be done. I agree. You have proved your case too well. Your capitalistic system cannot relieve the people of poverty, and it is no good for my hon. Friend the Member for Mossley (Mr. Hopkinson) and his colleagues of Worcester College, Oxford, coming and telling me that what we have to do is to go back to that glorious age before the industrial revolution, when each man sat under his fig tree which he had planted. It is a beautiful dream, but quite impossible. If he and Worcester College study their history, they will find that, for good or ill, you cannot go back to the past. You have got to make up your mind that the present cannot continue, and you have got to make up your mind consciously to go into the future boldly and with courage. The mass of the people, particularly the upper and middle classes, are afraid to face the future, afraid to go boldly forward facing the world with their hands and their brains. They are afraid that if they have not go their stocks and shares and estates, life will be too difficult for them. The educated people, the aristocracy, the blue-blooded people are afraid to face life; the captains of industry, the great bankers, are afraid to face life on the same conditions as that poor woman in my division who faced it with a laugh. Unless this nation can believe in an age of plenty and this House can plan for an age of plenty, a plenty in which all of us will participate, then the people outside are going to sweep up, as they have swept up before, and wipe us and this institution out of their way, and bring in their own social order, in their own way, by their own methods.
4.16 p.m.
Mr. WALLHEAD: I beg to second the Motion.
It is a long while since the case that we desire to present has been placed

1193
before the House of Commons in such moving and eloquent terms as have been used this afternoon by my hon. Friend the Member for Bridgeton (Mr. Maxton). My fear is that the few remarks that I may have to make may detract from the force of my hon. Friend's eloquent statement, because I do not feel it possible to add much to what he has already said. The question of the poverty of the people has been discussed many times in this House during recent months. I dare say there are those Members of the House who charge my hon. Friends and myself on this side, and not merely just this group, but my hon. Friends above the Gangway also, with too much iteration of this fact. At any rate, we propose, as long as the condition of the people remains what it is, and as long as we are here, to put their case with as much iteration as the case for other sections of the community has been put on other occasions by those who represent them. John Bright declared that the secret of agitation was constant iteration, and, however monotonous it may become that this case should be put, it will be presented, because it is the most important question which this country, which this House, and which the world have to face at the present moment.
I have discovered since I have been in this House that, as a matter of fact, we are always engaged here upon the question of poverty. Most of the legislation in this House arises from poverty. We very rarely legislate for any section but the poor. We are always dealing with the poor. Are they sick? Can we afford to keep them well? Can we afford to maintain hospitals for them? Can we afford to insure them against unemployment? Can we take half-an-hour off their day, or add 1s. a week to their legal wage? Always this House spends its time in discussing the question of the poor—a remarkable situation—but we never consider how rich we can make them, how we can utilise our resources to put them above the reach of poverty. We only discuss how to escape the immediate dilemma by handing out some little palliative that will keep the sufferers quiet until the next row takes place, when the next election comes along; and then we all say once more, "Send us back, and we will show you what we will do to rectify these evils."
1194
Like my hon. Friend the Member for Bridgeton, I have looked at the Amendments on the Paper, and they are very remarkable. Those hon. Members who have put them there want to know whether there are these poor people, how many there are, what is the incidence of this poverty. But what is the essential difference between the condition of the people now and the condition of the people when Sir Henry Campbell-Bannerman declared, in 1905, that 30 per cent. of the people of this country were perpetually on the borderline of poverty and starvation? What has changed since then? Let it be remembered that that declaration by Sir Henry Campbell-Bannerman, and the fact that it could not be disproved, was the death-knell of Free Trade. It killed Free Trade, and it meant the rise of the Labour party. It meant the rise of the working-class party, and what we have to be careful of now is that that rise of the working-class party does not become so enmeshed in the idea of saving the situation for the capitalist section of society, that they will adopt the worn-out shibboleths of the party that preceded them.
The hon. Member for the Mossley Division (Mr. Hopkinson), in his Amendment, says we must escape from Socialistic legislation. From what Socialistic legislation in particular are we to escape? Shall we go back to the time prior to the Factory Acts? Shall we go back to the time when this House, against its will, was compelled, in sheer mercy, to come to the rescue of the people here, o poverty-stricken and broken that the world knew there was no hope for them other than the help this House could give? Is that the Socialistic legislation from which we are to escape? We are constantly told that you cannot change human nature, and I believe that is true. Human nature does remain practically the same. This House always has to say, "Thou shalt not." That has been the great emphasis of the so-called Socialistic legislation. "Thou shalt not" work children 12 hours a day. "Thou shalt not" adulterate foodstuffs. "Thou shalt not" make thee a yardstick 35 inches long. It has always been "Thou shalt not," and if it has not been that, it has not been worth having. The rule of unrestrained capitalism, which has been the foundation of everything done here, has led to this position.

1195
Then there is another Amendment on the Paper, that tells us that we have not yet got sufficient Protection. I give every section of the House credit for sincerity. We all have our beliefs and points of view, and we all hold them sincerely. Naturally, we emphasise our points of view; but Protection? Surely, if there is a discredited system anywhere, it must be tariffs.
Mr. DINGLE FOOT: Socialistic legislation.
Mr. WALLHEAD: Anyhow, it has failed, and the outstanding failure, surely, is the United States of America. If there is a failure of Protection to protect the people of any given country, surely it is exhibited in the United States of America to-day. There are also those mortals who look to a changed currency, a managed currency. None of these things will work. Some may work for a time, but none will alter the facts of the case in any permanent manner. I agree with my hon. Friend that since the time when he and I first entered this House, we have listened to very many prophecies. Always we have been going to turn that mythical corner. Now, as has been pointed out, we do not expect to turn it during the next 10 years. I was asked my opinion about that statement of the Chancellor. Did I think he was too pessimistic I think he is too optimistic. I think he is entirely optimistic.
Fancy talking about a solution 10 years hence. The next 10 years will superimpose their own distinctive problems upon the problems already existing. It must be apparent to even the foggiest thinker that as time progresses, science progresses faster than man's capacity to deal with its output. I speak as a layman, and I speak probably in the presence of those who know far more about these things than I do, but I suggest, with all modesty, that starting from where we are to-day, the next 10 years are likely to see greater scientific and mechanical changes than any previous 20 years through which this country has passed. If that is even approximately true, the next 10 years will superimpose upon our immediate difficulties a new set of difficulties entirely of their own, which will want dealing with in their own way. Obviously, the forces which have
1196
caused our present distresses will continue, and even if, to use the Prime Minister's phrase, we took away these 2,000,000 of scrap and wiped them out completely, the next 10 years would produce their own 2,000,000 of scrap; the wiping-out process would go on eternally, and at the end of it all we should be precisely where we are at the present moment.
Statements have been made by eminent gentlemen on the situation that confronts us, all showing the tremendous amount of bewilderment that exists in the minds of men who do not agree with the point of view accepted by my hon. Friends on this side. I cannot give the exact dates when these statements were made, but they were about the time of the crisis of 1931. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) said this:
" It is very extraordinary and very odd that we should be suffering from the overproduction of the things we all want."
The right hon. Member for Epping (Mr. Churchill) said:
" The modern world is suffering from the curse of plenty. Who could have thought that cheap and abundant supplies of all commodities should find the science and civilisation of the world unable to use them? "
Of course, they have been jerked out of their wonted channels. Their orthodox political economies do not meet the new conditions. Adam Smith cannot deal with this situation. Adam Smith wrote his wonderful "Wealth of Nations" in a. time of scarcity, and it does not explain an age of plenty. It does not pretend to deal with it. This age of plenty finds the Adam Smiths unprepared with theories as to why it arises and how it can be dealt with. Here is ex-President Hoover; he is talking about the conditions in the United States at, the time when the economic blizzard struck them:
" We have an equipment and a skill in production that yields us a surplus of commodities far beyond any compensation we can usefully take by way of imported commodities. There is only one remedy, and that is by the systematic permanent investment of our surplus in productive works abroad. We thus reduce the return we must receive to a return of interest and profits."
Ex-President Hoover visualises an export of American commodities demanding no effective return beyond interest and profit; no return from the point of view

1197
of goods of equal value or equal quantities. That is a pretty good position! We must, he says, export and take back only the profits, and when we have got the profits we must export them and must go on exporting and taking in order that we may go on exporting and taking again, but we must never imagine that we are going to consume these goods ourselves. This country is in the same position. Mr. McKenna, speaking to the American Association of Bankers, said that we were in the same position and that we could only now export on long credit; otherwise, we were bound to smash. That brings its own answer.
May I put this in conclusion. Here we are—and I think the hon. Member for Mossley will agree—living in a wonderful world, in a scientific age and a world in which science and inventiveness have advanced far beyond what any man dared dream 50 years ago. James Watt, tinkering over his kettle in Glasgow in 1774, could not by any stretch have imagined what the outcome would be. The world could not have imagined it. All the wonderful things of science and invention have been handed over to the hucksters. Instead of being dealt with in the scientific spirit in which they were evolved, the hucksters have dealt with them and said: "These shall not be used unless they yield a profit." We are practically masters of the material world. Man is so powerful that he can dive to the depths of the ocean, and with a naked light he can carve up steel as a hot knife carves through butter. He can soar in the, air at 20,000 feet and sail along at 250 miles an hour. He has circled the globe. He is master of the ether, and he can hear speeches from Australia, 17,000 miles away. We can do wonderful things, but we cannot feed ourselves adequately, we cannot clothe ourselves properly, and we cannot erect habitations of a decent character in which to dwell. Until we have become masters of these material things so that we can satisfy our material wants, until we can bring leisure of an ennobling character to all mankind and satisfy mankind's material, ethical, and spiritual needs, this system must be accounted a failure. We sincerely believe that it will and must fail and that it will ultimately be replaced by that system which hon. Members ridicule, but which to us brings a measure of hope because we believe
1198
that only when these things are owned and controlled by the people as a whole will they be used in the interests of a classless community.
4.39 p.m.
Mr. O'CONNOR: My hon. Friend the Member for Bridgeton (Mr. Maxton) introduced a note of sincerity and deep passionate conviction for which we always look from him, and I am sure that many Members of the House felt with me that it was good on occasions that our complacency should be shattered, even if ruthlessly, by a speech such as that to which we listened, which opened the windows and brought home to us from one who knows the facts as well as anybody in the House the devastating circumstances of poverty in which so many of our people live. It seemed to me that the hon. Gentleman's speech really fell into two parts which were not very well related. He first referred to the human aspect of the poverty problem, and that part of his speech captured the sympathy and imagination of all of us. One might have pointed out, perhaps, that much of the devastating poverty that he described could equally well be found in Soviet Russia or in other systems of society than our own. One would not quite agree with him that the industrial advancement of the nineteenth century had brought no advancement to the wage earner. Probably it would be more nearly true to say that the wage earner in work to-day is better off than he has ever been, and that the man who is unfortunately not in work and has to be maintained on the dole is probably maintained better than the man in full work 40 years ago. These are statements that can be established on economic foundations, but, at the same time, they do not leave us with any sense of satisfaction.
We followed the hon. Gentleman with sympathy and approval in the criticism that he made of the economics of gluts. There is nothing that stings the social conscience of mankind so much as this possibility of enormous productive capacity and bountifulness of nature, and at one and the same time the inability to distribute the products of nature or of the machine. In that matter we agree with the hon. Gentleman whole-heartedly. What I listened for in vain was an answer to two questions which arose in my mind

1199
when I read the Motion. These were—what exactly is the hon. Gentleman attacking and to what does he ascribe the fundamental features that he has described, and what would he put up in its place? At the end of his remarks he seemed to be attacking something that none of us on this side of the House would be prepared to support. The hon. Member for Merthyr Tydvil (Mr. Wall-bead), in the very powerful speech which he has addressed to us, also attacked it. It was the rule of unrestrained individualism, the chaotic anarchic individualism, the industrial apostasy of the nineteenth century. That was the target of his attack. If he is attacking that, he will find many friends here. We certainly never intend to see again or to re-erect that shoddy structure which used man as its material and passed him on to the scrap heap at the end of his working life without provision for his old age or ill-health or the incapacities he sustained in his working life. That system has gone for good.
The constructive problem is what is to be substituted in its place. It is there that we do not get very much help from my hon. Friend or from hon. Members on the other side. To them capitalism is a fetish. It is a bald unpleasant name which covers a multitude of sins, and which, as both the speeches to-day have shown, serves for hon. Members opposite to describe the discredited industrial structure of the nineteenth century. To me capitalism is no fetish at all. It is merely an expedient, a method of giving the highest possible incentive to the human being to do service. If any better expedient can be devised, I shall co-operate with the hon. Gentleman in bringing it into operation. The hon. Gentleman really approached the mark when he said, as he said in another speech recently, that the mandate that was given to the Government was to make capitalism work. I prefer the phrase individualism—to make individualism work. This Parliament has a, great chance of devoting itself to that task. In a few constructive remarks I want to throw out, merely as indices, the sort of way in which I should like to see that problem approached.
This fundamental cleavage at once becomes between my hon. Friend and
1200
me, that he believes that private ownership or individualism is a bad thing, and I believe it is a good thing. I want to see it spread as a fructifying incentive among our population. He cannot believe that, and therefore it does not come within the ambit of his philosophy to disseminate it. To me, as I say, there is something ennobling in the incentive ownership gives which, up to date, one has not been able to find in any other system of society. What are the methods by which constructively we can extend ownership so as to poise our society upon a surer foundation than that upon which it rests at present I am wholly against irresponsible talk about the wholesale cutting down of social services. Those services, introduced in the early part of this century, were established for the purpose of shoring-up a system which had evaded its responsibility, and it is on their existence that the system as we know it has survived during the last 25 years. But, on the other hand, those services have been, and are increasingly becoming, rentiers upon the very capitalist system which my hon. Friends are always deriding. They were erected in a haphazard way, no one stopping to work out actuarially what the cost was going to be or where the burden was going to fall, simply because there were enormous reserves of the capitalist system, in the shape of great estates and great fortunes, which could be taxed at heavy rates. Because there were those great deposits to tap it has been possible to go on pushing forward these services in a haphazard way without any relation to the earning power of the community from year to year.
The first thing we ought to realise is that we must fix some proportion between the amount of money annually spent in the form of social services and the total national income. The present haphazard method must inevitably keep wages low, and as, in my belief, high wages are the secret of a property-owning democracy, I am against ill thought-out methods the effect of which is to keep wages low. Professor Henry Clay worked out some little time ago, in a most interesting paper, the effect of the development of the social services upon wages, and came to some remarkable conclusions. He told how, as the social services increased, the wages curve, which had been rising,

1201
tended to flatten out and, ultimately, to droop, showing that the burden of communal expenditure upon industry acted directly upon wages, I believe that to be perfectly true, and I think we have got to determine, as a matter of policy, what is, roughly, the right proportion of the national income to be taken by the State and spent on behalf of the individual. My hon. Friend's philosophy would lead him to the attitude that ultimately the maximum expenditure ought to be undertaken by the State and the individual left with a pittance in his pocket to be used as pocket money—to buy himself cigarettes with, if he wanted them. Our philosophy is at the other end of the globe altogether. What we want to see is the State taking the lightest possible toll of the individual and leaving the largest possible amount of his earnings in his pocket, and it ought to be the business of Government, according to my view, so to direct the surplus expenditure which the individual retains as to enable him to found for himself a stake in his own community.
We ought to recognise the direct toll which taxation is levying on the wage earner at the present time. We hear a great deal about direct taxation, but much less of the indirect taxation which impinges on the wage earner in order to provide the Government with money to spend collectively for him at almost every turn of his life. It is taxed in the matter of beer, tobacco, petrol, unemployment insurance, health insurance, import duties, rates, entertainments and so on—there are a score of taxes, the effect of which in the aggregate must be to deprive the wage earner of spending and saving power to a very considerable extent indeed. I think it was Mr. Morrison who, in an illuminating paper written shortly after the last election, pointed out the obvious truth that the time has come when the development of the social services must be paid for by the wage earners themselves, and that it is for them to consider whether they prefer their money to be communally spent or whether they desire, as I feel they would prefer, a system in which they will have a surplus of their own to invest as a stake in the country. We ought to strengthen by every means possible the machinery of collective bargaining, so as to ensure that no industry may come to
1202
the State for assistance in any of the many ways in which the State can assist industry without being in a position to present it with machinery for fixing fair wages, fair standards of hours and, if possible, bargaining as to the distribution of the proceeds of the industry among all those engaged in it, whether employers or employed.
I want to see an all-in insurance scheme adopted by the Government and coupled with a bonus, payable either in cash or land, at a time when a man is thinking of retiring from the industrial field, so as to induce as many people as possible to go out of industry armed with some small capital sum or with land with which they can perform useful service for their declining years. I want, above all things, to see the Government more active—perhaps that is unfair—to see the Government pressing forward by every conceivable means with the consideration of the question of the hours of labour. I was extremely glad to hear from my right hon. Friend the Minister of Labour the other day that there was no foundation whatever for the belief which has been disseminated that the Government are not enthusiastic about attempting to reduce the hours of labour. What advantage can it possibly be to the wage-earners of this country that they should see each advance of science cutting away from them their employment? Yet such is the case at the present time. Every advance in ingenuity, every new piece of machinery, instead of being hailed by the workers as being the greatest conceivable blessing to them, as lightening their toil, is looked on by them with terror and fear as depriving them of the means of earning their daily bread. I hope that in co-operation with the trade unions it will be possible to make an advance along the lines of seeing whether, in selected trades to begin with, the amount of leisure cannot be increased.
Every Government seems to be pursuing a mad reverse of the ideal in this matter of employment. Obviously the whole process of civilisation ought to be to unemploy people, not to employ them. The progress of civilisation ought to bring more leisure, and the problem of the next 25 years is not how to get more men at the loom but how to give people education and the equipment with which to employ their leisure. Following on what my hon. Friend was saying, that

1203
industry had brought nothing to the wage-earner of to-day, but that conditions were as bad as they have ever been, one remarkable fact meets the eye. During last year, a year of unparalleled depression, a year of taxation which burdened and crippled the rentier and the capitalist, the small wage-earner of this country saved £7,000,000 more than he did in the previous year.
Mr. MAXTON: Where does my hon. and learned Friend get that figure?
Mr. O'CONNOR: I think it was stated by the Chancellor of the Exchequer or the President of the Board of Trade. The new investments in the Post Office and in War Savings certificates amounted to £7,000,000 in the last year.
Mr. MAXTON: Will either the Chancellor of the Exchequer or anybody else assert that that is due to investments by small wage-earners?
Mr. O'CONNOR: I should rather doubt whether my hon. Friend is right about that. In the case of War Savings certificates, I think the people with the higher ranges of income already had their quota of them, and therefore the purchases of last year represented purchases by people who had not previously held them and who presumably came from the wage-earning classes.
Mr. MAXTON: I do not want to interrupt again, but this is a point. The explanation has been given to me that these investments, not merely in War Savings certificates but in co-operative societies and friendly societies, are the proceeds of the sale by small shopkeepers of their businesses. They were being unsuccessful or they were wound up, and those people have been putting their investments into funds of that description.
Mr. O'CONNOR: There is no doubt it is a, matter which is not readily susceptible of proof. Perhaps we might be on safer ground if I said that these savings, both in War Savings certificates and Post Office Savings Bank deposits—even a better test—come from the area of the extremely small capitalist, the capitalist who is a wage earner or has a small business. Wherever it comes from, however, there is something like £7,000,000 more of small savings. And what is it doing? It is lent to the Gov-
1204
ernment. It is the business of the Government, in my opinion, to redirect that saving. The great capitalist is not going to be able to finance industry in the future, nor do we want him to do 0. What we desire to ee is an inflow of capital from those small sources into the industries of the country, and every possible step should be taken by the Government to assist that flow, so as to spread property much more widely than it is spread at the present time, and give to the small individual the responsibility we all want to see him have for the industrial development of the country.
How is that to be done? I think it could be done, in the first instance, by an alteration of the Trustee Act, which is long overdue. I would like to see the prior charges of approved industrial undertakings placed upon the Trustee Act, to see in that way the small savings of the people diverted into those channels. It is their responsibility now, because I do not think the great capitalist is going to be able to do it much longer. He is far too keen to put his money into Government debt. It is essential that we should start a flow of small savings into the industries of the country—into approved securities, I would say, because nothing could be more fatal than to land small capitalists in a few more Hatry crashes. It might be done by a simple alteration of the Trustee Act. I think it ought to be coupled with some kind of—not perhaps an investment board, but some kind of certification by the Board of Trade of new issues, so that there would be some information given to the public, without engaging the responsibility of the Government, to ensure that the wastage of savings in the last 10 years is not going to be repeated. The inclusion of prior charges in a trustee list would also give the Government the opportunity of satisfying itself as to the conditions prevailing in an industry which sought inclusion, and that could be used as a definite method of giving the Government some control, and of giving some incentive to industry to see that good wages and conditions and fair profit-sharing prevailed within it.
The development of the deposits in the building societies must fill us all with satisfaction, even in these hard times. A note of warning is worth sounding in

1205
that connection. I do not know whether everybody has visualised the problem that the building societies are building up in the next 25 years. You run a great danger, unless you make house property liquid—which sounds a contradiction in terms—of facing a period when your population will be to some extent immobilised, because people will own their houses and will not be able to sell them, and if they want to move to another district they will not be able to walk away with them. Side by side with building development, the Government ought to consider whether it can set up some kind of corporation which shall have the assets and the means of disposing quickly of house property, so that the small investor in house property may be able to dispose of his assets when he wishes to change his district or his employment, or when he dies. In the new capitalist order, as I visualise it, you have to give the small capitalist the same advantages as the great capitalist had. The capital of the great capitalist was always liquid. He, had his stock exchanges, his auctioneers and his different methods of turning capital into cash. It would be wise, in view of the great development of the building society movement, that some consideration should be given to the possibility of making capital of that kind more liquid.
I will conclude on this note: Like the hon. Member for Merthyr Tydvil, I am no pessimist. I look forward to an era of enormous prosperity, of greater prosperity, probably, than the world has ever seen. I believe that we are only suffering growing-pains at the moment, and that it would be a mistake to face the prodigality of nature and the inventiveness of man with fear, frightened of the future. In the new order that is coming, it is in the dissemination of ownership, the spread of responsibility among the people, and the linking of a whole democracy into a property-owning community, that the stability and the prosperity of the country lies.
5.4 p.m.
Mr. HICKS: I rise to support the Motion moved by the hon. Member for Bridgeton (Mr. Maxton). I was particularly impressed by the manner in which he moved it, and by the facts that he offered so effectively in support of it. The hon. Member for Central Nottingham
1206
(Mr. O'Connor), in his contribution to the Debate, stated that the hon. Member for Bridgeton had excited the sympathy of most hon. Members. That is very true. I do not say that in any mean spirit. I am sure that there is nobody in this House or outside who can view with complacency the extent of the poverty and handicap to which millions of our people are subjected to-day. The hon. Member for Central Nottingham, as I have no doubt other Members from the Government Benches, will be saying that Socialist proposals for a solution will not get us anywhere. He said that we regarded capitalism as a fetish. That is not correct. Capitalism is very real it is not a fetish. Its ramifications and its ravages are too extensive for us to regard it in any sense as a fetish. The hon. Member also said that he wanted to see individualism brought back. He is asking the Government to work individualism. How can you make a central Government responsible for individualism? It is a contradiction in itself.
The fact is brought out in very bold relief that Governments are more and more called upon to deal with issues that private individuals were previously able to deal with. With the march of economic development, Governments will be called upon more and more to deal with the problems arising therefrom. Governments will not be able to escape responsibility for industry of any magnitude which is necessary for the general life of this country. You cannot expect me, in speaking to this Resolution, to agree with the policy of the Government. I regard the Government as the representative of capitalism and landlordism, and a very efficient representative at that. They have used this House and its machinery to steam-roller through any legislation or any Measure that they have considered necessary to bolster up vested interests, in any degree that they have considered right.
I heard the cheers when the hon. Member for Bridgeton was referring to the fact that the Chancellor, in the brave statement which he made the other day, said that we must look forward to another 10 years before we are able to get out of the difficulty. The Government and its representatives are prepared to 'accept and to face the prospect of another 10 years of unemployment. I

1207
would like to see where the proposals to stop that are coming from. The Government's only line of action appears to be piling on taxes, lowering wages, stopping public works, preventing the development of housing progress and cutting down social services. That is the sort of thing the Government have done since they have been in office, and the burden upon our menfolk and womenfolk in the country has become a great strain. It is impossible to conceive a more amazing moral or mental bankruptcy than that of the Government in their proposals for dealing with the situation. The Government must be regarded as the political executive of capitalism in Great Britain. I would say that very definitely. All phases of its policy have been directed towards maintaining, conserving and advancing the capitalist interests in this country.
I can hardly agree with the part of the Resolution which says that the Government are "trifling." What the Government have done has been more than trifling in the way they have lowered human standards in the workers' home., in this country. The Government is no foolish lamb, stupidly trotting its way to the slaughter. Whatever stupidity may be alleged against this Government, I am sure that the Government cannot be accused of innocence. The men In our Government are men of keen intellect, great public knowledge and experience, and great capacity. I suppose that it would be very difficult to find men in any Government who have had a richer experience than the men in our Government. They represent the present social system and all that it stands for, and the enormously wealthy and infinitely resourceful capitalist class of Great Britain. Yet they are paralysed with the problems that the system has thrown up.
The Government have at their disposal all the accumulated knowledge and the vast literature that has been written upon the subject, all the probings of the Royal Commissions and the work of all the great economists, every one contributing to an analysis of our present system. The Government have colossal resources, great organisers, great administrators, scientists, engineers, electricians and technicians; they have land, plant and machinery. Nothing is short, either in material needs or in. capacity, experience
1208
or information. The "Times" newspaper, on 7th January, 1933, wrote this very remarkable passage:
"In practically every branch of production machines are now performing in a few hours tasks which formerly required the handiwork of many men for many days; and the power of the machine to stimulate the production of mines and of factories is supplemented by the power of scientific discoveries to stimulate the production which depends upon growth. It is as true to-day that the scientist can make two ears of wheat grow where one grew before as that the engineer can mine two tons of coal where one was mined before. The productive capacity of the twentieth century State is, indeed, almost without limit, and in the world as a whole there is either actual or potential abundance of food, clothing, and heat—to mention only the prime necessities of life."
That is the contribution of the leading organ of Toryism in this country to the problem with which the Resolution deals. There never was, in the history of human society a Government with such opportunities as this Government, and yet, having such opportunities, their contribution to the solution of the problem has been very small indeed.
In the modern world, where industrial development, science and invention have reached their apex of achievement, to be discussing the fact that we are adding to the misery of the people and to the numbers of the unemployed, suggests either very callous indifference to human welfare or that individualism, in rising superior to social responsibility, is bankrupt of capacity to deal with the situation. Of the 45,000,000 people in Great Britain, roughly 40,000,000 are living a very uncertain existence; they are either working for wages or are dependent on wages for a livelihood. Their opportunity in industry is very insecure, irregular and uncertain. The general conditions under which they are living have been inquired into by commissioners from our big national newspapers—the "Daily Herald," the "Daily Telegraph," the "Manchester Guardian," the "Evening News" and others—whose energy and capacity we all very much appreciate. They have told us of the abominable overcrowding and the slum and housing misery of millions of our people. A very large number of those 40,000,000 people are still, as regards housing accommodation, without the ordinary decent requirements for a civilised existence. They are existing in alums which are vile and

1209
foetid and vermin-ridden. The reports from investigators, medical officers of health and others, will show that rats and mice abound in very many instances. And yet, in this age of great capacity, with science and invention available for harnessing to industry, hours of labour that could be employed in putting those conditions right are idly cast away at the Employment Exchanges.
On the question of employment and the reduction of unemployment, I agree with the hon. and learned Member for Central Nottingham (Mr. O'Connor) that one of the problems that we shall have to consider seriously in the near future will be the organisation of recreation as well as of work. That is a problem to which the House might well devote some time. The number of people such as I have just referred to, who are living in our slums, is estimated at over 3,000,000, and it is generally accepted by social workers that that is an under-estimate. Even the ancient troglodyte—the cave dweller—had a certain range of opportunity so far as fresh air was concerned; he was not imprisoned under such abominable conditions as many of these people are. I wonder whether some of our people do not ask themselves sometimes what the centuries of civilisation have contributed towards their human happiness, and whether they are better off in their general conditions as a result? The hon. Member for Bridgeton (Mr. Maxton) mentioned some of these terrible conditions in his own constituency, and they can be multiplied in every constituency—in every industrial constituency, at any rate—throughout this country. The 3,000,000 unemployed with their families comprise at least one-sixth of the total population of this country, and the present Government, by its general policy in regard to cutting down social services and cutting down benefits, has been calculatedly responsible—it cannot be innocently done—for driving these people down to a standard of existence which is below what is ordinarily regarded as a minimum.
Mr. Seebohm Rowntree, whose authority will be accepted by all who take notice of investigations into conditions of life and poverty, made, as is well known, an investigation to ascertain what was the lowest standard of subsistence for a man, his wife and three children. He has recently gone into the
1210
question again, and has published fresh figures for January of this year, which show that a man, his wife and three children should have at least 31s. 6d. per week in order to maintain themselves in a state of physical efficiency. Our unemployment pay for such a family is 29s. 3d. But, to the figure of 31s. 6d., rent and other expenses have to be added. I suppose that 15s. would not be regarded as an unreasonable rent in London for a man, his wife and three children, or 10s. in the provinces. As compared with these figures, our unemployment benefit in such a case amounts in the aggregate to only 29s. 3d., which has to include the rent, no other provision being made for it. On the other side we see heaped-up wealth that has been produced by our own people. There is no magic way of producing wealth; it is only by the application of labour power to nature-given material that wealth is produced. We see piled-up wealth on the one side, and, on the other, these millions of people subjected to a poverty-line lower than that which is regarded by the experts as a minimum. How can we expect them to escape the ravages of disease and illness?
It is impossible for us to look at the question from any other angle than that the distribution of wealth is totally wrong. There is heaped-up wealth which these people have laboriously produced, and yet they are prevented from touching it. We speak sometimes of the gold reserves in our banks, and of the idle money in the banks. While you have the gold in the banks, you have these little jewels of humanity, boys and girls of a great Imperial race, being destroyed in the foul, disease-ridden slums in which so many of our people are compelled to live. The more the workers produce, the less there is available for them. The harder they work, the quicker they become unemployed. The more work that is done, the lower the standard of life of the workers.
The capitalist system is defended to such an extent that one would think it was a divinely inspired system. The defenders of the capitalist system in this and other parts of the world, where there are mountains of wealth and an abundance of agencies to supply their own brothers and sisters, their own flesh and blood, with all the things that are necessary for their livelihood, say that it is

1211
wrong for them to have that wealth. If they are asked why this problem should not be solved, why the people should not have more food, the answer of capitalism is: Destroy the food; burn the coffee; make briquettes of the wheat; fire the boilers with wheat that could be used for human consumption. The fish that has been caught in the sea, instead of being distributed, is put back into the sea or used for manure. If they are asked why it is that people do not have better clothes, the answer is: We will burn the cotton, or dig it into the soil; we have too much wool, and too many textile operatives and tailors. That is why our people are shabbily dressed. Let hon. Members go into their own constituencies and see whether the people are properly dressed and shod. It is not because we have not the means. Why are the people not properly housed, when we have so much land, when we have so much building experience, when we have 20,000 architects unemployed to-day, when we have 400,000 building trade workers unemployed, when we have large quantities of idle plant and machinery? What a ridiculous and amazing contradiction and confusion the whole thing is.
The Motion speaks about widespread poverty and the methods employed to tackle it, but anyone who examines the system will wonder what steps the Government or their representatives are prepared to take to tackle this problem in anything like a practical way. The whole thing appears to us to be beyond common understanding. The system which the Government represents is failing more and more, and it is bound to fail. Its representatives are fighting all the time for markets that are not there. They are fighting with the people of other big countries for markets in the same areas. This is sowing the seeds of international commercial rivalry and international war. War is not caused by the perverseness of character of individuals, or because some representative of a State may say things that are irregular. Wars are much deeper-seated than that. The reasons for them are generally commercial rivalries. I should like to read a short quotation from the late President Wilson, speaking at St. Louis in September, 1919, after the last War. He said:
" Peace! Why, my fellow-citizens, is there any man here, or any woman, let me
1212
say is there any child, who does not know that the seed of war in the modern world is industrial and commercial rivalry? The War was a commercial and industrial war; it was not a political war. The reason that the War we have just finished took place was that Germany was afraid her commercial rivals were going to get the better of her, and the reason why some nations went into the War against Germany was that they thought that Germany would get the commercial advantage of them. The seed of the jealousies, the seed of the deep-rooted hatred, was hot commercial and industrial rivalry."
What is the position to-day? Our country, and all capitalist countries, have produced more goods than there is an effective demand for in the home market, and they are all pushing for markets in other parts of the world, attempting to drive out competitors — Americans, Germans, French, Belgians, Scandinavians, Czechoslovakians, or whoever they may be. Each is trying to outbid the other. The evidence of that is the 30,000,000 or 40,000,000 of unemployed people that there are in the world to-day. They cannot be employed in industry again under capitalism until it is possible to expand markets and get additional buyers for the commodities that are produced. Where are the markets? They are already covered by the effective industrial countries that I have mentioned, and there are others; and, side by side with all this, we have an ever-growing development of capacity to produce more commodities than we are producing to-day. Since we are able to produce more commodities than ever before, one would say, in the ordinary scheme of things, that the home and family ought to be richer by that greater capacity; but, instead of going on looking upwards, we go backwards and downwards. We see more produced and less consumed; we see faster work and quicker unemployment; we see rationalisation, machinery, and so on, bringing the total of our unemployed up to the many millions at which it stands at present. And they are the people who have produced the goods.
Those who represent this present order have to ask themselves whether the problems which the present order throws up are not being created much faster than any action which they are able to adopt to overtake them. Every day and every week you find yourself further behind. You think you are able to get

1213
cheap money here and then you find that another country goes off the Gold Standard. If you think you have a market because you have gone off gold, another country goes off and the competition goes on again. I have never spoken of any capitalist as being an individual who is full of brutality It is not the man but the system with which he is associated. Since you have been in power in wage cutting you have led employers. We are £10,000,000 worse off since you have been in office than we were before. You have reduced unemployment benefit; you have imposed a means test which is lower than the amount of unemployment benefit. The hon. Member for Central Nottingham spoke in regard to the savings of the people. The Government have looked after the savings of the poor people when they became unemployed. If they have two or three shillings in the bank they must take them out before they get any relief under the means test. The Government have looked after their savings in a very effective way. You have reduced the wages of the workers in public employment.
Mr. LOVAT-FRASER: Does the hon. Member remember that it was his party that introduced the means test?
Mr. HICKS: I am stating a few things that you have done which have contributed towards unemployment. Not only have you led the employers in wage cutting, cut down the miserable benefit of the unemployed, and imposed the means test, but you have curtailed industry, aggravated unemployment, closed down housing schemes and public works—
Mr. DEPUTY-SPEAKER (Sir DENNIS Herbert): If the hon. Member will be good enough to address the Chair, we may know better whom he means by "you."
Mr. HICKS: They have crippled the social services and made cuts in public education. When you come to examine the work that the Government have done, the Motion is justified in every possible respect. We cannot accept the position as it is. We cannot accept the fact, when we have the capacity to bring better and brighter lives to our people, that we are going further and further down in the
1214
social scale. To remain quiescent in such circumstances is wrong. There can be no moral justification for it. No Government, however powerful it may be in intellect or numbers, has the right to stand between people and the means of satisfying them. This restriction that is being imposed upon people is criminally monstrous—the wilful destruction of foodstuffs while people go hungry, wil-fully putting people out of employment when they should have the opportunity of using their skill and capacity to feed, clothe or house the people.
There is, in the opinion of the Labour party, only one way. However long the capitalist system goes on, the contradictions that it will throw up will be greater and greater. The central Government will be called upon more frequently than ever to tackle these problems. It will not solve them. Industry organised for individual welfare instead of the social welfare is bound to bring in its train the contradictions that I have mentioned. Until the country agrees to change the basis of production from private to public enterprise, until the main industries are taken over by the people for the people, until they are properly and effectively planned, until Great Britain is regarded as a unit, perhaps a unit inside the bigger unit of the British Empire, and the material resources of the world are used for the purpose of providing greater happiness and comfort, contradictions such as we have today will be intensified and will show themselves more glaringly, and international wars brought about as the consequence of economic rivalry will be re-instituted. All the countries in the world are better equipped in man power, machines, aeroplanes and death destroying agencies than ever they were before. However useful this system has been in the past, it has reached its limit of usefulness to-day in the direction of guaranteeing millions of men and women a better life. Let us take a fresh point of view upon it. Do not be afraid of fresh ideas and of examining something different from what our forefathers had. I believe that, by these agencies and the establishment of the system of Socialism nationally and internationally, the problem of poverty will disappear and human happiness will be alleviated.
5.37 p.m.
Mr. HOPKINSON: It is customary, if any Member makes a special effort in the way of a speech, to compliment him on it; and it often happens that those compliments are not altogether sincere. But everyone who listened to the speech that initiated the Debate will agree with me that it was from every point of view such a speech as added to the reputation of the speaker. I could not help thinking as I listened to the hon. Member that if only I could speak like that, I could cause a revolution, though one of a very different kind from that which he contemplates. I propose to give some hints as to the nature of what I think is going to be the real revolution that is coming, for I would remind the House that the hon. Member threw down a challenge towards the end of his speech. He said, "Turn away from the past and look to the future if you dare face the future," or words to that effect. He knows very well that I recognise that he, in his way, has been preparing for a certain future. He knows that in my very humble way 1 also have been preparing for a future, and I hope he will agree when I say that I fully recognise that his whole life and his whole actions have been guided by a really profound love for the people of the country. As I recognise that, and as he knows that I recognise it, perhaps he will give a little recognition towards a similar spirit in what I have been doing, although in every single point of policy I am diametrically opposed to him.
I well remember the days when I worked as an apprentice and the days after that when I had to do a great deal of work at the coal face in the pit. In those days there were old men working with me to whom Socialism all their lives had been in the nature of a religion. Generally speaking, they were men who had absorbed the ideas of William Morris, those somewhat vague but extraordinarily beautiful ideas of a co-operative commonwealth for this country and ultimately for the world. It is one of the saddest things one can observe to see how that faith has been destroyed and that magnificent vision of a great and happy future for mankind has been taken away and has left nothing whatever in its place.
The House will perhaps pardon me if I trace as far as I can the experience of
1216
the world in Socialism and subsequently the experience of the great world protest of what is called "Individualism." The hon. Member for Bridgeton being a Scotsman possibly like myself, occasionally dips into a book called the Bible. Being a Scotsman no doubt he dips into it with a view to finding suitable terms of invective with which to overwhelm the capitalist class. But I need hardly remind him that the experiment of a cooperative commonwealth was tried some 2,000 years ago in a city called Jerusalem. There was then a body of men who held all their goods in common and no man deemed his wealth his own. As far as we are able to ascertain, from the somewhat scanty information vouchsafed to us, that society worked admirably for a time; until at length it attracted to its circle a gentleman and his wife of the name of Ananias and Sapphira and it broke down most lamentably, because they kept back part of the price.
Surely, that is the history of socialistic and communistic communities all through the ages. As long as there was a great ideal as the motive for their action they succeeded, but sooner or later to every one of those communities there came an Ananias and a Sapphira who kept back part of the price. If we take the latest and greatest of all these experiments, we find that what happened was adumbrated on a small scale in the story to which I have referred. It will be remembered that when the man and his wife kept back part of the price, Peter rose up and put them to death for their sins. So too Lenin discovered there was only one way of dealing with those who interfered with the running of a communistic organisation, and that was to get rid of them by death at the earliest possible moment. Having adopted that method, he was able to attain to a large degree of success, and it is quite possible that in Russia within the next two or three years there may be a complete guarantee of material existence—food, clothing and lodging—to every citizen, but at what an expense. At the expense of everything that separates men from the beasts.
As I say, the hon. Member and I have in our differing ways devoted ourselves to solving problems—to solving perhaps the greatest problem of the age, which is not a material but a moral one, the problem of giving a new hope to the

1217
millions who are at present hopeless and see no future, of giving them once more a bright and happy future to look forward to and something to work for, even if they cannot expect to get it within this generation or the next few generations to come. What the hon. Member works for is the changing of institutions. What I work for is the changing of individuals. And I shall win, as the whole history of mankind has shown up to the present. Always has the selfishness of men and women wrecked every experiment towards the co-operative commonwealth of his ideals. But I, who have been convinced for many years that it is utterly useless to attempt to get progress by changing institutions, maintain that the whole history of mankind shows most conclusively and manifestly that progress is only to be obtained by changing individual men and women.
Let us apply that to the immediate question under debate. In order that the hon. Member's Utopia may materialise, in order that his co-operative commonwealth may flourish, it is essential that there should be at any rate a majority of the people of the community in question who are willing to work and to give their service and their lives, not for their own advantage, but for the advantage of their fellow-men. Ono thing we know, unhappily, too well, is that there is not in this country or in the world to-day anything approaching to a. majority of men and women willing to undertake those obligations to give their best work and best thought without regard to personal reward, or to their families. Therefore, what we call the capitalist system exists. It was not a system which anybody designed or set up. It is simply the state of affairs which must exist in any community where the majority of men and women are selfish rather than unselfish. I say that for the present, at all events, it is utterly foolish and wrong to suggest to those unhappy people to whom I have referred, to those unhappy people who have lost that great ideal of Socialism which sustained them in hope so long, that there is any possibility of a realisation of their dreams until they themselves are manifestly and distinctly changed from what they are at the present time. That there is the possibility of a change we all know.
During the War we were entirely under a system of State Socialism, and it
1218
worked, and we are paying for it now through the nose. But the fact remains that millions and millions of men and women in this country were willing to work, to fight, and to suffer everything that men and women can suffer, and not to ask any reward whatever from the State which was employing them. Those who are everlastingly, like the hon. Member for Bridgeton and his friends, demanding the abolition of war should at least recognise that the only possibility in these days of any realisation of their Socialistic dreams is when the nation is engaged in a war for its very existence and we live as a Socialist commonwealth.
Let us turn to the other side of -ale matter. I have suggested that it is useless to change the organisation of society; useless because that organisation will change itself when men and women have changed themselves, and fitted themselves for some other form of organisation in industry and in society. Just as I have said that capitalism is merely the state of affairs which exists among selfish men and women, and cannot be altered without the complete wrecking of their prosperity and depriving them of their livelihood, so this dream of a social commonwealth, such as the dream of William Morris and his friends, is only realisable, and is inevitably to be realised, if once that condition exists that men and women think more of their neighbours than of themselves. Therefore, I maintain that this much maligned capitalist system under which we live at present must still continue in some form—and here I make my challenge to the hon. Member for Bridgeton. While he devotes himself and his great powers of oratory to endeavouring to alter a system which cannot be altered until men and women are altered, I, in my humble way, have spent my life in preparing for that alteration in the outlook of men and women which alone can bring about in the future the co-operative commonwealth of his dreams.
The way I have gone about it is this: I came to the conclusion many years ago in my industrial life that it was useless to attempt to convert the whole bulk of the men and women of the country, but that it was possible to make an enormous advance if one could convert even a few and if those few were in a position of responsibility, and thus to initiate this

1219
new era for which we both long and which is the ideal of us both. In other words, I reached the conclusion that it was within the bounds of possibility so to alter the outlook of those who control the industries of our country under this capitalist system of ours that they could take the first stages towards the ideal of our dreams. So important do I deem these matters that I have never for one moment hesitated in my own conduct of affairs to feel my way step by step towards that better and happier time for the workers which he and I have devoted our lives to bring about, and by experiments in industry to see what happened when you adopted new methods of remuneration and of dealing with work and for getting continuity of labour even in these depressed times. The results of what I have done amount largely to this: that to remove that poverty which we all deprecate so much there is at the present time but one practical thing we can do. What is wanted is that, when the weekly pay day of the country comes round, instead of the paltry millions which are paid out in the pay-bags at the present time, the aggregate amount must be vastly increased. In other words, we must initiate a campaign for more wages.
But before hon. Members above the Gangway and the hon. Member for Bridgeton agree too closely with me upon this point, I would say to them that more wages at the present time in many cases mean lower rates of wages than what are being paid to our people in many of our industries. That is what I meant in the Amendment which I put upon the Order Paper, but which I do not propose to move as the Debate will follow a more useful course if Amendments are not brought in at the present stage. What I meant was that the actions of successive Governments—for no party in the State is guiltless in this matter—have all been devoted, like the actions of the trade unions, to raising the rate of wages without any regard whatever to the aggregate of wages paid throughout the country in each week.
It is useless to have a few fortunate railwaymen, for example, employed at a. high rate of wages when there are scores of thousands of railwaymen already thrown out of employment and others who are being thrown out. What is the
1220
reason? In the case of the railwaymen it should be obvious to everyone. It is not the directors and managers who decide what the rate of wages for railwaymen is to be. They cannot decide. It is those who use the railways who decide every time what the wages of the railwaymen shall be. When wages boards or Governments go about the matter in the way in which it has been gone about up to the present and say, "this railwayman ought to have such and such a rate of wages," unless they have consulted the users of the railways first, they condemn that railwayman to perpetual unemployment, as has been the case in thousands and thousands of instances during the last few years. But if the public were allowed, as formerly they were allowed, to say what the wage rate of the railwayman should be, then the railwayman would get the wage instead of having to go upon the dole as he does at present. I pray hon. Members above the Gangway to think over this matter before I pass from it, and to think it over most carefully, whether what we want is not more wages in the aggregate rather than high wages for a few lucky individuals and the rest of our unfortunate people living on the dole.
The House will pardon me for making my speech a good deal longer than is my custom, but the tone of the speech of the hon. Member for Bridgeton was so elevating and so lofty that I am tempted to do my little best to rise even though it be to a short distance, up to those heights to which he has risen. I have said that, so far as I can see, there is no hope for mankind and no hope for industrial mankind unless there is an immense change in the outlook of men and women, and I have also stated that it is very much easier to change the outlook of a few capitalist employers of labour than to change the outlook of the whole bulk of the workers.
Therefore, I think it is right that I should endeavour to link up those arguments, and, as far as I can, show what I contemplate will be the development of industry during the next two or three generations in this country. The times have changed very much. There was a time when, generally speaking, the great fortunes of the country were in the hands of those men and those families whom the whole of the people of this country

1221
were inclined to regard as the best of our citizens. That time has gone. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) has seen to that. He destroyed those people. He destroyed them utterly, and we have been suffering from the loss of them for many years since.
Now, in the course of the War and subsequently, we found the general tendency was for the great accumulations of money in this country to be in the hands of people to whom I do not wish to be unkind, but whom I think I might rightly describe as the sort of people that no decent young man would ever like to be like. In the days when I was a youngster, there was something rather creditable in a lad going into industry and making a great fortune. It raised him in a certain degree to something like the same social status as those old great landowning families of the country who had hitherto represented our rich. But since the War and since the era of the right hon. Gentleman the Member for Carnarvou Boroughs, I venture to say that any young men going into industry might well question their seniors and say, "If I work here in industry and devote all my talents to making this business a great and a prosperous one, is it not just possible that at the end of it I may find that all my efforts have simply resulted in making me like Mr. So-and-So or Lord So-and-So? If that is the case, then success in industry is not for me."
I have spoken partly in jest over these matters, but the fact remains that among the young people of to-day going into industry with the prospect of taking up responsible positions, the money motive is not nearly as powerful as it used to be even in my recollection. I think that the time is rapidly coming—in fact, I think that it is almost on our doorstep—when we shall find young people coming into industry without worrying too much as to whether they will make great fortunes, but coming into it for the reason that I am running my industry now—I am getting nothing out of it—namely, for the sake of doing a thing as well as one possibly can and showing that one can do it better than the other fellow. In other words, the sporting instinct which has distinguished all classes of our country for so many generations may, I
1222
think, become the mainspring of energy and enterprise in industry, instead of that broken mainspring, the desire for great possessions. I find in going about the country among people of all classes and in talking to young people whether in the coal-pit or the board room, there is a possibility that this is not wild idealism on my part. This at least I know—that the experiment I have made of regarding an industrial concern merely as a means of sport and not as a means of gain, is a successful one, inasmuch as I proved by six years' experience that industry is a game which is worth the playing for the sake of the game, even when someone else gets the silver-plated toast rack and you get nothing.
In his unregenerate days, when he was not afraid of trite catchwords, the hon. Member for Bridgeton would say: "Let us have democratic control and ownership of capital." I am going to make him a present of part of his demand. I have tried for some time now the experiment of democratic ownership of the capital of my own concern, and so far as my experiment has gone I have proved that there is no harm whatsoever in democratic ownership of capital—provided there is not democratic control. For some years now I have not owned the capital which formerly belonged to me. The whole of the capital in my business belongs to my employéps—but the degree of autocracy with which that little concern is conducted is unequalled in any industrial concern in the country. In support of my view that we can run industries successfully with democratic ownership of capital, provided that we maintain autocratic control, I am going to bring against the hon. Member the evidence of the poor, downtrodden wage-slaves with whom I have worked and whom I have consulted from time to time in the course of the experiment.
I said to them, at the very beginning of the experiment: "I do not see in the very least why you should not own the capital of this concern of ours, rather than that I should call it mine, because so long as it is capital neither you nor I can blue ' it. Therefore, it does not make any difference whether I transfer it to you or keep it in my own name." They understood that. I then said: "What about democratic control? This involves you once a year in elect-

1223
ing from among your number representatives who are to decide "—this is the decision which has to be made by all capitalists—" how much of the product of the industry is to be paid out in wages, and how much should go to capital." That is the crucial question which the capitalist employer has to decide year by year. After some conversation, they agreed that what would happen would be this: in the first year they would think who among their number were the best people to control the matter and to decide the very difficult question already mentioned. They would say: "We will choose those who have been successful in their own private affairs, those who have accumulated a little capital of their own and are preparing to retire at a comparatively early age, so that they will be wage slaves no more. We will elect them because they have been rather good in managing their own affairs."
I then said: "Suppose we run into a rather bad time. Suppose the Government pass another Coal Mines Act"—which would inevitably mean hard times for us, because our customers are the collieries. "When there was no bonus to be added to the weekly wage and when the demand was made by your committee for a reduction in wage rates because they could not afford to pay what was required, what would happen?" We know that, like the hon. Member for Bridgeton, they would go to the local equivalent of Glasgow Green and say: "Here is a committee of brutal capitalists making capital the first charge on industry, instead of making the wages of the workers the first charge. Perish the thought !" And inevitably at the next election those would be elected who would be pledged to give the whole of the product of the industry in wages and to keep nothing whatsoever for capital. So that, in three years, in the case of my own concern, the show would be in bankruptcy.
By all means let us have democratic ownership of capital if it pleases anybody, because it makes no difference so long as it is kept as capital; but for heaven's sake allow those who are capable of running the show successfully to keep control of what is the very lifeblood of the nation and the workers.
1224
The whole of my life I have been sitting on brass tacks, and it is very difficult for me to get into the rarified atmosphere in which the hon. Member for Bridgeton moves. But I think I have justified the opinion that occasionally even a practical shopkeeper like myself can show some signs of imagination, some sign of looking forward to a better and a happier future for the workers of this country and the workers of the world. Socialism, so far as the intelligent workers of this country are concerned, is as dead as a, door nail, and the hon. Member knows it. I look at the party opposite, the Socialist party, and what arises again and again to my mind in regard to the creed which they find it so profitable to support is summed up in the words of a poet who was quoted the other day in this House for the first time for some years:
" Its frame still stands without a breach,
Though blood and warmth are fled;
And still it speaks its wonted speech
But every word is dead."
6.7 p.m.
Mr. McGOVERN: I am sure that every Member of the House has enjoyed the speech of the hon. Member for Mossley (Mr. Hopkinson). I was deeply interested in it, because I believe him to be very sincere in the belief that he holds, but I am bound to draw the attention of the House to the fact that we are not discussing whether there are good employers and bad employers in the capitalist system of society, but whether the system of capitalism is able to bring itself back into a, state of prosperity and abolish the widespread poverty of the working-classes. The hon. Member made one or two statements which I should like to analyse. He said that before we can have any state of society such as that outlined by the hon. Member for Bridgeton (Mr. Maxton) we must have a, complete change in the attitude of individuals. We must have, in the words of the Leader of the Opposition, which I heard nearly 20 years ago, "a complete change of heart." Speaking as a Socialist, it is not only essential that we should believe in a new gospel but that besides being a, Socialist one must have the spirit of Socialism and be able to enunciate it, not as a professional politician or advocate, but as something for which one is prepared, if necessary,

1225
to make sacrifices to bring about the realisation of one's aims and ambitions.
When the hon. Member said that before we can have any change we must have a complete change of heart in every individual, I must cross swords with him. He seems to assume that human nature is absolutely selfish in its entirety. I disagree. I say that conditions and environment create selfishness within human beings, but that mankind is not selfish at the very bottom. Where would you get a more complete demonstration of the lack of selfishness in the working class than the fact that they go into industry, that they go into the bowels of the earth, that they produce the coal that is required for the well-being of every human being in the nation, that they produce the wealth and, having produced the wealth, they place it into the hands of the class that has never done anything in the production of it. Is that a selfish act on the part of human beings, who are prepared to allow themselves and their families to endure the greatest privations of poverty and distress, while they give to the class who have done nothing to produce the wealth extremely pleasant surroundings and good conditions 2 Surely that is a demonstration of the lack of selfishness on the part of the working classes. While I believe that a change of heart may be desirable in a large section of people and that we have a task in bringing about the atmosphere for a Socialist state of society, the hon. Member has a greater problem before him in attempting to convert the large employers of labour and the landowners to his point of view about benevolence in industry under a capitalist administration.
Selfishness may be a part of the makeup of individuals, but suppose the hon. Member and I sat at a table under present conditions, and he enjoyed a splendid course dinner. After the dinner he goes to a comfortable home, buys good clothes, and has a chance for recreation, education and all the finer things in society. On the other hand, I, an unemployed man, am compelled to sit at the table and to hear him order anything that he desires. I am compelled to have bread and margarine And a bowl of tea, which does not satisfy my wants, but the money in my pocket dictates that which I am to eat and drink. Then I go home to a slum where the gas has been
1226
cut off, through inability to pay. I go to A bed that has no blankets, because of inability to provide them. Does he say that, if I am a reasonably-minded man, with the blood of an ordinary human being, I am not to develop in my mind and heart a desire for a complete change? If that is selfishness, then I agree with the hon. Member. It is simply the desire to have that which nature intended every human being to have, and the capitalist system of society cannot provide that in any shape or form for the great mass of human beings. The hon. Member for Mossley gave us a disquisition, in an egotistical fashion, of what he has done in industry. I saw a great Amount of egotism in his statement.
Mr. HOPKINSON: I am very sorry if I appeared to be egotistical, and I apologise to the House. I thought that it was necessary for my argument to mention one or two personal matters. I apologise sincerely.
Mr. McGOVERN: Despite all the poverty that has arisen in this country, there has been no effort made by any Government to deal with the situation. They remind me of a man who, in jumping off an omnibus, which unfortunately has suddenly moved forward, clutches the rails and is suspended in mid-air. If he had jumped off at the proper time he would have met with no injury at all. That is true of the capitalist class of this country, and of the Governments of this country. Because there is. a certain amount of inconvenience to be met with in arranging a new social order, they are not prepared to face this inconvenience, and they hold on and on to a system which is collapsing, which is gradually becoming bankrupt not only in this country but in every part of the world. They will hold on to the ownership of the means of life until eventually great disaster will overtake them. Every person can see to-day a desire on the part of men and women for a change. There is a growing belief in force to bring about the desired change from capitalism to some better ordered state of society. There has been a gradual evolution of thought in the minds of men and women and they are now prepared to back every form of force to effect that change.
You may deprecate the growth of unconstitutionalism in this country and in the world, but that unconstitutionalism

1227
has been created by the constitutionists of this country, of this House and of the world. It is not the Communist, or the anarchist, or the hon. Member for Bridgeton, great as I know his powers of oratory are on the platform, who are responsible for that growth; it can be traced to the failure of successive Governments and successive politicians to bring about any effective change in the conditions and lives of the people. I admit that Socialism can make little headway if there is a decent state of society, when men and women can earn decent wages and live in good houses; but when they are unemployed and living under the conditions in which many of them do to-day, they become dissatisfied and ask why they should be living in a state of poverty.
We had a great deal of reform in this country at one time. When the Liberal party were in office and in power they gave us a greater scale of reforms than has any Government since. They were in office during a period when capitalism was in the ascendancy, when it was finding new markets and opening up new routes, when this country was the workshop of the world; and out of the profits which were made by investments in backward countries they were able to give a certain amount of social reform to the common people of this country. But with the gradual evolution and development of that system of society, the Liberal party came to a dead end. The War period practically ended social reform in this country, with one or two small exceptions. Since the end of the War every Government in this country and every statesman have gone into office believing, expecting and hoping that at the end of 12 months or two years there would be a different state of society and of trade. But stagnation and creeping paralysis have overtaken industry, not only in one country but in every country in the world. With a growing productive power on the part of the working classes, individually and collectively, there has been a reduced power of consumption. These are contradictions which no system of society can keep in operation for very long. If you are going towards a glut of things and if, on the other hand, you continue to displace labour, it means that you must give additional powers of consumption to the
1228
common people if you are to cope with the situation.
The Liberal party failed. The Tory party failed. The Labour party, in the few months in which they were in office in 1924, failed. A Tory Government came in again, and failed. The Labour party during two years of office completely failed to make any attempt to stop the rot. They did more—they became the fire brigade of capitalism. They attempted to damp the revolutionary aspirations of the working classes of this country and tried to put capitalism on its feet again. They attempted to keep it alive by pumping labour oxygen into its lungs. The Labour party has been used for the same purpose in every part of the world. There is not a Labour party that has not attempted to work the capitalist system and they have been thrown out of office periodically as a complete failure, because they have applied themselves to the problems of the day as Liberals and Tories would have applied themselves, and have attempted to keep at work a. system which is unable to work in any shape or form under present conditions.
The working classes at one time believed in Liberalism, and then they had faith in trade union activities. The Labour party in 1929–31 attempted to solve the problems which Capitalism was throwing up until eventually they were overwhelmed by them, and the National Government came in with a flourish of trumpets. Young members of the Tory party came in like high-spirited racehorses, but they are now trotting along like a lot of old cab horses. They see that there is no hope of doing anything at all; they see that the Government cannot deal with the situation. And not because they are not able men. On the Front Bench there have been eminently able men, but they have attempted to deal with a situation which cannot be dealt with within the confines of the capitalist system. The hon. Member for East Woolwich (Mr. Hicks) says that since the Government came in the wages of the working people have been reduced by £10,000,000. Were they not being steadily reduced during the Labour party administration? Were there not protests against the reductions? Did not the Labour party have something to do with the Anomalies Act, by which 241,000

1229
people were put on Poor Law relief? Are they going to take credit that during their period of two years in office things went down and down? No Government can stop that because the Government do not own and control the means of life. It is the private employers in industry who own and control the means of life, and the Government are only the tools of the bankers and the employing class. Those who own the economic means of life control the Government and determine the policy of the Government.
The Labour party failed. They attempted to create the feeling that when they got back into office, not because the people believed that they are better, but because they are driven from one party to another in attempting to solve present day problems, that they were going to reduce unemployment, restore wages, abolish the cuts and the means test, give all widows pensions, and all spinsters pensions as well; raise the old age pension to £1 per week at 60 years of age and raise the school-leaving age. To attempt to make an intelligent section of the community believe that you are going to do that is simply stating what you know to be untrue and impossible; and it makes it all the worse because the Labour party know they cannot do what they have promised the working classes they would do. There can be no change until there is a change of heart. There can be no change in the lives of the common people until there is a change of system, from private ownership to public ownership, the means of life being controlled by the community.
Nature was kind in intention. It gave us land and raw materials, health: and ability, energy and creative powers, for every human being. These powers should be utilised but they will never be used within the confines of the capitalist system of society. The Labour party have made promises to the people of this country which they have never attempted to fulfil. They have tried to make them believe that when they come into office again they will deal with all their ills, when they know that they have no power to do so without a change in the present system. They have simply attempted to do the same as Liberals and as Tories—work the present social system. I say quite frankly that, as far as we are concerned, we believe that poverty will never
1230
be eliminated except by a change in the present system of society. The Labour party, if it is their intention to defend the interests and profits of the ruling classes, are bound to fail. In this country there is a growing belief in the common people that by their own power and by their own hands they will bring about a social revolution and achieve working class ownership and control.
6.30 p.m.
Commander COCHRANE: I certainly do not propose to follow the hon. Member for Shettleston (Mr. McGovern) into the family squabble which he has attempted to carry on with the party above the Gangway. The hon. Member for Bridgeton (Mr. Maxton) when he began his speech was candid enough to say that he would be destructive, and I certainly think that the hon. Member for Shettleston has added his meed of criticism. I do not propose to follow either of the hon. Members. I prefer to devote myself to considering whether the capitalist system which has been so much abused to-day is really as dead as the hon. Members would wish it to be. As a test I would take a question which, is obviously in the minds of all hon. Members who have addressed the House, and that is the question of a glut, of idle money and idle men, or, as I prefer 'to put it, whether the rapidly increasing productive power of the world is being used in the most effective way to reduce poverty. That is a question which we must consider, and it is one which has undoubtedly given rise to grave doubts in the last few months. My right hon. Friend the Chancellor of the Exchequer, in a speech at Edinburgh a few weeks ago, described it as "one of the gravest problems facing the statesmen of the world." I think that that is a true description. The problem cannot be put better than it has been put in a summary of conclusions in a book published a year or two ago by the International Labour Office, and called "Social Aspects of Rationalisation." It referred to the displacement of labour by machinery and stated:
" It is possible that this tendency will continue in future and will become more and more general and distinct. The consequent unemployment should then be considered to an increasing extent as a sort of physiological unemployment. By this we mean the sort of unemployment that must

1231
be accepted as normal, since its causes cannot be abolished without injuring general progress."
I invite attention to that last sentence. I think that "progress" is a much-abused word. For my own part, I refuse to accept it in the sense that industrial development which causes increasing unemployment should rightly be described as progress. If the development of machinery and the ever-increasing displacement of labour are to continue, it will make no difference whether they continue under a capitalist or a Socialist system, so far as the lack of employment among the people is concerned. Indeed, I think it must be clar that under Socialism there would be no cure for this distressing state of affairs, because the statement which I have quoted is in accord with the materialist doctrine of all Socialism—the idea that the production of wealth and its distribution were the only problem with which we had to deal. I believe that there is a fundamental mistake there, for I am sure that the people of this country do not wish to be idle and dependent on State charity. That is the meaning of it if an ever-decreasing number of people are to produce the wealth required for the consumption of the remainder. Clearly then the remainder must be recipients of charity from the State, whether it be directly in goods or whether it be paid in money. In other words we are reaching a stage at which we must seriously consider whether the present wage system is a satisfactory medium for distributing the wealth of the country.
The problem is undoubtedly becoming more and more serious. I am certain that the only way in which we can reach a solution of the difficulty is to make people more self-supporting. There is a direct issue between us on this matter—either State Socialism, with its system of doles or charity, or the development of a capitalist system which, as my hon. and learned Friend the Member for Central Nottingham (Mr. O'Connor) said, would lead to a property-owning democracy. I would carry it a stage further and say that, while I value a property-owning democracy, I value still more a property-owning and producing democracy. That, I believe, is the ideal which we all wish for, and I think no one more than the hon. Member for Bridgeton and his friends. I cannot help thinking that they
1232
have a good deal of the individualist in them. Otherwise why do they often sit in crowded discomfort on the bench they occupy instead of enjoying the more spacious ease of the benches behind the Labour party?
We must recognise that in everyone there is a desire not only for political liberty but, what is more important, economic liberty and security. I regard security as of great importance. I do not think that any advocate of the Socialist system would care to say that if the whole power of the country were handed over to him he could provide not only the material things, but also the life of activity as well, which is what the people really want. That can only be done by retaining for them a measure of freedom and liberty to work out their own salvation and to provide for themselves. It so happens that as this problem has become more and more insistent, the possibility of dealing with it also exists for the first time for many years. For the first time since the industrial revolution we have a Government armed with the necessary authority and power of legislation to put into effect whatever design they wish for the industrial structure of the country. Whatever we may think of tariffs, we have at any rate an opportunity of devising and carrying out a policy which will enable industry in this country to be carried on to the benefit of the greatest number of people in this country, and I believe that it is on those lines that we must develop. That clearly means that we are to try, in the words of an Amendment on the Paper, "to spread productive capital more widely amongst the people of the country." If we are to do that we must also spread industry more widely, for the two things go together.
Not only is it loss of employment which we are suffering from this so-called rationalisation of industry, but over-centralisation is adding much to the misery of the people throughout the country. I invite any hon. Member to go to-day to those places where there is least poverty. Where are they'? They are those districts where there are numbers of industries, and where the whole community are not dependent on one single industry which may fail them at any time. That, I believe, is an object lesson which we should expand. I do not wish to attempt to go any further into the matter to-day.

1233
I would rather leave it as a suggested idea, not as a mere aspiration, but as something which can be put into effect and which I trust will be put into effect, for I believe it would go a considerable way in finding a solution for the poverty which we all so much deplore.
6.40 p.m.
Mr. PICKERING: I would like to pay my tribute to the remarkably fine speech of the hon. Member for Bridgeton (Mr. Maxton). As we listened to him we all felt certainly that he had a very great heart, great eloquence and great imagination. I speak because the hon. Member made reference to an Amendment which is on the Paper and to which my name is attached, and he pooh-poohed the idea of the need for an inquiry. I quarrel with the hon. Member's Motion from the beginning, for it is absolutely misleading. It refers to "widespread poverty." I would not for one moment try to minimise the seriousness of the situation today. I think that the position is deplorable and a desperate challenge to our statesmanship, but I do not see it expressed in those words of the Motion. It was suggested by the hon. Member that there was no need to ask what poverty is. From the way he speaks of it there is very serious need to ask what is meant by poverty. Poverty is not the trouble to-day. If we go back 30 or 40 years we find that there was poverty of a very different kind from anything that exists to-day. People could starve in those days, and they do not starve now. There were slums existing by the thousand then where they do not exist in tens now. That cannot be denied.
Poverty has been diminished during the last 30 years. Compared with 30 or 40 or 50 years ago there is really no poverty to-day. And that poverty existed under capitalism. The hon. Member wants us to overthrow the present system, which he calls capitalism. Yet we are told by hon. Members opposite that the present state of things is no longer capitalism we are told that now we are in a state very little distinguishable from Socialism. I dare say that if a captain of industry of 50 years ago were to return and find what our methods of organisation were to-day, he would say, "This is nothing but Socialism." The fact is that we do not get any further by bandying about these words "capitalism" and "Socialism." As my name is attached to the
1234
Amendment which I have mentioned I feel that I must in the short time at my disposal say something of the reasons why we ask for an inquiry. The terms of the Amendment are:
" That with a view to assessing the extent of existent poverty, an inquiry should be instituted, with the assistance of the appropriate local authorities, to determine what, in each locality, is the cost of maintaining a reasonable level of subsistence and how many persons are in receipt of wages below the ascertained level of subsistence."
Poverty is at the present time prevalent. I know of many families with £4 or £5 a week who are poverty-stricken, and I know of other families with the same number of persons and only half that amount of weekly income, and they are healthy, strong and happy. Poverty depends very much on the individual, but there ought to be a certain level below which it could be said that poverty existed. It would clarify the situation if there were in each locality a subsistence level below which no wages should fall. That would not touch the higher paid industries. It would affect only unorganised and lower classes of labour. There should be such a level and if it were found that wages below that level were being paid, special inquiry ought to be made and reasons demanded for the payment of such wages.
If wages were forced up to a subsistence level it would mean a certain amount of spending and the gradual return to employment of many who are now unemployed. We ought to know exactly what we are talking about when we talk of poverty. It might do good to some people who are always pulling long faces to learn, as the result of inquiry, that they were by no means as poverty-stricken as they imagined. From a varied experience among the poorest classes I could tell stories of how some people refuse to be in a state of poverty, even though they have practically nothing on which to live, because ther spirit triumps over poverty. Our people ought to be encouraged to make the best they can of what they have got. That is not to say that I do not wish to give them much more. It is no consolation to me to know that anyone is worse off than 1 am. I am sorry for that; I wish that all our people could be much better off than they are, but we must not sap their moral, and there are some people who are

1235
poverty-stricken no matter how much they have.
The real disease of to-day is not poverty but idleness—enforced idleness. At one time our Socialist friends used to declaim against a certain class whom they called the idle rich. Unfortunately, for one reason or another, there has been growing up a. large class who can only be called the idle poor, people who have to be maintained in idleness. It is this disease of idleness which is responsible to a great extent for the mental state that prevails in the world at present. It is demoralising for a man to be kept idle. A man needs work to be a man in the proper sense. I have no love for shibboleths and I care not whether you call a system "capitalism or" Socialism," but we must take every step possible to do away with this disease of idleness and this new class of the idle poor. I hope that the National Government, which was given a doctor's mandate, will realise that if it endeavours seriously to grapple with the problem of curing this great disease of idleness the people will rejoice. They will stand anything from this Government as long as the Government show a determination to do away with the great disease of to-day which, I repeat, is not poverty but idleness.
6.50 p.m.
Mr. GORDON MACDONALD: I desire to join in the chorus of congratulations to my hon. Friend the Member for Bridgeton (Mr. Maxton) on having brought this Motion before the House, and on having proposed it in one of the most brilliant speeches to which it has been my pleasure to listen in this House. It gives me great pleasure to support very warmly on behalf of the Labour party every contention contained in the Motion. I was at a loss to understand why the hon. Member for Shettleston (Mr. McGovern) thought it advisable on this occasion to criticise the Labour Government for not having introduced more Socialist measures during their term of office. During that term of office the hon. Member for Bridgeton and I disagreed on many occasions and we had occasion on one Friday to express our views as to whether it was reasonable or not for the Labour Government to introduce purely Socialist measures. I then
1236
contended, as I contend now, that this House during the Labour Government's term of office, was not a House elected to introduce Socialist measures. It was an anti-Socialist House by a very large majority. I agree that it might have been debatable, whether the Labour party ought to have taken office or not, but I do not think that now is the time to discuss that question, and certainly this Motion is not the occasion for the hon. Member for Shettleston to deliver his usual speech of vituperation against the Labour party. His speeches seem to consist of that and nothing else and I do not think the House desires to hear, time after time, the hon. Member for Shettleston using opportunities like this in order to criticise the Labour party instead of devoting a little more of his time to representing Shettleston and showing—
Mr. McGOVERN: I am representing it better than you are representing your constituency.
Mr. BUCHANAN: The Labour party attacked the hon. Member for Shettleston (Mr. McGovern) first. They tried to keep him from representing Shettleston and they lost their deposit.
Mr. G. MACDONALD: All I have to say is that I do not like to see the hon. Member for Shettleston using opportunities like this to criticise the Labour party on the ground of something which they have not done. As regards the Liberal party I am surprised to find that they are the only section of this House who do not agree with the first contention of the Motion, namely, that the House recognises the existence of widespread poverty. Every other Amendment accepts that part of the Motion. No Members have ventured to put down an Amendment to that contention except Members of the Liberal party.
Mr. PICKERING: The point underlying our contention is, not that there is no poverty, but that the phrase "widespread poverty" scarcely describes it.
Mr. MACDONALD: I am not at all surprised at the Liberal party asking for an inquiry. That is nothing new. They have become almost as expert as the Prime Minister in instituting inquiries. But I object to the Liberal party trying to impress upon us that there is no widespread poverty. I agree with the Mover

1237
of the Motion that there is no need to produce statistics to prove it. Any Member of this House who knows his own division will admit at once that there is widespread poverty. As regards the second contention, that poverty cannot be removed within the framework of capitalism, I can understand that it is not accepted by the majority of the House. I do not think that the hon. Member for Bridgeton expected a majority of Members to accept that contention. But if he made a verbal alteration in it and made it read to the effect that poverty had not been cured within the framework of capitalism I think that contention also would have been accepted by all with the possible exception of the Liberal party.
Beyond doubt capitalism has failed to remove poverty. I am prepared to give capitalism credit for its achievements. It has done many good things for this and other countries. In my opinion it has been the means of solving the problem of production. We in the Labour party as Socialists grant at once that capitalism has solved the problem of production and poverty is not due to that problem not having been solved. What capitalism has failed to accomplish is the distribution of the goods produced in such a way as to prevent poverty. Surely every party in this House has for its sole purpose the elimination of poverty. I can understand that there are differences of opinion. There are those like the hon. and learned Member for Central Nottingham (Mr. O'Connor) who believe that poverty will be removed more quickly and effectively within the present capitalist order than under a Socialist order. I was not surprised when the hon. and learned Member said that in Russia, a Socialist State, widespread poverty existed. I admit that 15 years of Socialism in Russia, after more than a century of capitalism, has not been long enough to remove poverty, but I ask others to admit—however prejudiced they are against Russia—that 15 years of Socialism in that country has improved the status and life of the vast mass of the Russian people.
The hon. and learned Member for Central Nottingham, however, used a sentence which we on this side felt inclined to cheer. He said that the only indication of progress is the provision of
1238
enjoyable and beneficial leisure for all the people. We accept that statement. He told us in another sentence that he supported capitalism because it was the method which gave the highest incentive possible to do good for the race. That is the fundamental question. To us, capitalism is a social order under which the only effective incentive to industrial, commercial and economic activity is private financial gain. We question whether private financial gain, though an effective incentive to individual effort, is the best incentive to social life. Our contention, and our only reason for supporting the Motion, is that any social order which has as its motive personal and private financial gain, must fail to provide for all the people the type of life which they are entitled to enjoy.
The third contention of the Motion is that the capitalist order of society is not progressing towards prosperity, but heading for collapse. I need not adduce any argument on behalf of that. Throughout the capitalist world, and in every country where capitalism is firmly established, we have that position. The hon. Member for Bridgeton pointed out that they are doing everything they can to prevent the collapse of this system, which would be to the disadvantage of many of the upper classes. I agree that Socialism presupposes a very high standard of morals and life. I would have those who support capitalism to remember that it is a weak argument to support capitalism because it does not call for as high moral character as Socialism does.
If we are to get Socialism working effectively in the world in the interest of all, we want a much higher type of character. That may mean hard work for a long time until the welfare of the human race is the only motive. Until that becomes the greatest possible desire of the greatest possible number, we shall fail to solve this problem of poverty. I agree that capitalism does not mean widespread. poverty in the House of Commons. I agree that capitalism is not a very bad system for us in this House; that, I feel, is our greatest danger. Capitalism has brought to us, as Members of this House, a decent standard of life. The danger is that we shall not be able, therefore, to change that system. I remember in my mining days, when I was confronted with my

1239
individual economic problem, I had a burning desire to help in the solution of the general economic problem. I confess, as every honest man in this House must do, that, as our individual economic problems show signs of being solved, there is danger of our enthusiasm to solve the general problem being damped. That hinders the solution, for the fact is that it means for a vast number of people the possibility of sacrificing some of those things they have enjoyed hitherto. What has made reform difficult in every country, and every generation, is the danger to the interests of certain classes.
We have a tremendous task. No one need worry over that very much for a while. I was criticised for saying some months ago at this Box that it would be years, or scores of years, before any Government sat on those benches, backed by a majority of the electorate, to support Socialism. I still say our task is a tremendous and gigantic task. Although it is tremendous, and although it is gigantic, I am still satisfied that, however slow progress may be, we must change the incentive to industrial economic activity from private financial gain to social good if this problem is to be solved. Parliamentary institutions are threatened. There is no danger to any Parliamentary institution, which deals effectively with this problem of poverty. The only danger to Parliamentary institutions is if they fail in their main function, and do not give the people a full and healthy life.
7.6 p.m.
The MINISTER of PENSIONS (Major Tryon): The tone of this Debate, if I may say so, was set from the moment when, in order to describe the sufferings of people badly housed, the hon. Member for Bridgeton (Mr. Maxton) went to Conservative sources and found there a sympathetic, faithful and, I am. sure, a true account of evils we all deplore. I take it that so far as these evils exist there can be no party difference between us, but only as to the methods by which we should make things better. A reference to that particular part of Glasgow, and its housing, I heard myself upon the wireless. I hope the authorities of Glasgow will actively push on with the Government scheme for making slum clearances, which places no restriction
1240
upon the corporation. That is the right means for dealing with the particular point with which the Debate was started.
But we are dealing with much more than the problem of slums. This is a proposal completely to revolutionise our trade, commerce, and the whole life of every person in the country. It is extremely unfortunate that, throughout the speeches, we have not gained the smallest knowledge of how this is to be done, and who is going to manage it. Is it to be managed by some of the Members of the late Government who still sit opposite us? I am sure that if it is to be managed in the spirit displayed by the last hon. Member who addressed the House it will have a much better chance of success than if it is advocated in the gospel of hatred, so often used by Socialist speakers for the purpose of producing the millennium. The hon. Member for Ince (Mr. G. Macdonald) desires that we should help each other, work for the good of all, and not for hatred, which is much more frequently used as an argument why people should adopt Socialism.
We have not had in the speeches any examples of countries which have successfully adopted Socialism, or mention of the time needed to bring it into operation: It is true that the hon. Member for East Woolwich (Mr. Hicks) in a peroration which, I think, must have been practised on platforms, told us that under his policy poverty would disappear. That is a large promise to make. He hurried to the assistance of the late Labour Government in the last election when poverty was not disappearing very rapidly. We have had the Russian five-year plan. The five-year plan has had to be made into a 10-year plan before it can be successful. We have just had a definite statement from the Front Bench opposite that it will be at least 15 years before anything can be expected to develop, because it is the case that the Russians have had only 15 years. Is it suggested that there will be the same problem in 10 years' time under the present Government, but that if you vote for the others it will be 15 years before anything is done?
Mr. G. MACDONALD: I did not stipulate any number of years.
Major TRYON: In a more cautious moment the hon. Member talked of

1241
scores of years before the Socialist party, really believing in the proposals put forward by the three or four members sitting on the benches below the Gangway, sit on the Treasury Bench. Scores of years seem a long period to have to wait.
Mr. MAXTON: We shall not have to wait that time.
Major TRYON: I have other plans I am going to expound.
Mr. MAXTON: You will have to get going quick, or you will not have a chance.
Major TRYON; Scores of years do not seem to suggest great hurry. There are other methods. Some dictator is to order the working classes about—so we heard in the Debate between Sir Oswald Mosley and the hon. Member for Bridgeton. The hon. Member for Bridgeton, being elected, is able to put his case tonight, but Sir Oswald Mosley is not able to be present because, although I understand he stood at the head of a National party, the whole of that party did not obtain as many votes as the humble Member who is now addressing the House. The proposers of this Motion are hopeless of anything being done within the framework of the capitalist system. We can say for this country that in a moment of peril throughout the world, with Parliaments falling and revolutions and fighting in every direction it stands more fast than any other country in the world. I hardly think that in this moment of world-wide peril this country can be expected to adopt the sweeping Motion now before the House. We are also a democratic country, and I do not think anyone will claim that the Motion will get support from the electorate. There is no support for this huge change.
Would it not be well to consider what is being done under the capitalist order? The people of this country, even in this terrible time, are, under the capitalist system, better off than any other people, and they are better off than they were some years ago. I have some interesting figures of what is being done under the capitalist system. We are at the present moment spending £125,000,000 a year in old age pensions, War pensions, widows' pensions, blind pensions, and contributory old-age pensions. Under the capitalist system this £125,000,000 is being
1242
spent, not for wealthy people, but in helping those suffering in various ways, or who are old and infirm. These pensions are being paid to nearly 4,000,000 people. The people who have gained in the last few years are people with fixed incomes. The people with fixed incomes, as everybody knows, are not capitalists. The people with fixed incomes in this country are those millions of pensioners—War pensioners, old age pensioners, and others drawing their pensions every week. They are far better off now, in this distressed moment, than they were a few years ago, because the pensions have remained fixed and the cost of living has unquestionably gone down.
Mr. RHYS DAVIES: Surely the right hon. and gallant Gentleman is not suggesting that contributory old age pensions are a cost to the State when contributions are payable by the employers and the employed?
Major TRYON; No, I was taking the State contribution in that particular case; I was not taking other contributions. From local authorities, out of the rates, there are various benefits to the extent of £47,000,000, and there are benefits to individuals, falling upon the municipalities, amounting to £131,000,000 a year. That is under the capitalist system. I was very much interested in the Amendment which is the last one on the Order Paper. There is a good deal in it. You must test the system not only by its own merits, but the burden you put upon it.
The hon. and learned Member for Central Nottingham (Mr. O'Connor), in a most interesting speech, pointed out that it may well be that the tax and burden of these social services are making it difficult for the system to carry on. I deduced from that not that we should abandon the capitalist system, as is proposed in this Motion, not that we should reduce the social services, but that we should try to fortify the industry of this country to enable it to give more employment and to carry these social services and, when the state of the country allows it, to improve them. We have heard nothing from the other side of the way in which the present Government have brought about changes, and I think it would have been fairer to mention the troubled state of the country

1243
when the Government took over control of its affairs. Certainly the state in which we were at that moment has been improved, and the general decline has undoubtedly been arrested.
I was a little astonished, having sat and watched a Labour Government for two years, to read the statement in this Motion that the action of the present Government has been trifling. The Government have done, in passing Measures and in various other ways, as much in a single Session, the first one, as is often accomplished in the four or five years' lifetime of a whole Parliament. As the Motion directly alludes to the Government as only carrying trifling Measures, I would like to suggest what has been done. Within the first year we barred the abnormal imports of agricultural produce. That is, I suppose, but trifling. We barred the abnormal importation of manufactured goods. We have passed a Measure imposing a 10 per cent. duty on practically all the imports into this country. Hon. Members may or may not agree with it, but to say that that is a trifling Measure is ridiculous. Perhaps if we had done nothing at all, we might still have—
Mr. G. MACDONALDs: Trifling in its effect.
Major TRYON: The hon. Member has very quickly made an addition, which would have made the Motion rather better than it is, but I am dealing with it as it stands on the Paper. Then we came to the problem of balancing the Budget, which had a possibility of a deficit of £170,000,000. When we took office that Budget was balanced. When it is said that we are only trifling with these matters, I cannot help reminding the House that we have, as a Government, introduced new tariffs which have already increased the revenue by £30,000,000 compared with last year. That is not trifling.
Sir HERBERT SAMUEL: By how much have they reduced it?
Major TRYON: I am not aware that new works which have been put up in this country, including new works in Darwen, have in any way lessened the income of the country. It was after this tariff had been passed and these changes
1244
had been made, that our trade balance with the world, which was so extremely serious, was improved by those means by which we were able to make that huge conversion, which is one of the great exploits of the present Government. I will not go into the whole problem of Imperial Preference, but surely, in a year in which one ship set out across the Atlantic containing such diverse Members of this House as the seven who set out in perfect harmony on that occasion, it should not be said that the Government have done nothing but trifle with the situation. I mention this, not because this is a Vote of Censure, but because I do not think those words, "foolish trifling," ought to refer to a, Government which, in its first Session, produced a complete change in our whole national trade policy.
I ask hon. Members opposite to believe that, though we do not believe in Socialism, we believe that if these social benefits are to continue and these rates are to be maintained, we must have adequate trade, adequate finance, and a sufficiently strong nation to be able to carry on all that we are now doing for our people. We believe that this is not the time—indeed, I believe the time will never come—when it would be right to make this change, and I ask the House to vote against this Motion, first, because in any case this is not the time to make a, revolutionary change; secondly, because it is perfectly clear that the electors of this country are not in favour of its being made, and we are still a, representative body, and the country is governed by Parliament; and, finally, because no suggestion or detail whatever has been offered to this House as to what the hon. Members who moved this Motion would do. It is all very well in debate to read out a perfectly true account of the housing situation in Glasgow. We agree on that, but because there is bad housing in one particular town, that is no evidence that the State should take over and manage the whole business of the country. Therefore, for all these reasons, and because we think individual enterprise—which is the proper expression, not "the capitalist system"—is more in accordance with the traditional spirit of our people, I ask the House to reject the Motion.
7.22 p.m.
Mr. BUCHANAN: I want to say a word in reply to the hon. Member for Ince (Mr. G. Macdonald), whom I regret not to see in his place, regarding what the hon. Member for Shettleston (Mr. McGovern) said. The Labour party spokesman, in a very gentlemanly way, complained of the tone of the speech of my hon. Friend the Member for Shettleston. Need I remind him that we are not any longer in that party, that we are a separate group, and that, as such, we are entitled to criticise them?
Mr. DAVID GRENFELL: Thank God.
Mr. BUCHANAN: The hon. Member interjects, "Thank God." That may be so, hut it is not long since his Leader pleaded with me to come back and join him and his party. I know that expression was only used in a fit of temper and is, therefore, forgivable. I have said equal things in temper, and so I can forgive others for doing it. I do not complain about their attacking me, but they complain that we criticise them in this House. What right have they to complain, when in my own division they have put up a candidate against me? Unfortunately, the candidate was in the High Court on a criminal charge. I never complain. I have never once complained about them. I have fought Communists, and I have fought everybody sometimes. Anyone has a, right to oppose me who thinks he has an ideal worth putting forward, and I have never objected to their opposing me, but they must not complain when we, in the House of Commons, make criticism of them. When they go to my union and drive me out of my union, and get me refused political help, they must not complain that I put my case in the place in which I have been elected to serve. The hon. Member for Dumbarton Burghs (Mr. Kirkwood) knows how he was treated at the Election, and not only are they doing that, but they are trying to penalise humble followers of mine and of us on this bench.
We have brought forward this Motion, and we have stated our case. What is the case that is to be defended? The simple test of a system is this: Does it give to the great mass of the people, not only now, but for the future, a full and secure home life? The right hon. and
1246
gallant Gentleman the Member for Brighton (Major Tryon) gave some figures about old age pensions in the course of his good-natured reply. He said that they had been given security, 10s. a week security. Yes, they have been given security in their poverty, because that is what 10s. a week means, and, when the right hon. and gallant Gentleman quotes the old age pensions, he fails to perceive that alongside of them comes a system of increasing poverty. He did not attempt to argue that a year or two ago the great mass of the people had higher incomes than they have now. Nobody denies that they had higher unemployment benefit and that they had no means test, and the capitalist system now comes along and says it must lower the benefit.
There is not a man in this House who will deny that the figures for unemployment may go up. Nobody has ever seen them at 3,000,000 before, and they may go up still further. If they do, unemployment benefit under this system must come down. I recently met a leading official in connection with unemployment insurance, and he said: "We can maintain the unemployed at the 3,000,000 level at present, but let it reach a much higher figure, and the figure for maintaining the unemployed must come down." What does that mean? It means that the greater the difficulties into which capitalism gets, the only section that must bear the brunt of solving the problem is the working people.
The only point ever made against us is this: You do not come, cut and dried, down here and tell us your future order. Those who started to mould the capitalist system could not have framed the system before it developed. Is the present system right or wrong? Is our contention a better contention? Our simple, elementary claim is that wealth is socially produced, that all wealth, whether it is the clothes we wear or the house we own, is the result of social, necessary labour applied to the raw materials of mankind. We say that if wealth is socially produced, if everything we have comes of the social productivity of mankind, wealth, being socially produced, ought to be socially owned and socially used.
Question put,
" That this House recognises that the widespread poverty of the people cannot be

1247
removed within the framework of the capitalist order of society, which is not progressing towards prosperity but heading for collapse, and condemns the present
policy of the Government as foolish trifling with a serious situation."
The House divided: Ayes, 42; Noes, 255.

Division No. 75.]

AYES.

[7.30 p.m.

Adams, D. M. (Poplar, South)

Griffiths, T. (Monmouth, Pontypool)

Macdonald, Gordon (Ince)

Attlee, Clement Richard

Groves, Thomas E.

McEn ee, Valentine L.

Banfield, John William

Grundy, Thomas W.

Maclean, Neil (Glasgow, Govan)

Batey, Joseph

Hall, F. (York, W.R., Normanton)

Maxton, James

Bevan, Aneurin (Ebbw Vale)

Hall, George H. (Merthyr Tydvil)

Parkinson, John Allen

Cape, Thomas

Hicks, Ernest George

Price, Gabriel

Cocks, Frederick Seymour

Hirst, George Henry

Thorne, William James

Cove, William G.

Jones, J. J. (West Ham, Slivertown)

Tinker, John Joseph

Cripps, Sir Stafford

Jones, Morgan (Caerphilly)

Wallhead, Richard C.

Daggar, George

Kirkwood, David

Williams, David (Swansea, East)

Davies, David L. (Pontypridd)

Lansbury, Rt. Hon. George

Williams, Edward John (Ogmore)

Davies, Rhys John (Westhoughton)

Lawson, John James

Williams, Dr. John H. (Llaneliy)

Edwards, Charles

Leonard, William

Greenwood, Rt. Hon. Arthur

Logan, David Gilbert

TELLERS FOR THE AYES.—

Grenfeil, David Rees (Glamorgan)

Lunn, William

Mr. Buchanan and Mr. McGovern.

NOES.

Agnew, Lieut.-Com. P. G.

Crossley, A. C.

Hudson, Capt. A. U. M. (Hackney, N.)

Allen, William (Stoke-on-Trent)

Cruddas, Lieut.-Colonel Bernard

Hudson, Robert Spear (Southport)

Amery, Rt. Hon. Leopold C. M. S.

Culverweli, Cyril Tom

Hume, Sir George Hopwood

Aske, Sir Robert William

Davies, Maj. Geo. F. (Somerset, Yeovil)

Hunter, Dr. Joseph (Dumfries)

Athol, Duchess of

Davison, Sir William Henry

Hurst, Sir Gerald B.

Atkinson, Cyril

Denman, Hon. R. D.

Hutchison, W. D. (Essex, Romf'd)

Ba e, Sir Adrian W. M.

Denville, Alfred

Iveagh, Countess of

Baldwin, Rt. Hon. Stanley

Dickle, John P.

Jamleson, Douglas

Balfour, Capt. Harold (I. of Thanet)

Donner, P. W.

Jennings, Roland

Barclay-Harvey, C. M.

Drewe, Cedric

Joel, Dudley J. Barnato

Barrie Sir Charles Coupar

Duckworth, George A. V.

Johnstone, Harcourt (S. Shields)

Beauchamp, Sir Brograve Campbell

Duggan, Hubert John

Jones, Henry Haydn (Merioneth)

Beaumont, M. W. (Bucks., Aylesbury)

Duncan, James A. L. (Kensington, N.)

Jones, Lewis (Swansea, West)

Beaumont, Hn. R. E. B. (Portsm'th, C.)

Dunglass, Lord

Ker, J. Campbell

Belt, Sir Alfred L.

Ellis, Sir R. Geoffrey

Kerr, Lieut.-Col. Charles (Montrose)

Bernays, Robert

Eimley, Viscount

Kerr, Hamilton W.

Boothby, Robert John Graham

Emrys-Evans, P. V.

Kirkpatrick, William M.

Borodale, Viscount

Eniwistle, Cyril Fullard

Knebworth, Viscount

Bouiton, W. W.

Erskine, Lord (Weston-super-Mare)

Knox, Sir Alfred

Bower, Lieut.-Com. Robert Tatton

Evans, David Owen (Cardigan)

Law, Sir Alfred

Bowyer, Capt. Sir George E. W.

Evans, Capt. Ernest (Welsh Univ.)

Law, Richard K. (Hull, S.W.)

Bracken, Brendan

Evans, R. T. (Carmarthen)

Lees-Jones, John

Briscoe, Capt. Richard George

Everard, w. Lindsay

Leighton, Major B. E. P.

Broadbent, Colonel John

Ford, Sir Patrick J.

Lennox Boyd, A. T.

Brocklebank, C. E. R.

Fox, Sir Gifford

Levy, Thomas

Brown, Col. D. C. (N'th'I'd., Hexham)

Fremantle, Sir Francis

Lindsay. Noel Ker

Brown, Ernest (Lelth)

Galbraith, James Francis Wallace

Liewellin, Major John J.

Brown, Brig.-Gen. H.C.(Berks., Newb'y)

Ganzoni, Sir John

Lloyd, Geoffrey

Browne, Captain A. C.

Gauit, Lieut.-Col. A. Hamilton

Loder, Captain J. de Vere

Buchan-Hepburn, P. G. T.

Gluckstein, Louis Halle

Lovat-Fraser, James Alexander

Burnett, John George

Goodman, Colonel Albert W.

Lyons, Abraham Montagu

Campbell, Vice-Admiral G. (Burnley)

Graham, Sir F. Fergus (C'mb'rl'd, N.)

Mabane, William

Caporn, Arthur Cecil

Grattan-Doyle, Sir Nicholas

MacAndrew, Lt.-Col. C. G. (Partick)

Carver, Major William H.

Graves, Marjorie

MacAndrew, Capt. J. O. (Ayr)

Castiereagh, Viscount

Gretton, Colonel Rt. Hon. John

McCorquodale, M. S.

Cautiey, Sir Henry S.

Griffith, F. Kingsley (Mlddlesbro, W.)

Macdonald, Sir Murdoch (Inverness)

Cayzer, Sir Charles (Chester, City)

Grimston, B. V.

Macdonald, Capt. P. D. (I. of W.)

Cazaiet, Thelma (Islington, E.)

Guinness, Thomas L. E. B.

McKie, John Hamilton

Cazalet, Capt. V. A. (Chippenham)

Gunston, Captain D. W.

McLean, Major Sir Alan

Chamberlain, Rt. Hon. N.(Edgbaston)

Guy, J. C. Morrison

McLean, Dr. W H. (Tradeston)

Chapman, Col. R. (Houghton-le-Spring)

Hales, Harold K.

Macmillan, Maurice Harold

Chapman, Sir Samuel (Edinburgh, S.)

Hamilton. Sir R. W.(Orkney & Zti'nd)

Magnay, Thomas

Clarke, Frank

Hammersiey, Samuel S.

Maitland, Adam

Clarry, Reginald George

Hannon, Patrick Joseph Henry

Makins, Brigadier-General Ernest

Clayton, Dr. George C.

Harbord, Arthur

Manningham-Bulter, Lt.-Col. Sir M.

Collins, Rt. Hon. Sir Godfrey

Hartland, George A.

Margesson, Capt. Rt, Hon. H. D. ft.

Coiville, Lieut.-Colonel J.

Harvey, Major S. E. (Devon, Totnes)

Marsden, Commander Arthur

Conant, R. J. E.

Hasiam, Sir John (Bolton)

Mason, David M. (Edinburgh, E.)

Cook. Thomas A.

Headiam, Lieut.-Col. Cuthbert M.

Mason, Col. Glyn K. (Croydon, N.)

Cooke, Douglas

Hepworth, Joseph

Mayhew, Lieut.-Colonel John

Copeland, Ida

Herbert, Capt. S. (Abbey Division)

Merriman, Sir F. Boyd

Courthope, Colonel Sir George L.

Hope, Capt. Hon. A. O. J. (Aston)

Mills, Major J. D. (New Forest)

Cowan, D. M.

Hore-Belisha, Leslie

Milne, Charles

Craddock, Sir Reginald Henry

Hornby, Frank

Mitchell, Harold P.(Br'trd & Chisw'k)

Croft, Brigadier-General Sir H.

Horsbrugh, Florence

Mitchell, Sir W. Lane (Streatham)

Crookshank, Capt. H. C, (Gainsb'ro)

Howard, Tom Forrest

Morgan, Robert H.

Cross, R. H.

Howitt, Dr. Alfred B.

Morris, Owen Temple (Cardiff, E.)

Morrison, William Shepherd

Runge, Norah Cecil

Strickland, Captain W. F.

Munro, Patrick

Russell, Altxander West (Tynemouth)

Templeton, William P.

Nation, Brigadier-General J. J. H.

Russell, Richard John (Eddisbury)

Thomas, James p. L. (Hereford)

Newton, sir Douglas George C.

Rutherford, John (Edmonton)

Titchfield, Major the Marquess of

Nicholson, Godfrey (Morpeth)

Salt, Edward W.

Todd, A. L. S. (Kingswinford)

Nunn, William

Samuel, Sir Arthur Michael (F'nham)

Train, John

O'Donovan, Dr. William James

Samuel, Rt. Hon. Sir H. (Darwen)

Tryon, Rt. Hon. George Clement

Ormsby-Gore, Rt Hon. William G. A.

Samuel, Samuel (W'dsworth, Putney)

Turton, Robert Hugh

Patrick, Colin M.

Sandeman, Sir A. N. Stewart

Vaughan-Morgan, Sir Kenyon

Peaks, Captain Osbert

Sanderson, Sir Frank Barnard

Wallace, Captain D. E. (Hornsey)

Perkins, Walter R. D,

Savery, Samuel Servington

Wallace, John (Dunfermline)

Petherick, M.

Selley, Harry R.

Ward, Lt.-Col. Sir A. L. (Hull)

Peto, Geoffrey K.(W'verh'pt'n,Bllston)

Shakespeare, Geoffrey H.

Ward, Irene Mary Bewick (Wallsend)

Pickering, Ernest H.

Shaw, Helen B. (Lanark, Bothwell)

Ward, Sarah Adelaide (Cannock)

Power, Sir John Cecil

Simmonds, Oliver Edwin

Wardlaw-Mline, sir John S.

Raikes, Henry V. A. M.

Skeiton, Archibald Noel

Warrender, Sir Victor A. G.

Ramsay, T. B. W. (Western Isles)

Slater, John

Waterhouse, Captain Charles

Ramsbotham, Herwald

Smith-Carington, Neville W.

Weymouth, Viscount

Rankin, Robert

Somerveil, Donald Bradley

Whiteside, Borras Noel H.

Rea, Walter Russell

Somervllie, Annesley A. (Windsor)

Whyte, Jardine Bell

Reid, Capt. A. Cunningham

Sotheron Estcourt, Captain T. E.

Williams, Herbert G. (Croydon, S.)

Reid, James S. C. (Stirling)

Southby, Commander Archibald R. J.

Wills, Wilfrid D.

Roberts, Aled (Wrexham)

Spencer, Captain Richard A.

Windsor-Clive, Lieut.-Colonel George

Roberts, Sir Samuel (Ecclesall)

Spender-Clay, Rt. Hon. Herbert H.

Winterton, Rt. Hon. Earl

Robinson, John Roland

Stanley, Lord (Lancaster, Fylde)

Wise, Alfred R.

Ropner, Colonel L.

Stanley, Hon. O. F. G. (Westmorland)

Wood, Sir Murdoch McKenzie (Banff)

Rosbotham, Sir Samuel

Stevenson, James

Ross, Ronald D.

Storey, Samuel

TELLERS FOR THE NOES—

Ross Taylor, Walter (Woodbridge)

Strauss, Edward A.

Commander Cochrane and Mr. O'Connor.

WHOLESALE PRICES.
7.40 p.m.
Mr. HAMMERSLEY: I beg to move,
"That this House welcomes the Government's declared intention to raise wholesale prices, gold prices if possible, but in any case sterling prices, and urges the Government, without waiting for the international consideration of gold prices, to give immediate effect to a definite and whole-hearted Policy of raising sterling prices."
Unlike the Motion which has just been debated, this Motion does not lend itself to great emotion or flights of oratory. I listened to the greater part of the previous Debate, and I was struck by the practically unanimous feeling of disquiet which was evinced from every section of the Chamber in respect to the prevailing conditions. That feeling of disquiet affects us in different ways. There are some who think it their duty to suggest that the only way to get out of our trouble is by raising strong emotions and national discontent in the hope that something, which is more hidden than explained by the words "downfall of the capitalist system," will take place. There are others—and I count myself among the number—who believe that our present discontent requires very careful study, and some modification of our existing system will probably do much more good than any ill-considered step in the dark.
This Motion calls !for a, rise in wholesale prices. I would like at the outset to make clear what I mean by wholesale prices. I hope that in that explanation
1250
I shall remove a little misapprehension which appears to exist in the minds even of some Members of the House. There is a common view that the wholesale price level is the average level at which goods are sold in the wholesale market. As a matter of fact, the words "wholesale price level" have a much more restricted use in practice. The Board of Trade Index of wholesale prices includes basic commodities like metals, raw materials, and cereals, and also a `few semi-finished raw materials like iron bars and cotton yarn; but it does not include the bulk of manufactured articles. I make this point, because the natural predilection in the minds of people is that, if the wholesale price level goes up or down, there will be a considerable rise or fall in the retail price level and a proportionate effect on the cost of living. That view is not accurate. In the case of textiles such as cotton, silks and wool, the cost of raw material very seldom exceeds 25 per cent. of the total cost of production, so that if there was a rise of 50 per cent. in the wholesale price of the raw material, there would be a rise of only 10 per cent. in the cost of the finished goods. That argument must be carried a little further if you refer to the cost of living, because in the cost of living items are included—such as rent—which are immovable. One would say that a variation in the wholesale price level causes a smaller variation in the retail price level, and a smaller variation still in the cost of living.

1251
In recent years we have experienced the results of a quick and rapid fall in wholesale prices, and we know that the retail prive level has been coming down much more slowly. That has frequently been a cause of complaint. I do not want to enter into the rights and wrongs of such complaints, but I do wish to say that arguments resting on the assumption that the rise and fall should be proportionate are to that extent ill-founded. It is clear that a rise or fall in the wholesale price level cannot be completely reflected in retail prices. A further point is that, provided there are no other factors to affect the situation, the higher the wholesale price level the less the spread between the two ranges of prices. I make these initial remarks to safeguard myself against a red herring being drawn across this discussion by anyone putting forward the view that a rise in the wholesale price level is not desirable because it would cause a corresponding increase in the cost of living. I do not deny that if there is a large increase in the cost of primary products there would be some reflection of it in retail prices, but I do assert that a rise in wholesale prices would, by increasing employment and providing profitable production, overwhelmingly outweigh any small disadvantages to the cost of living.
This Motion is in two parts. First of all, it congratulates the Government on its policy to raise wholesale prices. I do not think the House will expect me to supply any long argument to indicate why a rise in wholesale prices is necessary. It goes without saying that no individual or group of individuals can continue indefinitely to produce at a loss, that is, to sell the article they make at a figure which does not completely cover all the costs of production. I say "'all the costs of production," because if all those cost, depended on. the price level it would not matter very much at what the price level stood; but, as I have already indicated, there are factors in the costs of production which are not variable with the price level, factors such as rent, rates, taxes, cost of borrowing money, some which are controlled by contract and some which are determined by law. It follows automatically that unless all these costs of production, some of which do not decline with the fall in price level, can all be recovered in the selling price
1252
of the article, the time will come when the individual, firm or company will go bankrupt.
In 1924, when the wholesale price level was more than 60 per cent. higher than to-day, we had less than half our existing volume of unemployment. What satisfaction is it to the community to be able to buy articles at low prices, or to see articles on sale at low prices, if they have no money in their pockets with which to buy I When I walk about the streets and see, as I frequently do nowadays, articles on sale in shops at prices which I know are below the cost of production, it does not fill me with pleasure. To me it is a fore knowleldge of works closing down and of workpeople swelling the ranks of the unemployed. Nearly two years ago, in 1931, the Macmillan Committee reported:
" The recent increase in unemployment in every part of the world, accompanied by a decline in production, can in the main be attributed to the fall in the level of prices."
The growth of unemployment is not the only result of a continuous decline in the price level. Such a decline automatically increases that share of the national wealth which is owned by those whose incomes are derived from fixed interest bearing securities. A fall in wholesale prices automatically redistributes the national wealth at the expense of the producer, at the expense of the active individual, at the expense of that section of the community to whom we must look for the future of the race. According to Mr. Joseph Kitchen in certain figures published in the "Economist" in 1924 26 per cent. of th3 national income was represented by those with fixed money obligations. To-day, provided the national income were the same—of course, it has decreased—and no other factors had redistributed the national income, the mere fall in the price level would have meant that that 26 per cent. had grown to 44 per cent. It is a mere arithmetical calculation, based on the fact that a fall in the price level advantages those whose section of the national income remains stationary while every other section is falling.
Mr. HERBERT WILLIAMS: Has the hon. Gentleman taken into account the effect of the conversion schemes?
Mr. HAMMERSLEY: No. In making that calculation I said most definitely

1253
" providing no other factors had affected the redistribution of the national income." There are, of course, many other considerations, but I am simplifying my argument by pointing out that that one factor, if isolated, had by itself had this tremendous effect. Over a course of years, quietly, steadily, imperceptibly, almost in the night, as it were, forces have been at work which have been attempting to dispossess the producing classes of something like 18 per cent. of the national income, and when it is remembered that that proportion represents more than the total profits of all enterprise it may be realised what a divergence of interest is immediately set up between two producing sections, the wage earners and the employers, how a demand for wage reductions must arise and how the monotonous spectacle of company after company showing no profits has come about. To those members of the Labour party who are rather doubtful about the policy of raising wholesale prices I recommend these facts for careful consideration. Statistics, authority—I refer to the findings of every impartial and important committee in recent years—and experience re-echo the observations of the Macmillian Report, that a failure to redress the fall in prices will endanger the principles on which modern economic society is Founded.
I come now to the second part of my Motion, the more controversial part, that which urges the Government not to wait upon international co-operation but itself to take steps to redress this fall in prices in the area over which it has control. How can it be done? The accepted method of raising prices is to increase the quantity of money, to go in for an expansive monetary policy. We must have an expansive monetary policy. I do not doubt that there will be in the House some who are a little dubious as to whether monetary policy can have an effect upon prices. If there are any such, I would say that the Gold Standard system worked very effectively for scores of years before the War, and would probably have continued to work if all the other nations had known how to play the game of the Gold Standard. How does the Gold Standard system work? It works by varying the purchasing power of a currency in order that the purchasing power of various cur-
1254
rencies as expressed in gold is uniform. The purchasing power of a currency is, of course, a measure of prices.
How is that variation of the purchasing power of the currency brought about'? It is brought about by monetary policy, by making money dearer, or cheaper, through the Bank Rate, or by increasing or decreasing the quantity of money through the open market policy. Therefore, to deny that monetary policy can affect prices is to deny the existence of the Gold Standard, and whoever may put forward that argument certainly my hon. Friends the Members for East Edinburgh (Mr. D. Mason) and South Croydon (Mr. H. Williams) will not use it, because to do so would be foolish indeed. They would be advocating a return to the system whilst denying that the machinery exists to make that system work. But I agree that there is a difficulty and a great difficulty. It is not enough to know that monetary policy affects prices, it is not enough to press for an expansive monetary policy. In the present state of the world we are up against the fact that what affects prices is the quantity of money in actual use. Money which may be hoarded, or left on deposit, is useless in respect of its power to affect prices. Last year we had £260,000,000 increase in the deposits of the joint stock banks, and a decrease of £120,000,000 in their advances. In other words, there was an increased supply of money and a decreased use of it.
The practical problem before us is how the increased quantity of money which is available can be brought into active circulation. The first point we must realise is that we have to work through the existing monetary machine. We cannot force bankers to lend if they consider it unsafe to lend. We cannot force borrowers to borrow if they think they cannot find profitable use for additional funds. Yet additional money must pass into use. That is an absolute necessity. We may perhaps take a little lesson from what has happened recently in the United States of America. There it was realised that additional credit ought to Be brought into use. Additional credit was made, but none of it filtered through to the public. It was used, and very much more than was available could have been used, in an attempt to unfreeze the banks, and because such a large quantity of money was necessary to unfreeze the

1255
banks there arose the lack of confidence in the banks. Hoarding arose, and very much more money was going out of use than was being brought into circulation.
For our own situation, we have to realise that additional money must pass into use, and in order that it may pass into use, two conditions have to be satisfied. Lenders, that is the joint stock banks, have to appreciate that the money they lend is safe. Borrowers have to feel that there is a reasonable chance for a profitable investment. In connection with the first condition, that money must be safe, the country must note that, from the point of view of British banking practice, there is hardly a, basic trade in this country which is credit-worthy. Iron, steel, cotton, coal—you can go through the list —are not considered collateral and suitable industries to which the joint stock banking system can lend further assistance. On the contrary, most of those basic trades find the banks not giving them additional money but asking them to free their existing frozen position. They are being asked to see that their first job, having regard to the interests of their depositors and shareholders, is to make their position as liquid as possible. You find—I speak from personal knowledge of the trade with which I am associated, that in the majority of those basic trades there is not an increased lending but a decreased lending. The nation cannot afford to see those basic industries, which provide the bulk of employment for our people and are the foundation upon which our industrial greatness has been built, fall into decay.
There is thus a diversity of interest between prudent banking practice and national requirements. How can that diversity of interest be resolved? How can that gap be bridged? It can be, and it must be, bridged, if we are not, to sink to the level of a second-class Power. The production of the nation considered to be essential should be made creditworthy, from a banker's point of view, by some kind of Government guarantee, which involves some kind of Government control. Thus we are brought right up against the issue of nationalisation. There is a half-way course which would enable us to use the existing banking machine, and to retain the initiative of individual enterprise. In a sentence, it is a subsidy to selected exports. There
1256
must be some discrimination in respect of the subsidy, because it would probably do much more harm than good to subsidise all our industries. We have to subsidise those exports for which there is, practically speaking, an unlimited demand at the right price.
Take the textile trade. When we went off the Gold Standard there was, in the three months which followed that going off, an increase in exports of over 25 per cent., and that would have been furthered, had not that business been taken by Japan, who depreciated her currency by over two-thirds in 12 months. In the world market, we shall find that there is a large, unsatisfied need for cotton goods at the right price. Unlike many other commodities, the world-consumption of cotton is not going down, but is going up. Subsidies to definitely-known, particular lines of export in cotton goods would be a remunerative proposition, from the point of view that the goods could be sold and that there is no fear of their ceasing to be required. We should put into work many scores of thousands of workers in Lancashire and we should make at least a proportion of that industry credit-worthy. Money would flow into use, and in use would do its work to redress the fall in prices.
Not only would those subsidies put workers back to work in their own trades, but, through wages, would build up their purchasing power, the purchasing power of the people who must spend, and that would create a greater demand, not only for home goods but for imports. In that way, we should increase reciprocal world trade, rather than depend, as we are forced to depend at the present time, upon methods which have the effect of depreciating the value of the pound, which is a one-way traffic that tends to decrease world trade. This system would make for the increase of exports and the decrease of imports. As to how these exports should be selected is a question that I will leave to be considered by my hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan). I hope that he will catch Mr. Speaker's eye, and I do not want to delay the House from hearing him.
The other method which I talked about of passing money into use is to induce reluctant credit-worthy borrowers to borrow. The only substantial credit-

1257
worthy borrower is the Government, and that brings us right into the question of schemes involving Government expenditure. I believe that subsidies to selected exports would be more efficacious than Government expenditure, but there is a place for both. Particularly, we have in mind an overriding consideration that we must have valve for money spent. I recapitulate: Subsidies to selected exports and reproductive work of national importance. Those are two methods of forcing idle money into use. The other method is the raising of the level of prices.
There are two additional courses which react in the same direction, both of which I commend to the Government for adoption. We have in recent Debates heard a great deal of the word "confidence." The word has been used in different applications, and some of these different applications have tended to confuse our counsel. Confidence in the ruling authority the Government have already given us. Confidence in business is still to come. If the Government, by their attitude, show that they have confidence in the future trade of this country, a great deal will be done. They could show that confidence by suspending the Sinking Fund and by a reduction of taxation, not in the expectation of a lower yield, but in the expectation of a higher ultimate yield.
Those methods, coupled with the Government's policy of seeing that the Bank of England continues to pump credit into the joint stock banks, would be a signal to the world that in sterling, at all events, prices are on the upward trend. By maintaining and by increasing the present pressure of cheap money and by providing the outlets that I have indicated, the Government could keep up sterling prices. The excuse that they are willing to do so, but unable, is not a valid excuse. We require boldness, courage and determination. I appeal to the Chancellor of the Exchequer, not on grounds of sentiment, but on grounds of reason. Confidence is the life blood of trade. The probability of higher prices, is confidence. The Government's policy was stated by the Chancellor of the Exchequer, in his speech on 16th February. It is set out in my Motion. I beg the House to accept that Motion, knowing that by so doing they will be pressing the Government to push on vigorously with
1258
its own policy, and knowing, moreover, that that policy, resolutely carried out, will lead us surely and certainly to better times.
8.11 p.m.
Mr. AMERY: I beg to second the Motion.
My hon. Friend has invited the House to endorse the declaration given by the Chancellor of the Exchequer on 16th February, that it is the policy of this Government to raise wholesale prices—gold prices if possible, but at any rate sterling prices—and to urge upon the Government the desirability of giving immediate and whole-hearted effect to the policy embodied in that declaration. My hon. Friend in the earlier part of his speech dealt very lucidly with the economic effects of the fall in prices. I need not follow him closely in that aspect of the matter. What I should like to do is to concentrate upon the urgency and need for immediate, prompt and whole-hearted action by ourselves, without waiting for the possible outcome of the international Conference.
This question is not new. It is almost two years now since the Report of the Macmillan Committee was in the hands of the Government of the day. That Committee in its Report—the most authoritative Report of the sort that has ever appeared—regarded this whole question as one of extreme urgency and, in passages of almost impassioned foreboding, it pictured the whole world rushing headlong to ruin, and urged the need for effective and immediate measures to counteract a world-wide collapse.
Let me remind the House, as briefly as I may, what the cause of that calamity was, in the view of the Macmillan Committee. The Committee did not assign unemployment, and the depression and stagnation of trade, to some of those general causes which are so frequently quoted in speeches to-day—over-production, tariff barriers, or the breakdown of the capitalist system. They assigned the depression to a quite definite and specific cause, namely, the fall in prices resulting from monetary contraction and dislocation, which in its turn, was due to the interaction of a number of factors, both monetary and non-monetary—in other words, to the "failure of the monetary

1259
system to solve a problem of unprecedented difficulty set by a conjunction of highly intractable non-monetary phenomena." They pointed out that throughout history such a fall in prices has been the most serious cause of social discontent and political disruption. Some of the effects of such a change of prices on the condition of the country have been described to us this afternoon on an earlier Motion. The Report emphasised that it was essential to stop that downward process. The Committee urged, if I may quote the language of the Report, that
" To allow prices to be stabilised at approximately their present level would be a serious disaster to all countries of the world alike, and the avoidance of such an event should be the prime object of international statesmanship. Our objective should be, so far as it lies within the power of this country to influence the international price level, first of all to raise prices a long way above the present level, and then to maintain them at the level thus reached with such stability as can be managed. We recommend that this objective be accepted as the guiding aim of the monetary policy of this country."
When the Committee reported, we were still on the Gold Standard. The possibility of our breaking away from it had not been seriously contemplated, and it was not contemplated by the Committee. The recommendation which I have just quoted was in favour of international action, so far as we could influence the international situation, though I might add that in a number of their recommendations the Committee pointed very definitely to action on national lines. For instance, they recommended a very fundamental change in our whole monetary system when they advised that we should get away from the idea of a currency based on gold with a fixed fiduciary issue, and should substitute a currency quantitatively adequate to the needs of the country, only based upon gold in so far as gold might happen to be in this country conveniently available for purposes of rectifying international exchange.
Indeed, their whole condemnation—drastic condemnation—of the policy by which we re-established ourselves on the Gold Standard, indicates that, in the entirely changed situation which arose after we broke away from the Gold Standard, the Committee would have
1260
made very different and more far-reaching recommendations than they did. Our breaking away from the Gold Standard altered the whole situation. It altered our whole outlook, because it revealed to us for the first time our immense strength. For the first time we realised that this country did not stand alone as a sterling country, that breaking away from the Gold Standard would not expose it to those violent changes in the prices of our imported necessities that had been so often predicted. We discovered that with us went a large part of the rest of the world—by far the greater part of the British Empire and a considerable number of other countries —which between them furnished our main sources of supply both of foodstuffs and of raw materials. The consequence was that, so far from being exposed to a period of violent fluctuations, we, under sterling, have enjoyed a far greater stability than the rest of the world.
Our price level has been practically constant. Its fluctuations have not extended more than some 4 per cent. one way or the other, whereas, since September, 1931, world prices have fallen by not far short of another 15 per cent. So great has been the combined power of our position as the greatest importing market and the strength of our sterling supplies, that sterling prices have governed imports from gold countries, instead of imports from gold countries governing prices in this country. I cannot imagine that under those conditions the Macmillan Committee, who laid such stress on the importance of a managed currency, and on the importance of managing it so as to reach the price level needed, would not have advocated a fearless use of our sterling position in order to secure for us and the rest of the sterling world a price level on which industry and agriculture could carry on, with the burden of overheads kept down to a reasonable proportion as compared with the prices at which goods could be sold. I admit that for the first few months Ministers were naturally absorbed in the business of a new Government, the balancing of the Budget, and the making of provision for a better balance in our foreign trade; but I must say frankly that I do not feel that nearly enough has been done since then to make use of the strength of our position and to restore our prosperity and, by doing

1261
so, to contribute to the restoration of the prosperity of the world. One important step, undoubtedly, was taken. That was the great conversion scheme which was inaugurated by the Chancellor of the Exchequer and carried through with such courage and skill, and which has given us, at any rate, one important factor in the restoration of a better price level, namely, a cheap money market. Beyond that, however, I confess it seems to me that the attitude of the Government has been a little uncertain and hesitating, that they have been far too much inclined to wait upon what others might do.
I think we missed a great opportunity at Ottawa to link up an Empire fiscal policy with an Empire monetary policy. Indeed, without the latter, fiscal policy is largely in the air, because the whole value of the preferences agreed upon can be undermined and frustrated by changes in the monetary value of the currency of the different countries. To take but one example, the fact that New Zealand was forced off her previous parity, owing to our not being able to bring sterling prices to a higher level in the Empire as a whole, has, in effect, undone the concessions which she gave to us at Ottawa. As far as the New Zealand manufacturer is concerned, he has at this moment an additional tariff of something like 12 per cent. in his favour above that which he enjoyed six months ago, and the taking off of the 5 per cent. New Zealand surtax has been undone at least twice over, while, on the other hand, the New Zealand producer enjoys a corresponding additional advantage over the British farmer, and over his other competitors in the Empire, as compared with the position in which he stood last August. I realise that the negative attitude which the British Government took up at the Conference was largely based on the feeling that this matter could only be settled internationally; and the Chancellor's declaration, while tentatively advocating a policy of increased prices, took the line that "the absence of a. rise in gold prices inevitably imposed limitations on what could be done for sterling." With that statement, I respectfully beg to disagree entirely.
An argument that I have occasionally heard advanced for the necessity of dealing with this matter internationally is that any action on our part to raise our sterling price would correspondingly push
1262
down gold prices outside and set up a new competition of yet lower prices and so frustrate the success of our policy. I do not believe that for a moment. I agree with what Mr. McKenna said not long ago, that "there is no foundation, either in logic or in the record of facts, for the assertion that our departure from gold was responsible for the downward movement of gold prices." The price level of Great Britain is of the first importance to the world, not as a matter of exchange but because of our predominance as an import market and, if we raise sterling prices throughout the Empire—throughout the sterling area—set industry and agriculture on its feet and create an increased demand, that is bound to exercise a hardening effect upon the price of commodities in the world outside. If you argue that a rise in gold prices makes it easier to raise sterling, prices, obviously a rise in sterling prices would equally make it easier to bring about a rise of gold prices outside.
I am glad to think that the Chancellor of the Exchequer is now taking a somewhat different line. At any rate, the statement that he made on 16th February was a very substantial advance on the declaration that he made at Ottawa. If he could have made it then, it would have been an immense encouragement to some of the other Governments of the Empire. But I hope to-night he will implement that statement by indicating the positive lines on which to carry it out, because on 16th February, after making that declaration, he proceeded to hark back in a rather curious fashion to the idea that this matter could only be solved at a World Conference. He is not alone among members of the Government in this perennially undiscourageable devotion to the idea that something will come of the World Conference, that Micawber-like faith that somehow, if we cannot do things for ourselves, if only we can meet a sufficient number of foreigners round a table, something fortunate will turn up.
Mr. DAVID MASON: Will the right hon. Gentleman recall that declaration to the House?
Mr. AMERY: It is more or less verbally embodied in the Motion. My right hon. Friend then stated that the policy of the Government was to raise wholesale prices—" gold prices if you can,

1263
but, in any case, sterling prices." What is that we can really hope to secure from an international conference? It is certainly not the restoration of the Gold Standard as it existed before. That Gold Standard worked perfectly well as long as its control was vested in an internationally minded City of London. When that control passed into the hands of a great Power like the United States, pursuing an intensely national policy, the Gold Standard was bound to break down. Indeed, the disasters that have befallen the world are due to the misguided idea that in present world conditions you can restore a single so-called automatic international standard.
It is true that those who talk about the possibility of returning to that Standard are generally prudent enough to lay down certain conditions. They lay down among the conditions a satisfactory settlement of the Debt question. I admit that such a settlement is not only desirable in itself, but would ease the world monetary situation. But I think we ought to beware of exaggerating the importance that the international debt situation has played in bringing about the monetary disaster. Of the payments due to America, and responsible for the sucking of gold into that country, in 1930 only some 15 per cent. were governmental payments. The commercial debt due on American investments was 2½ times as great as the War Debt payments. The commercial debt due on the American balance of visible trade was more than three times as great. If there had been no inter-governmental debts, yet, with America's enormous economic preponderance and the nationalist policy that she was pursuing, the Gold Standard would have broken down just the same.
Another condition laid down by most of those who contemplate the restoration of an international standard is the correction of the present maldistribution of gold. The United States have been bitten pretty hard in their foreign investments in recent years. You are not going to get them to lend on a colossal scale. Nor are you going to get them, or any other great country inspired by a policy of economic nationalism, to allow such a free working of the Gold Standard as will lead to an influx of gold sending up prices, checking exports and encouraging
1264
imports. The countries of the world to-day are not prepared to accept these consequences of an automatic international system. Last of all, we are told to get rid of tariff barriers and exchange restrictions, to get rid, in fact, of economic nationalism. But how are you to do it? Does anyone think that the United States, with 12,000,000 unemployed, are going to throw open their doors to foreign competition and allow it to take such a hold upon their economic system as to redress the balance? They are the last people in the world to be prepared to submit to the temporary hardships which that would involve. Is Japan, our foremost industrial competitor, going to forgo the advantages of her present position in order to tie herself up to an international standard? Are Italy and Germany going to abandon their economic independence in order to re-establish economic internationalism? In the introduction to the agenda of the World Conference, not otherwise a very illuminating document, there is one phrase which caught my eye and which sums up the whole situation.
"It is impossible to maintain an international monetary system except on the basis of an international economic system,"
We are still a very long way from an international economic system and, therefore, we may assume that we are a very long way from an international monetary system. It will be a long time before the Humpty-Dumpty of the Gold Standard will be set up on his wall again. Meanwhile, I trust that no side issue, no concessions in respect of our Debt, for instance, will induce us again to put the noose of the Gold Standard round our necks and give the other end of the rope into the hands of the United States. I do not wish to say that some good may not come out of the international conference. It may be possible to get some agreement to get rid of the most-favoured-nation clause and so make the possibility for mutual negotiation among countries, and thus for some practicable extension of freer trade over large groups. It may be possible to come to some reasonable informal understanding among the great monetary Powers to pursue a policy of restoring the price level on parallel lines. That is all to the good, but we cannot wait for that. Indeed, the question itself is not going to wait. The situation

1265
in the United States, since we put down this Motion on the Paper, has taken charge. What is even more significant, President Roosevelt has taken charge of the situation. He proposes action in this matter, but American action, not international action. Let me quote what seems to me to be the most significant passage in his whole inaugural address:
" Our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of sound national economy. I favour, as a practical policy, the putting of first things first."
And among those first things in that same Address he puts the provision of "adequate but sound currency." I think that the whole context shows that the stress is not only on the soundness but on the adequacy of the currency. I think that we can fairly assume that a very definite and bold attempt will be made by American action, for the American people and for the American market, to restore a more satisfactory price level than that which exists to-day. That is bound to have a most direct repercussion upon our situation. It may be that President Roosevelt's policy will fail and that we may have to face an even more disastrous situation in the United States than that which has prevailed there during the last few months. If the policy fails, and the dollar falls it will be a matter of vital importance to us to take measures to prevent sterling from being pushed up to a position to prejudice our trade. On the other hand—and I think that it is the more likely result—President Roosevelt may succeed in restoring confidence and setting the wheels of trade and industry in motion again in the vast American market. If so, then not only the hoarded gold, but all the currency the American Government and the banks have been pumping into the United States in the last 12 months will begin to come out. You will almost certainly then have a situation of rising prices and, to some extent, of inflation. That again will have its reaction upon the relationship of the pound and the dollar and will make it both more necessary and at the same time easier for us to pursue a policy of raising sterling prices. By that I mean not only in the exchange. Indeed, I doubt whether the Exchange Equalisation Fund, however much enlarged, will be capable of meeting the strain of such
1266
a situation. I mean rather by the internal measures which we can take.
If I am not detaining the House too long, I wish to say something about the lines which I would suggest that our action might follow. There is one line to which the Chancellor of the Exchequer has more than once alluded in his speeches and to which he attaches a good deal of importance, and that is the line of the restriction of production. I am prepared to admit that a restriction of imports, aiming, like a tariff, at the encouragement of domestic production at a sheltered price level, may be, and should be, a very useful concomitant and support of any policy aimed at raising the sterling price level. It is not for me on this occasion to go into the respective advantages of the tariff method or of restriction, but I readily admit that that may be a useful element in controlling the situation. But as a general policy for affecting world prices, I confess that I should look with the gravest misgiving upon the idea that a policy, not of raising prices by increasing the volume of money in circulation, but of restricting production could really achieve this end.
The whole supposition upon which such a policy could be based is that our disaster has been due to over-production. But there is no evidence of general overproduction. There may be in some commodities, but, broadly speaking, the total increase of output has not been very much above the steady average increase of 5 or 6 per cent. per year which has characterised the progress of the world for a long time past. Stocks have accumulated. Yes, but much more from under consumption than from over production. Indeed, I should be inclined on the whole to agree with the great economist Professor Marshall when he said that "the chief cause of the survival of the monstrous fallacy that there can be too much produced of everything is the want of a proper standard of purchasing power." The world is still far too full of those who have not enough to eat and not enough to wear and who would be only too glad to consume if the opportunities of production and of earning were given to them.
Let me turn to actual monetary policy. I entirely agree that the first and essential step there is the one which the

1267
Chancellor of the Exchequer has taken with such success—cheap money. I would only add in that field the suggestion that the time has now come when he ought to take the further step of making money not only cheap but free. By removing the restrictions which still stand in the way of the free investment of sterling he would help materially, I believe, by expanding sterling circulation, to increase sterling prices. If we are to be put in a position where the Exchange Equalisation Fund has continually to buy dollars to prevent the pound from being too high, why not let our own public individually buy dollars and dollar securities and collaborate in the effort to keep sterling at a reasonable figure? More than that, why should we not make use of the present opportunity of the negotiations which we are carrying on with the Scandinavian countries and with the Argentine to put our trade with them both on a stable currency level, and in a position where they can afford to buy from us, by advancing substantial sterling loans to those countries and using those loans as an instrument by which their currency can be definitely pegged to ours, as indeed we pegged our currency to the American currency during the War, and as the currency of a great part of the British Empire and of some countries outside the British Empire is pegged to ours to-day? Again, why could we not help Canada to liberate herself from her dollar obligations as far as possible and come more closely on to a sterling basis? So much for monetary policy. But monetary policy alone cannot help. The provision of cheap money, by itself is not everything. It is no good having your petrol tank full if your feed pipe is clogged and your carburettor is not working, and if you do not turn the crank-handle.
My hon. Friend has appealed to the Government to give a stimulus to enterprise. I should like to second the appeal. I am not asking the Chancellor of the Exchequer to splash money about on public works except upon those which are actually and definitely essential and reproductive. But the bringing about of private expenditure by a small differential expenditure on the part of the Government or by Government credit might just enable those things to become profitable or worth risking which individual
1268
business men are afraid of risking to-day. I am pleading for a policy of trade facilities, not only in the technical sense, but in the widest sense of the word; a policy of bold encouragement for every promising new industry with a chance of being justified if the general progress of the country goes on.
I should like to make an appeal not only for one but for two Cunarders. I should like to suggest that a Government guarantee would hasten the electrification of the railways, and that some form of Government help might bring about the development, on a business scale, of new means of utilising coal for the production of oil and motor spirit. Again, I should like to support the suggestion of the Mover of the Motion that the Government should give their serious consideration to the possibility of granting carefully selected export subsidies. British wheat, in its day the finest agricultural production in the world, was originally built up by an export bounty on wheat. Even more striking is the history of the cotton industry. In 1780 we exported £350,000 worth of cotton piece goods. In the following year or the year after we imposed an export bounty of ½d. per pound on cotton piece goods and the volume of our exports doubled themselves from year to year, until in 1812 it represented £16,500,000 worth; the direct result of giving encouragement to people to launch out boldly on a large scale.
There is one industry in that connection which I suggest deserves special consideration. In the world of to-day the motor industry is going to play the part that the railway industry in many ways played 70 or 80 years ago. Britain's prosperity in the Victorian era was largely due to the fact that we were the world's railway providers. I believe that, if we only have the courage, we have an opportunity of being the world's greatest suppliers of motor vehicles. At present we are hampered in every export market by the horse-power tax, which forbids our making the kind of car or vehicle that is of any use in the world outside. Why should we not recast our horse-power taxation? Why should we net, seeing that we have to impose heavier duties on heavy lorry traffic in the interests of fairness to the railway companies, compensate that traffic by some encouragement in the export trade, by a subsidy

1269
if you like, to enable them to win back outside what they may be losing at home? I would remind the Chancellor of the Exchequer that very valuable work has been done in the last few years by the Overseas Mechanical Transport Committee, a body for whose setting up I was responsible in 1927. They have worked out a form of transport for heavy goods, for 15 tons at a time, which can make use even of the most primitive earth road. Such an encouragement would involve perhaps only a few tens of thousands of pounds, certainly not more than £100,000, but it would make an immense difference to the export trade of this country.
I would add, lastly, a word for agriculture. There, we have a further field for encouraging production, encouraging the demand for money and developing circulation. There is much that still remains. to be done. I should like to endorse, without repeating the argument, the plea so admirably made last Wednesday by my hon. Friend the Member for Central Sheffield (Mr. Boulton) for lower taxation, for a bold policy of looking ahead for a period of years, frankly reducing taxation because that reduction is needed, without any particular regard to the luxury of having a Sinking Fund or to the immediate balancing of the Budget. The whole difficulty is that the business world lacks confidence. They look at each other and hesitate. If the Government could show in their measures that they have complete confidence in the future of this country, confidence in the early recovery of this country, the business world would be encouraged and would follow suit, but if they pursue a policy of sitting tight, of bringing in all their money, of being afraid to invest, afraid to speculate, then we cannot expect the business men of the nation to do other than follow suit.
I apologise for having detained the House, but I hope that the Chancellor of the Exchequer in his reply will give us some indication of a definite forward sterling policy all along the line, and that he will not suggest, as he was rather inclined to do on the 16th February, that our policy must wait upon the World Conference, or that we have been caught up in an entire breakdown of the system of production and distribution in the world which it will take years and
1270
years to set right. I believe that the present world situation, as the Macmillan Committee pointed out, is quite specifically and definitely due to an attempt to work a single international monetary standard when the conditions are not suitable. If we can get away from that and boldly go forward, shaping our own monetary policy in our own interests and those of the Empire, and of such other countries who may wish to join us, we shall speedily be able to restore our own prosperity and contribute to the prosperity of the world.
8.51 p.m.
Mr. LEONARD: On occasion I have noticed a tendency on the part of experts outside this House that I do not always see in the experts inside the House. I think with some of them that everybody cannot be in the parade but that someone must be standing on the pavement, especially those who do not stand on the pavement very often. Bad the Amendment to which my name is attached been before the House I would have drawn particular attention to the fear that exists amongst those I represent that the upward tendency in wholesale prices, however it may be effected, would not safeguard the common people of this country. The Resolution welcomes the declared intention of the Government. I may not have been paying sufficient attention, but I have not seen any definite declaration on this matter by the Government. I want something more tangible than mere declarations of intention, because the intentions expressed on previous occasions have not produced anything to verify the intention. What about the Government's position in regard to the gold standard I They came in to save the gold standard but their departure from it was applauded.
As regards public economy, we were told that it had to be rapidly applied in order to save the national credit. In my opinion our national credit has gone down considerably because this Government has made an attack upon education and the social services. In regard to public expenditure, I should have thought that the common sense idea during a period of depression, and in view of the importance of keeping wages in circulation, was that the Government should not indulge in a policy of preventing trade and restricting commerce.

1271
The great idea of civilised nations now seems to be to export more and import less. Such a policy cannot work now or at any time. The result, as far as we can tell, from the figures of imports and exports shows that since 1929 world imports have fallen by 41 per cent. and exports by 43 per cent. Restriction has been the order of the day. Every nation seems to be endeavouring to make a profit out of their neighbour, instead of trying to work together. I thought that the principle of the interdependence of the nations of the world was accepted by everyone, but I regret to see that it is not the case if we are to accept the Motion now before the House.
If we are to follow the idea of economic nationalism the difficulties which have attended nations in the past will be manifold in the future. Nor can there be any confidence among the nations so long as they are all intent on seeing how much they can get from each other and how little they can give. When I saw this Motion I wondered to what extent the hon. Member for Stockport (Mr. Hammersley) was a supporter of the Government, because in a speech which the Chancellor of the Exchequer delivered at the opening of the British Industries Fair he said:
" How are we going to restore that confidence which alone will enable international trade to resume its former channels? "
The Chancellor of the Exchequer, I believe, is as desirous as anyone to reach that desirable position. He went on to say:
" To my mind it is absolutely impossible to suppose that a single country can do that."
If that is the Chancellor of the Exchequer's opinion then it is in direct conflict with the Motion and with the statements which have been made this evening in support of it. In the same speech he said:
" I have no objection to tariffs myself so long as they are reasonable ones, but excessive and prohibitive tariffs I complain of; and, in addition, to them we have what amounts to prohibitions or partial prohibitions in the way of quotas."
The difficulty in regard to tariffs is that once you put on a small duty they ask for more. This has been demonstrated even in the short time the present Government have been in office. The right
1272
hon. Member for Sparkbrook has referred to monetary policy and to the World Economic Conference. May I quote from the Agenda of the World Economic Conference:
" We are therefore unanimous in affirming the necessity that action for the removal of the restrictions on international trade (prohibitions, quotas, exchange restrictions, etc.), should be taken as soon as possible and continued on progressively wider lines as the other causes of the present economic disorganisation are mitigated or removed.
The fact must not be overlooked that the abolition of restrictions will, in its turn, exercise a very considerable influence on the situation and will effectively help to remove the other difficulties. If they can increase their exports, many countries will be enabled to purchase larger quantities of foreign products. The opening up of larger markets, apart from whatever action may be required in the financial sphere, will greatly ease the difficulties encountered by the debtor countries as regards their balance of payments.
The tariff policy which has been followed by many countries in the past has been greatly aggravated in recent years. This tendency has contributed largely to the disorganisation of world conditions. In respect of tariff policy and treaty policy, as in the case of important restrictions, the conference must seek to modify existing practices and to secure the adoption of more liberal methods.
Positive action in this direction is assured of important support. Countries compelled to dispose of a large proportion of their products, whether agricultural or industrial, on the world's markets are most deeply interested in checking the increase of tariff barriers and in securing their reduction. An improvement in the world economic situation would be facilitated if the debtor countries were enabled to pay their debts by the export of goods and services, and if the creditor countries framed their economic policy in such a way as to maintain the capacity of debtor countries to pay by these means."
The hon. Member for Stockton-on-Tees (Mr. Macmillan) I know places great reliance on an increase in wholesale prices to bring about the result desired, but I notice that some qualifications were made by the Mover of the Motion. The hon. Member for Stockton-on-Tees recently said in a pamphlet:
" I do not doubt that a rise in prices taken by itself would have very great beneficial results. What I do assert is that in the absence of improvement in the economic system as a whole, those benefits would neither be conclusive nor permanent."
Later on he writes:
" Obviously, if industrialists knew for a certainty that not only would prices rise

1273
but that they would be able to sell their goods at the higher level there would be no difficulty. So far as the proposal has yet been explained by its advocates there is no good reason to be certain on either of these points."
After further consideration of the matter he says:
" The Board of Trade index figure shows a fall since 1928 from 140 to 104. We require therefore an increase of about 30 per cent. The full effects of this rise ought not to be reflected in retail prices as they have only fallen by about 10 per cent. in the same period. There would, however, be some effect unless it can be offset by improvements in production and in marketing."
We want to know just how much it is going to affect the people in whom we believe. I agree with one very terse sentence here. The hon. Member advances the proposition that prosperity is conditioned on equilibrium in production. He says:
" If the forces of production are properly distributed in the production of consumption goods in the right quantities, and if the rate of saving is equalled by the rate of capital investment, then the total products will exchange against each other and prices and employment will be stable."
That requires a conscious and concentrated effort, and an effort of a conscious character among the industrialists of this country is not in evidence to-day. Were it so, we might place some reliance on the possibility of wages in the future. But I regret to say that I see no departure from the tendency displayed in figures in, the Ministry of Labour Gazette. It says there that the net reduction in wages in 1931 was no less than £400,000 a week; in 1932 it was £248,000 a week. If that is going to continue, and the possibility is that it will, it is going to be a hardship on the common people. That we are not prepared to countenance. I wanted to give some details with regard to the tendencies in production, but time will not permit me to say much.
I have here a statement from the Board of Trade Journal of 1928, which shows a big change in the structure of labour engaged in production. It was at one time held that the producers, the men who did the dirty drab work of society, were the people who carried the whole burden, and it was a heavy burden. But I find that that has changed, because in a review of 68 industries the Board of Trade Journal states that as between 1907 and 1924 the mental workers had
1274
increased from 9 per cent. to 14 per cent. This is a structure that has been placed on the back of the increased productivity that machinery gives to the worker. But I cannot realise how it is that Members in this House and others outside seem to think that the only thing a machine can do is to produce goods. A machine can produce labour as well as goods, and we are going to do all we can to prevent that machinery being used in the manner it has been used up to now.
There is also the question of mass production. Let me say something as to the desire to depart from the economic nationalism as displayed in this country, to a more general but not sufficiently general policy to take in other countries. There is an idea that we can make a Dominion entity. We are therefore being changed over to the idea of making the Dominion self-supporting, a unit of its own. But that will still allow the same trouble to create itself. In the Federation of British Industries publication entitled, "Industry in the Empire," I notice some details which I accept as correct. One thing about an organisation like this is that in its publication it cannot indulge in propaganda. The men for whom it caters must know the facts. I notice that there is given a synopsis of the position with regard to the Colonies and their products, under the heading of "Agriculture." In Australia 65 per cent. of the production is agricultural production and 96 per cent. of their exports are agricultural. In Canada the figures are 45 and 39 per cent.; in New Zealand 70 and 98 per cent.; in South Africa 57 and 96 per cent.; and in the Irish Free State 73 and 86 per cent. The great idea is that there shall be an understanding between the various outlying sections of the Empire, and that they will be able to continue to indulge in the very desirable activity of feeding us and other parts of the world, and that in return for that there shall be a recognition that we shall be the people to supply them with those things that are industrial products. But they go on further in that part of the publication dealing with Empire economic cooperation and complementary industrial production, to express a desire for a conference with the captains of industry in our Dominions. They say:
" The purpose of a conference between the manufacturers in a particular industry in Great Britain and in a given Dominion

1275
would he to explore the feasibility of an arrangement whereby the production of certain goods should be recognised as being the province of the Dominion manufacturer, whereas others would be regarded as better left to the United Kingdom manufacturer."
Mr. DEPUTY - SPEAKER (Captain Bourne): I find some difficulty in reconciling the hon. Member's arguments with the Motion, the subject of which is prices.
Mr. LEONARD: I respectfully suggest that the remarks I am endeavouring to make are intended to be strictly related to the question of preferences and tariffs.
Mr. DEPUTY-SPEAKER: The question of preferences and tariffs is in order only in so far as it deals with prices. It is not in order as a subject by itself.
Mr. LEONARD: I will endeavour to come to that point. The things that are contained in the proposals to which I have just referred would very quickly cancel themselves out, because there is a great desire for adequate price levels on the part of the producers of commodities in the Colonies as well as in this country. Tendencies that have been displayed in the industries of the Dominions, which are also desirous of having a proper wholesale price level in the Empire and the world, would quickly cancel themselves out, because the great desire of every country is to be a successful industrial nation. They are all striving might and main to measure their advancement by the erection of factory chimneys. Therefore I am not prepared to accept the view that even confinement in an Empire Dominion is going to give to the common people of this or Dominion countries the advantages that a conscious endeavour to meet their everyday requirements would have. That conscious endeavour is not present.
Self-containment may be a desirable thing, but it has not worked in America. America has been self-contained to a great extent. It has had all the gold that any country could require. To-day the experts have not made up their mind whether America is on or off the Gold Standard. I am of opinion that they are under the Gold Standard, and very far under it. With regard to the monetary machine, my only comment is that at the present time it is not directing commodities, as it ought to, towards
1276
the people who require them. An hon. Gentleman opposite on one occasion described gold as the rails upon which commodities run. Those rails are not under the control of the people who produce the commodities or the people who require the commodities and, as regards financial modifications, anyone will please me who gives to those engaged in production, a greater measure of control so far as money is concerned than they have at present. I suggest that the measures proposed by the Government, calculated to increase wholesale prices, if they do increase wholesale prices will not bring to the common people what is anticipated by the Mover of this Motion.
9.17 p.m.
Mr. ENTWISTLE: As the speeches in this discussion have been rather long, I shall endeavour to be brief in my remarks. I agree entirely with the subject matter of the Motion. I am a wholehearted reflationist. It is almost universally admitted now that we must have a rise in the wholesale price level. It is clear that if you try to distribute an increased quantity of goods at too low a level of prices, the rigidity which is set up under the modern system, your nominal wages and your fixed charges will make that an entirely impracticable method of distributing your production. We are therefore all agreed that we must have this increase in prices and the Chancellor of the Exchequer has frequently asserted that to be the objective of the Government. The trouble is how it is to be achieved. It is true to-day there is available a quantity of money. The note issue is not all in circulation by any means. We have an increase in the note issue due to the recent purchases of gold by the Bank of England. It is automatically increased by all those purchases. Yet we find that it is extraordinarily difficult to get that money into circulation so as to exercise an actual effect on the price level. Everyone admits now that there is only one way in which to get that money into

1277
circulation, other than by purely psychological causes. Those causes have a great influence and if some event were to occur which would send a wave of confidence throughout the country, that undoubtedly would be the most potent of all factors for getting that money into circulation. But, in the meantime there can be no doubt that there are advantages in a Government stimulus, both in its immediate effect in getting more money into circulation, and also in its encouragement of that psychological wave of spending and confidence which is so essential.
I do not want to go into the details of the various suggestions which have been made. I certainly think that we ought not to hesitate at borrowing, in order to stimulate enterprise and create additional purchasing power in the country. With regard to the debatable point as to whether we can raise sterling prices without an increase in world gold prices, or, rather, whether an increase in sterling prices would have any influence on the gold price level, there is one fact brought out by the Chancellor of the Exchequer in a recent speech which is rather significant. It is that the general price level in this country, if it were in exact relation to the present rate of exchange, should be about 42 per cent. higher than the gold price level, because that is the percentage depreciation of our exchange. In fact, the general price level is not in this country 42 per cent. higher than the gold price level. That fact has been used I think quite legitimately to answer the objection, say, of Americans, that it is the depreciation in our exchange which has forced down the level of gold prices. That view would obviously be inconsistent with the fact that, notwithstanding the depreciation, our prices are not as high as they should be.
It cannot be that depreciation has caused the forcing down of the gold price level. The only explanation I can see is that we are the great market of the world, we are the largest producers of world commodities or rather of those commodities that enter into the world market for the quotation of gold prices; that the purchasing power of this country has been decreased through the necessary measures of economy which had to he instituted when the National Government was formed and that sterling prices are not rising because of this lack of purchasing power in the country. If we could get that to rise by the various methods suggested, I think there is no doubt it would influence world gold prices. One effect might be merely that
1278
our exchange would further depreciate with no consequent increase in the gold price level, but it seems clear that the main reason why the gold price level has been continuously falling is the lack of purchasing power in this country which is the great market of the world.
Whether that be so or not—I agree that we are on rather debatable ground there —what I rose chiefly to say is that although I am in favour of reflation or inflation, as an internal policy for this country, for which I think the time is now ripe, I think it particularly unfortunate that a good many advocates of reflation seem to have a violent anti-gold complex. The right hon. Gentleman the Member for Sparkbrook (Mr. Amery) seems almost to see red when gold is mentioned and we have many enthusiasts who have read a great deal on this difficult question of the theory of money and who attribute all our troubles to the Gold Standard and are determined that, whatever else happens, on no account must we ever go back to gold. I cannot help thinking that these prejudices are somewhat ill-informed and it is certainly very unfortunate if they are to dictate the future policy of the Government.
We know why the Gold Standard broke down and there is not the slightest doubt that the conditions which broke it down would have broken down any other international monetary standard. It is not sufficient merely to inveigh against the Gold Standard. What is the alternative to be put in its place? The main opponents of the Gold Standard seem to assume that being on gold is the same thing as being on gold at pre-War parity. There were a great many critics of the policy of the Government, and of the Bank of England in 1925, when we went on the Gold Standard at pre-War parity. I was one of those critics, for I think that was a great mistake. But that is no reason why one should object to gold as being an impossible standard under any conditions, and get violently hostile to it as a commodity or as a basis of money. We are bound to get an international monetary standard before there can be any restoration of world prosperity. There are people who say that on no account must we touch gold, and that we now have everything in our

1279
favour because we are off gold. They forget we are not entirely detached from gold. Within the last few weeks £56,000,000 worth of sterling in gold has been purchased by the Bank of England. The whole measure of sterling to-day can only be understood in terms of gold. It is quoted in terms of gold standard currency. I would like from the people who have these opinions a clear exposition of an alternative international monetary standard.
Mr. AMERY: I certainly do not wish to attack gold in itself. My criticism was of any single, rigid, international monetary standard under present world conditions, because economic nationalism would be bound to break it down whatever parity it was on, or whatever it was. I have no objection to gold as an exchange element in our monetary system. I trust we may always find a use for it perhaps eventually at some rate varying with the commodity price of gold.
Mr. ENTWISTLE: I hope the right hon. Gentleman does riot think that these are, necessarily, opinions I attribute to him. I think the most important point to-day is that we have got to have an international monetary standard restored unless we have a system to make this country entirely self-contained in itself, or with the assistance of the Empire. If we have a perfectly closed system we may have any monetary system we like, if we are not going to trade with anyone outside. We are a long way from achieving that. The United States of America are a much more self-contained area, and have potentialities of being more self-contained than any other country, yet the United States are suffering from world depression. A country could go back to the Gold Standard and indulge in inflation at the same time. Nobody has suggested that we shall go back to the Gold Standard on pre-War parity. I take it that we could get an international agreement for the restoration of the Gold Standard, with the various countries going on to the Gold Standard at such a ratio as they pleased. It may be that other countries will be influenced by the particular ratio on which this country goes back to the Gold Standard, but it is vitally essential that we should have an international monetary standard restored.
1280
The only alternative international standard mentioned is a commodity one. I have not yet seen it formulated how this would work and produce one essential to a monetary standard, which is stability between the various exchanges. The objective of managed currency it is easy to understand. That objective should be to maintain an average price level. How a commodity standard would secure stability between the different foreign exchanges has never been explained, or I have never seen it although I have tried to read everything on this subject. It has never been formulated by any economist. It is mentioned as a possible alternative, as being theoretically possible, but no scheme has ever yet been put forward. Even if it were we would require to have an international agreement before it was adopted. There is not the slightest chance of getting an international monetary system restored which is not based on gold.
I do not think the Government can be criticised for saying that they will not go back to gold. I do slightly criticise the Government for the conditions they have made before they say they will entertain the possibility of going back to the Gold Standard. One of these conditions is a considerable lowering of tariffs. I do not see why that should be made a condition at all. It is true that America cannot maintain an export surplus without being prepared to lend and allow other countries to keep on the Gold Standard. We need not wait until other countries agree to a definite reduction of tariffs. We are now a tariff country ourselves. We have a weapon which would have enabled us to resist some. of the causes at the time we were driven off gold. I still assert that we can get inflation on gold. We can inflate gold prices while having an international monetary standard. We cannot do it by deflation. We can go back at the price we choose. America can deflate her dollar, and France the franc. The other method would be to carry out the recommendations of the Macmillan Report. It is the alteration of the ratio to gold reserves.
The various monetary credits now rest on gold. In some countries they are rigidly limited by legislative enactment. These should be modified, and we should use available reserves for building a much larger structure of credit. I do

1281
not think there will he the least difficulty in getting international agreement. World depression could largely be brought to an end by the adoption of three essential things, on none of which I think it is impossible to get agreement. The first is the restoration of an international monetary standard which will have to be based on gold at whatever parities different countries enact. The second is the restoration of foreign lending. You would get rid of the maldistribution of gold. Until America has got over the fear of foreign lending, because of unfortunate investments, the loans might be made through the Bank of International Settlements. That in itself would facilitate what we all desire. A restoration of the international monetary standard, loans, and the adoption of the Macmillan Report recommendations—those three things, if they were dealt with at the World Economic Conference, would go a very long way towards restoring world trade.
Before I finish—and I have already been too long—I want to say a word or two about the fallacy of the so-called sterling area and of the notion that we have now got a Sterling Standard and can be quite independent of the Gold Standard. A Sterling Standard, if it were adopted as an international standard, means that the rest of the world must agree to accept our monetary policy, whatever it is. If we inflate, they will have to inflate with us; if we deflate, the rest of the world will have to deflate with us. It might be that the rest of the world would be prepared to follow the present Chancellor of the Exchequer—they would certainly be very wise if they did—but it does not follow that they would be prepared to follow the Leader of the Opposition when he comes into office. The rest of the world certainly became very fearful of the future of this country during the tenure of office of the party which he now has the honour of leading. It is, therefore, ridiculous to talk of a Sterling Standard.
We talk of the sterling area as if we could be independent now of countries on the Gold Standard. We talk as if, because we are trading with countries within the sterling area, it does not matter what the price of sterling is in comparison with the dollar, and we are quite
1282
happy if we only negotiate and trade with those countries which are now linked to sterling. I wonder whether hon. Members who talk in that way have really any idea which countries in fact have not imposed any exchange restrictions or quotas on this country. They might be surprised to learn that almost all the countries in the so-called sterling area are now imposing the most severe restrictions on our trading with them. The only countries which have no trade restrictions are India, New Zealand, Mexico, South Africa and Australia, of the non-Gold Standard countries, and none of them of very great importance from a trading point of view. [HON. MEMBERS: "India?"] I meant, in magnitude of trade. India is very important to us, of course. I only meant relatively small in size. The Gold Standard countries which have not got any restrictions against us are the United States, Italy and Canada.
I only say that, to emphasise once more the importance of getting an international monetary standard restored. I hope the Government will not make the conditions for that restoration too rigid, and I am quite sure that, if we adopt a reasonable policy at the World Economic Conference, that standard can be restored. It is consistent with inflation in this country, it is consistent with inflation of gold prices, and until it is done and we are back on a standard, I cannot see any end to the world depression.
9.39 p.m.
Mr. D. MASON: With a great deal of what the last speaker has said, I am in agreement. I agree with the general principle of adherence to gold, but I cannot follow him when he refers to reflation. We hear a great deal about reflation, in the Press and elsewhere, but I have never yet been able to make out exactly what reflation means. As a general principle, I rejoice to find him so whole-hearted in his support of the necessity for having a basis for our currency, namely, gold. I was interested in his inability to find out what was the basis of ray right hon. Friend behind me, although he eventually came down on the side of gold and did not adhere to that of which he was formerly an enthusiastic supporter, namely, an index number as a basis for currency.

1283
I should like to return to the actual Motion itself. The hon. Member who moved it and the right hon. Gentleman who seconded it based their main argument on what they called an expansive monetary policy. In other words, they adhere to inflation in currency. They believe that if you largely increase your quantity of money, that will lead to a rise in the price of commodities. It is very interesting to find that after the Napoleonic Wars we had a Debate on this subject in this House, and I would suggest to any hon. Members who are interested that nothing would give them greater satisfaction or reward than to take the trouble to read either the Debates which then took place or the works of many of the great authorities of that day. It is a curious fact that we find an almost exact analogy between what took place after the end of the Napoleonic Wars and what is taking place now. There was an over-production of goods then. The belief was that the Continent would absorb a great deal of our surplus after peace was declared, and there was a terrible reaction when they found that, as a result of the great Napoleonic Wars, the purchasing power of the people declined, just as we were disappointed in the same way after the end of the Great War.
Then there were the advocates of inflation, and there were resolutions passed. Hon. Members then, like the Mover of the Motion to-night, in almost similar terms moved resolutions to the effect that the only way to raise prices was by inflation. Tooke is perhaps recognised as one of the greatest authorities on prices, and he wrote at that time. I have read what he said on this subject, and I think it exactly meets the argument that has been submitted by the Mover of the Motion. This is what he says in Volume I, page 149, Section X:—
" How little coincidence there was in the preceding interval between the increase or decrease in the amount of Bank of England notes and that of private paper, and have moreover remarked that the most striking instances of a great rise of general prices occurred without any increase of Bank notes, while on the other hand the most memorable instances of a sudden fall took place contemporaneously with large additions to the Bank circulation."
Quite the contrary.
Mr. HAMMERSLEY: The hon. Member has misinterpreted what I said. I said the quantity of money in actual use, and there is a great deal of difference between that and the amount of money which may be available or in circulation. It is important to make that distinction.
Mr. MASON: That is a very fair distinction, and I do not deny it. It shows that unless you have confidence the mere fact of an expansive monetary policy by increasing the circulation, which is generally described as inflation, will have no effect. It has been tried in America and was well described by Mr. Beckett, a great banker, the other day, and I submit that the whole history and experience of what took place after the Napoleonic Wars indicate that the idea that you will raise prices by monetary manipulation is not based upon experience and is likely to fail. There are other means which the Mover and Seconder referred to as likely to raise prices. There was the question of public works, and I agree with public works which are essential and productive, for they tend to increase demand. As the hon. Member in whose name the Opposition Amendment stands said, unless we get an increased demand or an increased purchasing power on the part of the working classes, there is not much gained by a rise in prices. We want the wherewithal to buy the commodities. We desire general expenditure of capital, and, while public works are good so far as they go, the difficulty is to find schemes. The Chancellor of the Exchequer and many Members of the Government have said that, if any Member can bring forward a scheme, the Government will be prepared to consider it, but the difficulty is in finding schemes that are suitable and of a sufficiently vast character to increase prices.
In the middle of the last century the expenditure of £150,000,000 on railways led to the greatest amount of prosperity in this country. Agriculture flourished because there was such a demand for the products of the soil. This vast expenditure of capital, such as we desire to see to-day, led to prosperity, and, if we can stimulate that again, the same results will follow. We cannot get that in this Island again, however. Where can we get it? I will make some suggestions on

1285
the lines of the Amendment which I have placed on the Paper, that is, a restoration of the Gold Standard whereby we can get a legitimate rise in prices brought about by a legitimate demand. I would ask the attention of the House to what I believe would improve our credit, would tend to bring about a legitimate rise in wholesale prices, and would lead to the scaling down of the debt due to America by this country; that is, the restoration of the Gold Standard. Many Members believe that the Gold Standard will eventually be restored in this country. The Chancellor of the Exchequer must feel very much complimented in that every section of opinion tries to claim him as a supporter of particular theories. I also have a quotation from him in which he says:
" There are some who seem to think that it is the policy of the Government to go back at some early date to the Gold Standard. It is difficult to get an idea into some peoples heads."
I do not know to which section that refers—
" but I have repeatedly stated and I say again now that we cannot go back to the Gold Standard until we can be satisfied that the Gold Standard will work."
That, I think, is a very fair statement and, if I can, I want to show the right hon. Gentleman that it can be worked and that it is his job to work it. There were various contributing factors why we went off the Gold Standard in 1931. The Government of the party opposite were perhaps a contributing factor. They were undoubtedly guilty of indulging in an orgy of profligate finance. They were running into debt at the rate of £1.000,000 a week, and they presented us with a deficit of £120,000,000. That state of finance was not calculated to enable any country to maintain the Gold Standard, but I am bound to say that there was a greater cause which has been in existence for many years, and which is the main reason why this country had great difficulty in maintaining itself on the Gold Standard. That was the excessive issue of notes in circulation. That was fixed tentatively by the banks —that is, the fiduciary issue—at £260,000,000. When the amounts were fixed it was stated to be tentative, because no bank or statesman was capable of knowing what ought to be the exact note issue. Our currency was depreciated, and that can be proved at
1286
any time. Anyone can test it by taking the Mint price for gold. The price of standard gold was £3 17s. 10½d. and of fine gold £4 4s. 11d. The way to prove that inflation exists is by comparing the Mint price with the market price. The difference between the two is the measure of the inflation.
For many years we had an unfavourable exchange. In former days, when our issue of notes was so delicately in poise with the trade of the country, an export of £1,000,000 or £2,000,000 affected the exchange, but in 1929 there was an export of £80,000,000 in gold bullion and the exchange remained unfavourable. That indicated that some other cause was at work. We have heard a great deal about frozen credits, war debts and other contributing factors, and they have their influence upon exchange, but in the main the excessive note issue is the main cause for the depreciated pound. It would have been thought that the Treasury and the Bank of England, realising that this was the main cause of the depreciation, would have tried to correct it. What did they do, however? In August, 1931, the Bank, instead of applying to the Treasury for leave to reduce the note issue, applied for an increase, and the fiduciary note issue was raised to £275,000,000. Their request was acceded to by Mr. Snowden, now Lord Snowden, and their action, combined with a loss of confidence abroad, led to continued exports and withdrawals of gold bullion from this country. Those withdrawals were not due to any sinister design on the part of France or America to get gold for hoarding purposes. If the exchange fell to a certain figure any bullion dealer or banker could go to the Bank of England when we were on the Gold Standard and get gold and ship it abroad at a profit. Therefore, if, as I wish and many bankers in the City wish, we could see London again restored to its old position as the world monetary centre, surely the first step is gradually to contract the note issue, not to use the Exchange Equalisation Fund to keep down the pound, as the Treasury are doing. I want the pound to rise to par again. An hon. Member laughs. What is there to laugh at?
Captain WATERHOUSE: What little prosperity there is in trade and industry in this country at the moment is entirely due to the depreciation of the pound, and

1287
if an hon. Member rises to ask us to appreciate the pound when we still have 3,000,000 unemployed it really is a just cause for merriment.
Mr. MASON: I hope I shall be able to demonstrate to the hon. and gallant Gentleman that the policy I am advocating will have the very effect which he desires, and if I can do so I hope he will—I have no doubt he will—have the manliness and courage and good humour to admit it. We hear on all sides that this depreciated exchange is the very thing we want. Then if it is such a wonderful thing why not depreciate the pound to 5s.? Why not inflate all round, and bring down the pound as they brought the mark down in Germany, until it became an almost worthless coin, and as they brought the franc down in France, until it fell to one-fifth its former value? If the policy is sound why not send the pound down to 1s. or 2s.? It must be remembered that a depreciated exchange penalises imports, and we are importers as well as exporters. We have to buy our raw cotton and many other things from abroad, and is it not better, when we are buying cotton, that the pound should buy 4.86 dollars in America rather than 3.40 dollars?
Hon. Members may ask: How will a restoration of the pound to par, a restoration of national credit and a restoration of London as the great monetary centre, bring about a rise in prices? If London again becomes the great monetary centre, if a bill on London is as good as gold, then we shall have more money coming to London. As a French banker told me about three weeks ago, the French bankers who used to send money to London are not going to do so if there is any doubt about their being able to withdraw it except at a heavy loss. I saw references the other day to "Bad money." How can there be bad money? Every bank is anxious to get money—depositors' money. Are we not also anxious to get money? If we could draw millions from the Continent and the United States, if we could resume our place as the leaders in finance and as the great banking and monetary centre, then more loans would be floated here. Borrowers from all parts of the world would come to London. When an Argentine railway comes to borrow £1,000,000
1288
that money does not go to the Argentine in the form of cash; it goes out as steel rails or locomotives or other railway equipment. If more foreign loans were floated here it would help to bring about a rise in prices, a legitimate rise in prices, one produced by an increased demand. Hon. Members opposite who claim to represent the working classes, although I hope that we also, in a modest way, also represent them, should realise how this policy will widen the area of employment by stimulating trade in every direction.
The House may be a little weary of this technical lecture, but I suggest that this policy which I have supported whole-heartedly and consistently all my life may incidentally lead to a scaling down by the United States of America of our debt to them, and surely that would be a great blessing. I heard an hon. Member say, in his enthusiasm for keeping off the Gold Standard and maintaining a depreciated exchange, that he would protest against what he called "the swopping of our going back to gold for a reduction in our debt to America." But if, as I have been able to demonstrate, that policy is a sound one for this country, if it incidentally leads to the United States scaling clown the debt what a tremendous advantage that will be.
It might be asked, what effect will the position of affairs in America to-day have on the future of the pound and the dollar? There is some discussion as to whether America is off or on the Gold Standard. There is, of course, no question that America has gone off the Gold Standard. When you prohibit the export of gold and interfere with the convertibility of your note issue, you are off gold parity. It was well pointed out by the hon. Member for Bolton (Mr. Entwistle) that we still adhere to a belief in gold because we quote in regard to sterling exchanges in terms of a discount on gold. We cannot get away from it; behind our minds we still adhere to the principle upon which our finance has been based. I hope that I have said sufficient to appeal to the Chancellor of the Exchequer that he should move towards my section rather than towards the other section, and to convince him that to this country will in due time be restored what I believe has been one of the main sources of our greatness in the past.
10.7 p.m.
Mr. MACMILLAN; I hope that the House will not think it discourteous of me if I do not follow in detail the arguments put before us by the hon. Member for East Edinburgh (Mr. D. Mason). He is something of a monetary Mr. Dick. His King Charles's head is always depreciation. I must, however, make a passing reference to a speech which was delivered by the hon. Member for St. Rollox (Mr. Leonard) who was kind enough, in his anxiety that I might not be able to make my speech, to devote the greater part of his to the reading of some observations of mine from a pamphlet which I had written a few months ago. I was deeply touched to feel that he should carry the pamphlet about with him as a kind of Bible. There are one or two points which he mentioned upon which I shall try to touch later. This discussion has ranged away from the original terms of the Motion, and in the few minutes that I have, before the Chancellor of the Exchequer replies, I would like to say a few words about the main subject, which was the purpose and the object of this Motion.
It seems to be generally agreed, with a few exceptions, that it is desirable that the level of wholesale prices should rise. It is agreed by the Chancellor of the Exchequer, by the official policy of the Labour party as published in August last year, by economists such as Mr. Keynes and Professor Pigou, and by a very large part of the Press. Everyone seems to be agreed upon that. The trouble is that, in spite of this encouraging chorus of agreement, prices have stubbornly refused to rise. I would like to devote a few moments to the question of how this can happen. The level of prices can only rise for one of two reasons. Either when there is a reduction in the volume of commodities while the volume and the velocity of money remain constant, or when there is an increased volume and velocity of money while the volume of commodities remain constant. That is to say, either when there is a smaller amount of things and the same amount of money, or with the same amount of things and more money. An example of the first method might be said to be the coal and meat quotas that we have introduced, in which there is the reduction of the volume of commodities, the
1290
volume of money remaining constant, which therefore leads to a rise in the price in those selected commodities. The difficulty about this method is that it cannot be applied, except to a small range of commodities. It is properly a crisis method, to be applied to a few selected commodities. It is a difficult method, and it envisages equilibrium upon a lower basis of consumption. If it were applied over the whole scale of production, it would inevitably lead to a fall of purchasing power and to a final equilibrium upon a lower general level.
We have, somehow, to concentrate upon the second method of leaving the volume of commodities constant and increasing the volume and velocity of money. Then prices will rise. The method of increasing demand and purchasing-power cannot, in my opinion, be brought about by mere transference of demand. That seems to be the policy of those who put all their weight into the idea of reduction of taxation. Reduction of taxation is merely the transference of purchasing-power from one class to another. It may be a good thing to do and it has a great psychological importance. I am not arguing against it, but whatever your views of the other reasons why you should reduce taxation or increase economies, the transference of purchasing-power from one class to another is not an increase in the total volume of purchasing-power. Maybe a few prefer to reduce the wages of policemen and teachers, in order to reduce the Income Tax. How you look upon that depends as to whether you happen to be a teacher, a policeman or an Income Tax payer. Alternatively, the idea that you may benefit and do any good by taking money from the rich and merely giving it to the poor is equally fallacious, because it does not increase the total volume of purchasing-power.
What we have somehow to do is to increase the volume of demand. That leads us to what Government policy can do in that direction. How can it do it? It is clear from the Debates that we have had that banking policy alone cannot bridge the gap. Banking policy has done everything possible to cheapen money and to increase the amount of credit that is available. The figures which the Chancellor of the Exchequer gave in a Vote of Censure Debate, figures which have been freely used by economists, show

1291
that bankers' deposits—that is the deposits of the clearing-house banks with the Bank of England—have risen by £50,000,000 in two years. In ordinary banking practice, that should have allowed the joint stock banks to increase their advances to their customers by something between £500,000,000 and £750,000,000, but during the last year their advances have fallen by over £120,000,000. It is therefore clear that a mere policy of making money cheap and of increasing the capacity of the banks to lend to their customers cannot bridge the gap in bad times. The entrepreneur is so depressed, and so uncertain of what will be the future of the price level, that he is unwilling or unable to use money which is made available for him.
It seems to me, therefore, that when you get to that depth of depression, the only technical method of forcing into circulation the fresh bank money which has been created by the open-market operations of the Bank of England is for the Government itself to use the money and force it into circulation—for them, as it were, if I may use Stock Exchange language, to carry out a short bull move, because the whole country has got into a bear position.
One might almost argue that under the modern capitalist system the technique of a Government should always be to operate in exactly the contrary direction to that in which individuals are operating. In a period of boom, individuals are investing freely, and even over-investing to a speculative extent. During that time, the Government should be "bear." It should save, it should pull in its horns. On the other hand, a period of depression, when individuals are unwilling to invest, is the time for capital investment on the part of the Government. The trouble is that the Government, being composed of individuals, is subject to the same psychological forces as individuals. At a period when the rate for money was 7 or 8 per cent., and houses cost £1,400 to build, we built hundreds of thousands of them, and raised a great burden of debt around us for ever afterwards. Now, in a period of depression, when we can borrow money cheaply and build houses cheaply, we are
1292
a little reluctant to invest capital sums from Government sources.
I should say that in this situation, while economy on income account is sound, the view to which one is led is that expenditure on capital account is the right method for the Government to adopt for the purpose of giving the stimulus that is required in order to lead to revival. I would support that argument with the following observations. If it be admitted that this Government stimulus is required on capital account, what should be the direction of that expenditure? Here we must distinguish broadly between capital goods and consumption goods. It seems to me that, if the Government were to spend for the purpose of increasing the quantity of consumption goods, that would merely increase the supply of consumption goods more rapidly than the demand, and since, in a period of depression, a certain amount of profits and interest will be saved and not invested, but added to the liquid pool of uninvested money, it is essential that this Government expenditure should be used for the production of capital goods—houses, bridges, harbours, agricultural development and the like—rather than for the production of consumption goods. In that case, since the people who are taken off the dole and put into work—taken off the £1 a week of the Poor Law or the dole and given, say, £2 or £2 10s. a week in wages—will become consumers of consumption goods without adding to the total volume of such goods, the price level of those goods will tend to rise. If the Government will employ people in making capital goods, taking them off the dole and giving them purchasing power, they will be following the second and healthier method by which prices can be made to rise, inasmuch as the amount of purchasing power will increase without an increase in the amount of consumption goods, and therefore, the price of consumption goods must tend to rise.
Against this view it has generally been argued that we have tried this before, and it has failed. I would like briefly to point out that that is not the ease. We have never tried this method under the same conditions. It is true that we had Government expenditure during the years of the late Government and the Government that preceded it, but let us consider what

1293
were the conditions at that time. In the first place, we had a. system of free imports, and, therefore, this Government expenditure was only a contribution to the world price level, instead of being concentrated largely upon a rise of the internal price level. So soon as you have some control of imports, your new expenditure will be a contribution to the raising of internal prices.
In the second place, we were attached to stability of exchange—we were attached to parity of the pound at 4.87 with absolute stability of exchange—and, therefore, during that period, although the Government might be inflating with the right hand upon work schemes and the like, the Bank of England was forced to deflate with the left hand to exactly the same extent in order to keep the pound at par. That is to say, it is impossible to achieve two things at once. You cannot raise the level of internal prices and at the same time hold on to absolute stability of exchange.
At that time, 18 months ago, there was grave risk in our financial situation. There was the danger of a flight from the pound, but since that time this danger has gone. This House has indeed voted £150,000,000 for the purpose of keeping down the value of the pound. The danger of Government expenditure such as I suggest, if it was on too large a scale, would be that it might unduly depress sterling. But the danger is not now a flight from the pound. The Governor of the Bank of England is being forced to buy foreign currencies and gold in order to reduce, and not to increase, the price of sterling. The hon. Member for St. Rollox reminded me—I fully stand by what I said—that I never thought this inflationary method was any use as a permanent cure. Of course, I do not think so. Of course, the real objection that can be raised against any such methods is that, although you will cure a lot of temporary difficulties, you will restore equity as between debtor and creditor; you will give back some hope to the producer, you will relieve eventually the burden of debts and services—But the argument is that ultimately you will fail, unless you are careful, and fall into fresh disequilibrium and another period of falling prices. That is true and, therefore, it is essential that we should do what I understand to be the policy of the Government that is, com-
1294
bine an attempt to raise the price level now by some such methods as I have described, with a definite determination to use and direct that capital expenditure in order to make a better equilibrium, or balance of production, in this country and the countries associated with it.
Therefore, I suggest that the first line upon which we should direct this capital expenditure should be agricultural production. We have an immense possibility there of re-directing the balance of production and getting away from the dangerous situation we are now in of lack of balance between agricultural and industrial production, and increasing the development of rural housing and drainage, the improvement of land and saving good land which is now being threatened. In that way, we have an immense possibility of providing productive capital expenditure which can help to restore equilibrium between the various producing forces. We could is the same way, through trade facilities, direct money into the reorganisation of those businesses which are capable of expansion and improving the competitive power of those industries where there may necessarily have to be some contraction in view of other world forces. There, at least, their competitive power can be increased by reorganisation with help of capital guaranteed by the Government. Finally, in spite of the hon. Member opposite, who says that in this island there is nothing more to be done to develop the estate—
Mr. D. MASON: I did not say that.
Mr. MACMILLAN; The hon. Member said there was little more to be done—we have such splendid roads, and so on. Is anyone, satisfied with the condition in which the people live? Is there not £200,000,000 which can be spent upon the clearing of slums and the building of houses to be let to the working-class people at rents that they can afford to pay? There are tremendous fields for expenditure in this direction, expenditure which will combine two objects, first to raise the price level, and secondly to readapt the country with a view to a new production balance which would prevent us falling into a fresh disequilibrium after the prices had been raised. I am not advocating an irresponsible inflation, a sort of idea that you can inflate and

1295
trust to luck what happens. I think that perhaps the Government are unduly modest. Perhaps they have not realised how successful has been the first 18 months of salvage. We have got hold of the ship. It is under control. The fires have been put out, and we can now go out to sea. The whole object of the sacrifices which we have had to make during those 18 months and of the policy we have developed is that we may be able to exploit it. Now is the time to exploit it. It is the happy fortune of the present Government that they are able to combine what can be supported by arguments and reason with what also is desirable on humane and moral grounds. It is the happy feature of this policy that it can be supported both from the heart and from the head. The Government have, it seems to me, by the first stage of their policy, made England safe for spending. It is now possible to build upon the foundations which, partly by good fortune, it is true, and partly by good management, have now been laid. I think that they may also have the good fortune which is not always given to an administration, that if they will go forward boldly now the results may come in the lifetime of this Parliament and they may be able to do what it is not always given to Governments to do, to reap where they have sown.
10.28 p.m.
The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The Debate has called out so many interesting speeches from different points of view that I should have wished that it had been possible to devote the whole day instead of only half a day to this question. I think that, as there is only a short time left, it will perhaps be in accordance with the desire of the House that I should make a few observations upon what we have heard. There is before us a Motion and on the Paper there are two Amendments which have, however, not been called. Nevertheless, we have had speeches from those who had intended to move those two Amendments and from those speeches we have been able to judge what was in their minds. Perhaps, therefore, it may be convenient if I say a few words upon the Amendments before I proceed to deal with the Motion of my hon. Friend. As
1296
to the speech of my hon. Friend the Member for East Edinburgh (Mr. D. Mason), I wondered whether he had purposely left out the date of the restoration of the Gold Standard to which he intends to devote his remaining years. But with his usual frankness he has not shirked that question, and he has made it clear that, in his opinion, the time has come when we should at once return to the Gold Standard whatever anybody else does. I think that my hon. Friend has not only the reputation of never being convinced by anybody but also of never convincing anybody else. He is probably the only Member in this House, and I am not sure whether he is not the only man in the country, who holds that view. He not only desires us to go back to the Gold Standard, but he wishes us to use all our resources to raise the exchange value of the R. It was not astonishing that my hon. and gallant Friend the Member for South Leicester (Captain Waterhouse) took objection to that view and intimated that it would be a disastrous thing for industry if the exchange value of the £ were again to rise. The hon. Member says: "If it is so good to keep the value of the £ down, why not bring the value down to 2s.?" When my hon. Friend goes to a doctor and the doctor prescribes for him one tablespoonful of medicine three times a day, does he say that if one tablespoonful is good, why not take three? Or does he drink the whole bottle at once? Does it not occur to him that there may be a point between the two extremities where the value of the £ may be such as it is possible to maintain without injury to our industry, and perhaps with some benefit to it 9 I submit that to him as a new idea, and perhaps that would be the best idea for him to follow.
Mr. MASON: It has not benefited industry.
Mr. CHAMBERLAINMy hon. Friend says that it has not benefited industry, but, if he will take the opinion of industrialists, and they ought to know, they will tell him that they have benefited very considerably, very definitely, from the fact that the £ has been depreciated in value. Some very interesting remarks were made by my hon. Friend the Member for Bolton (Mr. Entwistle) on the subject of the Gold Standard and also on

1297
the subject of the so-called sterling area. In that respect, I find myself very much in agreement with him. The observations that he made about the sterling area apply just as much to the Empire as they do to foreign countries. When my right hon. Friend the Member for Sparkbrook (Mr. Amery) said that we missed a great opportunity at Ottawa to devise and to establish an Imperial monetary system as well as an Imperial economic system, meaning the linking up of the currencies of the Dominions to sterling, I do not think he faced the immediate difficulty which, must arise in such an event when the Dominions would have to grant to us the power of fixing the rate of sterling, which they would have to accept without having any control over the rate. What would suit us at a particular moment would not necessarily suit the Dominions. Therefore, I assure my right hon. Friend that the suggestion he made, attractive though it might seem on paper, when it comes to a matter of practice is not within the range of practical politics.
I will devote a few moments to the other Amendment, which begins with the proposition that:
"This House is of opinion that any movement to raise wholesale prices cannot increase the effective demand by the working classes in this country."
If the hon. Member who supports that Amendment had used the words "will not" increase the effective demand by the working classes in this country, that would have been an expression of opinion which would have been at least arguable, but when he says that it "cannot" increase the effective demand, he is holding out a proposition which is demonstrably untenable.
Mr. LEONARD: I intended to have introduced the two words "of itself" into that Amendment, after the word "cannot."
Mr. CHAMBERLAIN: I am not sure that even then it is an arguable proposition; and for this reason. We have had from a number of hon. Members to-night illustrations of the effect of the fall in wholesale prices which has taken place. It has been catastrophic in character. Wholesale prices, since October, 1929, have diminished by about one-third, and in the case of raw materials the fall has been 50 per cent. or 60 per cent. That has practically destroyed the pur-
1298
chasing power of quite a number of countries. It has not only made it extremely difficult for debtors to meet their obligations and raised serious obstacles to the transfer of currency from one country to another, but it has made business unprofitable and thrown large numbers of people out of work. And the countries which produce primary products, foodstuffs and the like, have suffered the most, because a characteristic of the fall in prices is that it is accompanied by considerable dispersion; that is to say, that the fall has not been uniform, it has been much greater in primary products than the fall in manufactured articles, and the fall in wholesale prices has been much greater than the fall in retail prices.
What has been the effect on this country? The most direct effect is that countries have not been able to purchase the goods which this country produces and desires to sell to them. The result of a rise in prices to all the countries that produce these primary natural products would mean that their profits, their power of purchasing goods from other countries, would increase; there would be an increased demand for goods from this country which would increase employment and help wages to rise. The hon. Member for St. Rollox (Mr. Leonard) gave the net fall in wages in recent years in hundreds of thousands of pounds per week, very striking figures, although he would have been more illuminating if he had given us the percentage. But that has taken place during the period of a fall in prices. Has it occurred to the hon. Member that there may be some connection between the two? Has it not occurred to him that if you want to stop the fall in wages the way to do it is to enable business to be carried on at a profit. You cannot take more out of an industry than there is in it; and if the industry is producing and selling at a loss then, of course, it follows inevitably, sooner or later, that wages must come down.
Let me come to the Motion. It urges the Government, without waiting for an international consideration of gold prices, to give immediate effect to a definite and wholehearted policy of raising sterling prices. When I read the Motion I seemed to recollect that it was not the first time my hon. Friend had addressed himself to this subject. I seemed to recollect his

1299
having spoken upon it during the passage of the Finance Bill in May, 1932, and on looking up the OFFICIAL REPORT I found that that was so. I also found that my hon. Friend at that time asserted, as he has done to-day, that the great need is to raise wholesale prices; that it would never do to wait for an international conference but that this Government must take the measures which are in their power to raise sterling prices irrespective of gold prices. My hon. Friend at that time knew exactly how to do it. He told us. He said that we must provide abundant and cheap money and plentiful credit. "Will they raise prices?" he asked. "Yes, they will," he said. What has happened since? My hon. Friend has no doubt observed that the conditions for which he asked at that time have since been fulfilled but that prices have not gone up, and that is no doubt the explanation of his having come down to-day with a new proposal, different from that which he made previously.
Mr. HAMMERSLEY: If it was anticipated at that time that an increase in the volume of available credit would have the effect of a rise in prices it was on the assumption that trade would be given facilities, and that in fact the bank deposits would be used by the public. It is a fact, of course, that that expectation has not been fulfilled in practice, and that the money is lying idle in the banks, but I think it was a reasonable expectation at the time.
Mr. CHAMBERLAIN: I do not want to criticise my hon. Friend. That may have been a qualification at the time, and I only draw attention to the facts because the hon. Member was certain at the time that his remedy was one which would effect the purpose. He was just a little critical of the Chancellor of the Exchequer who had said that you could not by monetary factors alone expect to raise prices. My hon. Friend agrees now, I think, that you cannot by monetary factors alone expect to get prices up. I have some figures here. I do not know whether it is worth while to give them to the House. Perhaps they are interesting to show what has happened since the day when my hon. Friend made his speech. At the time the Bank Rate was 3 per cent. Two days afterwards, no
1300
doubt in consequence of the observations of my hon. Friend, it was 2½ per cent., and on 30th June it came down to 2 per cent., at which it has remained ever since. The Treasury Bill rate was £1 17s. 2d. and it is now 11s. 4d., and of course the three months and day-to-day figures are reduced in proportion.
With regard to the exchange, the pound was then at 3.68 dollars or 93½ francs. At the moment we cannot say what it is in dollars, but it is worth about 88 francs. So that the exchange value of the pound has come down very considerably. Then my hon. Friend complained that we held to a deflationary policy, and that it had been shown by a reduction in the joint stock bank deposits. It is true that the average of those deposits during 1931 was £1,761 millions, and that on the date on which he spoke, or about then, they were £1,699 millions, a difference of £62,000,000. But they are now £1,982 millions. They have gone up by £283,000,000. Still they have not raised prices. Take another figure which is generally considered relevant. The bankers' deposits in the Bank of England at that time were £76,000,000, and they are now over £100,000,000. That all shows, of course, as I say, that you cannot expect by monetary factors alone to raise prices. But I think it would be a great mistake to suppose that the monetary factor has nothing to do with it.
As has been said by more than one hon. Member, wholesale sterling prices have remained remarkably steady, and that is the more striking if you compare them with what has been happening in those countries which are still on the Gold Standard. In the United States prices are down by about 20 per cent., in France, 12 per cent., in Italy, 12 per cent. and in Germany, over 16 per cent. Does not that show that here we are in the presence of world forces, forces not operating here only, but over all the world, and, that, by some means or other, and as I think largely by the monetary policy which we have pursued, we are countering the effect of these world forces so far as sterling prices are concerned? If we have not raised sterling prices we have at any rate prevented them falling. I was rather surprised to hear my right hon. Friend the Member for Sparkbrook

1301
(Mr. Amery) allude to a speech which I made on 16th February and observe that that speech was a tremendous advance on something which I had said at Ottawa and that if I had made that speech at Ottawa, it would have made all the difference there. I wonder whether he remembers what I did say at Ottawa. I have looked it up and it seems to me difficult to find any difference between what I said at Ottawa and what I said on 16th February. I said at Ottawa:
" His Majesty's Government desire to see wholesale sterling prices rise and the best condition for that would be a rise in gold prices."
What I said on 16th February was:
" We must raise gold prices if we can and, in any case, we must raise sterling prices."—[OFFICIAL REPORT, 16th February, 1933; col. 1223, Vol. 274.]
Frankly, I see no difference whatever between those two statements, and I cannot understand what my right hon. Friend reads into the second statement, which he describes as a great advance on the first one, and one which if it had been made at Ottawa would have changed the whole course of events.
Mr. AMERY: In his statement at Ottawa after referring to gold prices, my right hon. Friend went on to say that that limited very definitely the possibility of anything being done in regard to sterling. The whole inclination of his statement then was, "We could do comparatively little with sterling unless gold prices were raised." On 16th February the inclination of his statement seemed to be quite definitely in the other sense. "Do what you can with gold prices, but in any case we are going ahead with sterling." It seems to me that there is a substantial difference and that it would have made a great deal of difference at Ottawa.
Mr. J. JONES: Can anyone join in this row?
Mr. CHAMBERLAIN: My right hon. Friend will remember that what I did say was that the absence of a rise in gold prices obviously imposed a limitation on what could be done with sterling, but I did not say that unless gold prices rose you could do nothing with sterling. I said that there was a connection between the two and I think that view is accepted by a great number of authorities on the subject, including the right hon. Gentle-
1302
man the Member for Epping (Mr. Churchill), who laid great stress upon that in a speech which he made about the same time as the speech which I made. I think it will be agreed that there are other factors which have to be taken into consideration in thinking how we can raise sterling prices. I agree with those who have said that it is not enough to have plenty of money available at cheap rates—that you must, in addition, have confidence.
The Mover of the Motion was, I think, correct in saying that that confidence had to be double sided, that is, the borrower must have confidence that he can use the money profitably and the lender must have confidence that the security which he is given offers a reasonable propect. How is that confidence to be increased? There again, it seems to me, you cannot separate conditions in this country from the conditions in the world as a whole. As long as the world is in a disturbed condition when no one knows what political changes are likely to take place, or in what financial difficulties other countries may find themselves involved, you cannot expect that international trade is going to resume its former volume. We ought always to remember that in this country we have been, in the past, a great exporting nation. We have a large number of our people who earn their living by making goods and selling them to foreign countries. In the last few years our foreign trade has shrunk until it is half of what it was. The idea that we can replace what we have lost in foreign trade by any artificial stimulus, applied in this country, appears to me one doomed to disappointment.
It has been suggested that we could increase our export trade by subsidising selected industries. An hon. Member desired the particular trade he represented to be favoured. I dare say other hon. Members would be able to supplement his suggestions with other ideas. I believe one of my hon. Friends wanted to subsidise the motor trade. If you are to subsidise not only the old industries, but the new ones like the motor industry, I do not know where you are going to stop. Perhaps it would be sufficient if I said that if you are going to use the taxpayers' money in order to subsidise a selected industry, on the ground that

1303
there is unlimited demand for the product of that industry at the right price, can you be quite certain that other countries would accept the position without taking any action to counteract what you are doing? There is the question of the cotton and textile industry, in which our great competitor is Japan. Japan has depreciated her currency from 2s. to 1s. 2d., which is far greater than the depreciation in the pound. A very considerable subsidy would be needed to outweigh depreciation of that extent.
I think the matter would not be allowed to rest there. Other hon. Members, and particularly the hon. Member who last addressed the House, have said that the Government should now use their credit to start a new programme to stimulate industry, by the commencement of public work or the encouragement of private enterprise where this stimulus is needed to give the necessary start. That is the policy of the Government. That is the policy we have repeatedly described to the House as one which we were ourselves pursuing. But I do think it is necessary to say to the House very earnestly that hon. Members must not put too great reliance upon ideas of that kind. They must not imagine that the number of particular schemes which would come under their own description of schemes suitable for the purpose is unlimited, or that they are of such magnitude that they could be relied upon to raise prices or encourage the rest of industry to follow our example. What is the greatest national scheme that has been carried through in the last decade? I suppose anybody would say the establishment of the grid scheme. The grid scheme has cost £27,000,000 and is now approaching a conclusion. Can anybody say that it has had the effect of starting a general movement in industry. No. It has kept a number of factories in work which perhaps would not have been in work without it, and I believe that ultimately it will be a great asset to the country. But can anybody search round and show me half-a-dozen schemes which can compare in size, in volume, or in value with the establishment of the grid?
They all go round and round saying, "spend more money on housing, on slum clearance; spend money on the Cunarder, spend money on this, that, and the other." Everyone of these things is
1304
either being done or is being examined with a view to seeing whether it ought to be done by the Government, and if it comes within the description which everybody agrees should be applied to it, it will be done. But it would be a mistake to suppose that you can rely upon work of that kind, when you have gone through all your schemes, being of sufficient value to make a real, appreciable, and perceptible difference in this particular problem. No. It is a hard saying, but it is necessary to say again what I firmly believe in my own mind. You cannot expect that this country can attain prosperity while all the rest of the world is depressed.
Therefore, in spite of my right hon. Friend's objections to international conferences, we have got to have international conferences. We have got to try to persuade other countries to act with us in removing the obstacles to the restoration of international trade. I do not myself despair of obtaining a considerable measure of agreement, because I see that the more difficult the situation becomes, the more desperate the position of other countries grows, the more likely they are to be ready to consider any scheme which you may put up to them which will give some reasonable prospect of relief. The matters which are set out in the annotated agenda of the World Economic Conference cover, I think, most of the problems which have to be solved before we can expect to recover the prosperity of the world. There are some of them on which, no doubt, different countries have in the past held very different views, but I think I begin to see at least some approach to a greater approximation of views than has existed in the past, and until at any rate we get together, until we can exchange our observations and our views across the table, I think it is altogether too soon to despair and to say that these differences are so wide or so deep that it is inconceivable that they will be bridged.
To my mind, that would be throwing up the sponge a great deal sooner than it is necessary to do. While the Government will certainly spare no effort in doing all that it is in the power of the Government to do to stimulate trade and to raise sterling prices, yet at the same time we are not going to disguise from ourselves that the greater objective which

1305
lies before us is in the direction of international co-operation. For that purpose too we shall take every opportunity which presents itself to us to get into agreement with other nations.
Resolved,
" That this House welcomes the Government's declared intention to raise wholesale prices, gold prices if possible, but in any case sterling prices, and urges the Government, without waiting for the international consideration of gold prices, to give immediate effect to a definite and wholehearted policy of raising sterling prices."
Question put
The House divided: Ayes 128; Noes, 35.

Division No. 76.]

AYES.

[11.0 p.m.

Adams, Samuel Vyvyan T. (Leads, W.)

Haslam, Sir John (Bolton)

Ramsay, T. B. W. (Western Isles)

Baldwin, Fit. Hon. Stanley

Hore-Bellsha, Leslie

Ramsbotham, Herwald

Baldwin-Webb, Colonel J.

Horsbrugh, Florence

Ramsden, Sir Eugene

Barclay-Harvey, C. M.

Hudson, Capt. A. U. M.(Hackney, N.)

Reed, Arthur C. (Exeter)

Beaumont, Hon. R.E.B. (Portsm'th.C.)

Hume, Sir George Hop wood

Reid, James S. C. (Stirling)

Bird, Ernest Roy (Yorks., skipton)

Hunter, Dr. Joseph (Dumfries)

Ropner, Colonel L.

Boothby, Robert John Graham

Jamleson, Douglas

Rosbotham, Sir Samuel

Borodale, Viscount

Joel, Dudley J. Barnato

Ross, Ronald D.

Boulton, w. w.

Kerr, Lieut.-Col. Charles (Montrose)

Runge, Norah Cecil

Bowyer, Capt. Sir George E. W.

Kerr, Hamilton W.

Rutherford, John (Edmonton)

Broadbent, Colonel John

Law, Sir Alfred

Salt, Edward W.

Brown, Ernest (Leith)

Law, Richard K. (Hull, S.W.I

Sanderson, Sir Frank Barnard

Browne, Captain A. C.

Leckle, J. A.

Savery, Samuel Servington

Buchan-Hepburn, P. G. T.

Lindsay, Noel Ker

Shakespeare, Geoffrey H.

Burnett, John George

Liewellin, Major John J.

Shaw, Helen B. (Lanark, Bothwell)

Campbell, Vice-Admiral G. (Burnley)

Lloyd, Geoffrey

Skelton, Archibald Noel

Cazalet, Thelma (Islington, E.)

Lockwood, John C. (Hackney, C.)

Smith, Bracewell (Dulwich)

Cazalet, Capt. V. A. (Chippenham)

Lyons, Abraham Montagu

Sotheron-Estcourt, Captain T. E.

Chamberlain, Rt. Hon. N. (Edgbaston)

Mabane, Will Ian-

Southby, Commander Archibald R. J.

Chapman, Col. R. (Houghton-le-Spring)

Mac Andrew, Lieut.-Col. C. G.(Partick)

Stevenson, James

Clayton, Dr. George C.

McKie, John Hamilton

Stones, James

Collins, Rt. Hon. Sir Godfrey

McLean, Dr. W. H. (Tradeston)

Storey, Samuel

Colville. Lieut.-Colonel J.

Macmillan, Maurice Harold

Stourton, Hon. John J.

Conant, R. J. E.

Makins, Brigadier-General Ernest

Strauss, Edward A.

Cook, Thomas A.

Margesson, Capt. Rt. Hon. H. D. R.

Strickland, Captain W. F.

Cruddas, Lieut.-Colonel Bernard

Martin, Thomas B.

Stuart, Hon. J. (Moray and Nairn)

Culverwell, Cyril Tom

Mayhew, Lieut.-Colonel John

Sugden, Sir Wilfrid Hart

Davies, Maj. Geo. F.(Somerset. Yeovil)

Merriman, Sir F. Boyd

Thomas, James P. L. (Hereford)

Duncan, James A. L. (Kensington, N.)

Mills, Major J. D. (New Forest)

Thompson, Luke

Dunglass, Lord

Mitchell, Harold P.(Br'tf'd & Chisw'k)

Wallace, Captain D. E. (Hornsey)

Elmley, Viscount

Mitcheson, G. G.

Ward, Lt.-Col. Sir A. L. (Hull)

Entwistle, Cyril Fullard

Moore, Lt.-Col. Thomas C. R. (Ayr)

Wardlaw-Milne, Sir John S.

Erskine, Lord (Weston-super-Mare)

Morris-Jones, Dr. J. H. (Denbigh)

Warrender, Sir Victor A. G.

Ford, Sir Patrick J.

Morrison, William Shepherd

Waterhouse, Captain Charles

Fremantle, Sir Francis

Nail-Cain, Han. Ronald

Wedderburn, Henry James Scrymgeour-

Ganzonl, Sir John

Nation, Brigadier-General J. J. H

Whiteside, Borras Noel H.

Gower, Sir Robert

Nicholson, Godfrey (Morpeth)

Williams, Herbert G. (Croydon, S.)

Graham, Sir F. Fergus (C'mb'rl'd, N.)

O'Donovan, Or. William James

Wilson, Clyde T. (West Toxteth)

Graves, Marjorie

Oman, Sir Charles William C.

Windsor-Clive, Lieut.-Colonel George

Gunston, Captain D. W.

Palmer, Francis Noel

Wise, Alfred R.

Guy, J. C. Morrison

Percy, Lord Eustace

Hacking, Rt. Hon. Douglas H.

Peto, Geoffrey K.(W'verh'pt'n, Bilston)

TELLERS FOR THE AYES.—

Hanley, Dennis A.

Power, Sir John Cecil

Mr. Amery and Mr. Hammersley.

Harvey, Major S. E. (Devon, Totnes)

Procter, Major Hnry Adam

NOES.

Adams, D. M. (Poplar, South)

Hall, F. (York, W.R., Normanton)

McGovern, John

Attlee, Clement Richard

Hall, George H. (Merthyr Tydvll)

McKeag, William

Batey, Joseph

Hicks, Ernest George

Maclean, Nell (Glasgow, Govan)

Cape, Thomas

Hirst, George Henry

Mason, David M. (Edinburgh, E.)

Cripps, Sir Stafford

Jones, Henry Haydn (Merioneth)

Maxton, James

Daggar, George

Jones, J. J. (West Ham, Silvertown)

Parkinson, John Allen

Davies, David L. (Pontypridd)

Kirkwood, David

Price, Gabriel

Davies, Rhys John (Westhoughton)

Lansbury, Rt. Hon. George

Williams, Edward John (Ogmora)

Edwards, Charles

Lawson. John James

Williams, Thomas (York, Don Valley)

Evans, David Owen (Cardigan)

Leonard, William

Evans, R. T. (Carmarthen)

Logan, David Gilbert

TELLERS FOR THE NOES —

Grentell, David Rees (Glamorgan)

Lunn, William

Mr. Tinker and Mr. Groves.

Grundy, Thomas W.

McEntee, Valentine L.

CONSOLIDATION BILLS.
Resolved,
" That so much of the Lords Message (7th March) as relates to Consolidation Bills be now considered."—[Sir Frederick Thomson.]
So much of the Lords Message considered accordingly.
Ordered,
" That a Select Committee of six Members be appointed to join with a Committee appointed by the Lords to consider all Consolidation Bills in the present Session."
Message to the Lords to acquaint them therewith.
Mr. Entwistle, Mr. Fielden, Mr. Janner, Major 'Milner, Mr. Robert Smith, and Mr. Ross Taylor nominated Members of the Committee.
Ordered,
" That the Committee have power to send for persons, papers and records."
Ordered,
" That three be the quorum."—[Sir F. Thomson.]So much of the Lords Message considered accordingly.
The remaining Orders were read, and postponed.

OATS (PRICES, SCOTLAND).
Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]
11.8 p.m.
Mr. BOOTHBY: I make no apology for raising, briefly, the question of the price of oats in so far as it applies to Scotland. Before I say anything else, perhaps I may be permitted to comment upon the somewhat remarkable fact that the official Labour opposition have just thought fit to record a vote against the desirability of raising the price of wholesale commodities for the benefit of the primary producers of this country.
Mr. KIRKWOOD: And did so deliberately.
Mr. BOOTHBY: My hon. Friend may have done so deliberately, but I do not think he will get many of the farmers in Scotland to share his views. The reason I am raising this question to-night is that the other day the President of the Board of Trade admitted, in answer to a question, that the wholesale price of German oats as quoted in this country was very nearly half the wholesale price of oats marketed in Germany itself. When I put a further question to him upon that, his answer was:
" I have no power to prohibit or control the importation of oats into this country. As regards the question of my hon. Friend the Member for Aberdeen, East (Mr. Boothby), he was informed in answer to a question on the 22nd February that the
1308
oats imported in 1932, showed as consigned from Germany, were not of German origin." —[OFFICIAL REPORT, 28th February, 1933; col. 161, Vol. 275.]
I would like to ask the right hon. Gentleman what difference it makes to the Scottish farmer whether the oats sent from Germany to this country and marketed at a wholesale price of something like half the price of those oats in Germany, were actually grown in Germany or not. I would further like to ask him for the details of the treaty which prohibits or prevents him and the Government from taking steps to control or to regulate the importation of oats into this country. We have just been presented with a Bill by the Minister of Agriculture, and under the terms of that Bill the Minister takes power to control or regulate the importation of foodstuffs and of agricultural products into this country except in so far as he is prevented from doing so by existing commercial treaties with foreign countries. I ask the right hon. Gentleman what good he thinks that Bill of the Minister of Agriculture will do to Scottish farmers if it can be plausibly represented by the Government that we are prevented, by those very foreign treaties to which the Bill specifically refers, from putting the Clauses of the Bill into operation in the one or two pressing cases which, we all know, are the only cases in which substantial benefit can be derived by the Scottish agricultural community? The export of oat products to this country is known and admitted by the Government to be State-aided by foreign countries.
The first question that I want to put to the right hon. Gentleman is, what steps have the Government taken to counteract that known and admitted fact that oat products are actually State-aided by the Governments of Europe, and are imported into this country under those conditions? In regard to the export of oats, I have obtained an admission from the Government that the wholesale price in this country is only about half the wholesale price in Germany. I would ask the right hon. Gentleman if his attention has been drawn to a statement in the market news of Hamburg that it is the intention of the German Government deliberately to subsidise the export of oats as well as of oat products at the end of this month?

1309
I do not know whether there is anything in that, but I ask the right hon. Gentleman whether he knows anything about it, and if so, if he proposes to take particular action in the matter? All we know is that during last January, 18,000 cwts. of oats were imported from Germany, as against none in January of last year.
The Secretary of State and the Under-Secretary of State know perfectly well the position of the Scottish farmer at the present. Taking it all over, he is an arable stock farmer who depends for his existence upon beef and oats. Unless he can get a reasonable price for those two commodities, he will be gradually, steadily and remorsely forced out of existence. Those two commodities are the basis of Scottish agriculture. This House has brought particular and special assistance to the English farmer in respect of wheat and beet. In the North of Scotland, at any rate, neither of these products can be produced with any reasonable expectation of a profit. We got in at the last election on pledges to do something to assist the Scottish farmer as such. My right hon. Friend knows as well as we all know that these two commodities are the basis of Scottish agriculture. What steps does he propose to take to implement the pledges that we gave at the last election so far as Scotland is concerned?
It is no exaggeration to say that the whole of the North of Scotland is seething with indignation, especially as a result of the very cavalier replies which have been given on this subject by the President of the Board of Trade, who certainly gave the House the impression that he not only proposed to do nothing, but did not want to do anything in regard to this vital question. I do not wonder at the feeling of Scottish farmers on the matter. The Government have been in supreme power for 15 months. I would ask the right hon. Gentleman what has been done during that time for Scottish agriculture as such? I have not been able to see any results—
The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Skelton): Potatoes.
Mr. BOOTHBY: We heard a great deal at the last election, and we have heard a great deal ever since, about these foreign trade agreements which
1310
were to be so beneficial to agriculture and all other industries in this country, especially as regards Europe. We were to use the new weapon of the tariff to force our way into these European markets; we were to use it as a bargaining weapon to obtain reductions in our favour, and also to obtain reciprocal trading agreements which would be of advantage to both sides. Precious few of those agreements have been arrived at up to date. The patience of Scotland is not unlimited, and, unless something is done for Scottish agriculture—which means oats and livestock—and done fairly soon, Scottish agriculture will enter into a decline, and no one can say when it will begin to fall out of that decline. If that is the case, then the prognostication of the Chancellor of the Exchequer that we shall have at least 10 years of the existing unemployment will prove to be true indeed.
11.18 p.m.
Mr. JAMES STUART: I desire to support the plea that my hon. Friend has put forward, particularly in relation to oats. There are other pressing questions, but I desire to press this question particularly. I agree with my hon. Friend that the feeling at the present time in the North of Scotland is very strong, and I would ask the right hon. Gentleman either to say that he will definitely do something towards restricting or prohibiting foreign imports, or to give us the reason why it is impossible to take such steps. The present position is most unsatisfactory, and I assure the right hon. Gentleman that not only the Northern Members of the House, but farmers in Scotland, are extremely dissatisfied with the answers to questions which have been received in this House from the Government. I. would also assure him that I, at any rate, and Scottish farmers, will not be content with being put off in the sort of way in which we have been put off. The Under-Secretary just now, in an interjection, mentioned potatoes. It is true that a duty has been placed upon potatoes, but there again the price is not a remunerative one. It is a well known fact that we can produce in a normal year all the potatoes that we require, and we can also produce the oats that we require. I am now referring especially to oats, and, in view of that fact, it seems to me to be an astounding

1311
state of affairs that we should tolerate the importation of oats into this country by means of veiled subsidies. We are throwing people out of employment when we know that the main object of the Government is to endeavour to keep people in employment. I trust that the Secretary of State will give us a satisfactory answer, and that the Government will endeavour to do something about the matter.
11.20 p.m.
The SECRETARY of STATE for SCOTLAND (Sir Godfrey Collins): The two hon. Members who have spoken have very properly raised a, matter affecting their constituents—the tragic situation in which so many farmers find themselves through the low price of oats. If I am unable to give them the satisfaction that they desire it is not through any lack of sympathy with their cause. The House of Commons last year decided to set up an Import Duties Advisory Committee for the express purpose of considering such cases as my hon. Friends have put to me this evening. The Committee was set up by a large majority, said that its members could hear the case and receive written representations from different associations and bodies that are represented here and elsewhere: Their case has been before this committee for three months. It would be highly improper for me to make any comment upon whatever decision the committee may decide in its wisdom to bring into effect. I am sure that if my hon. Friends found themselves in my position they would fall back upon the very proper Parliamentary statement that this committee is to perform the very purpose which my hon. Friends want me to perform; to inquire into the case of the present price of oats and oat products. That must be my answer to them. The hon. Member for East Aberdeen (Mr. Boothby) thought fit to make, as I thought, some unfair comments upon the administrative action of the President of the Board of Trade. Since my right hon. Friend held that office, he has not been backward—I might put it much more strongly. He has used his knowledge and business experience to safeguard the interests, not only of farmers but manufacturers, and on the Floor of the House and in the
1312
rooms of the Board of Trade and at Ottawa for many weeks, he worked to safeguard the interests of this country. During the last few months, as my hon. Friend must know, he has been occupied weekly and daily and nightly in carrying through, we hope to success, these trade negotiations with other countries. It takes time for these negotiations to be carried to a successful conclusion.
My hon. Friend asked me whether it made any difference to Scottish farmers whether oats came here from Germany or elsewhere if they came at a low price. It makes no difference whatever from what country they come if they come at too low a, price. He went on to speak of the German export subsidy. The system at present in vogue in Germany differs in some degree from that which was in force a year or two ago. I understand that the system is that an exporter in Germany exporting, say, one cwt. of oat products is given a certificate entitling him to import an equivalent quantity of oats duty free. The certificate may be sold, and the probability is that if oats are being imported in quantities equivalent to the oat products exported, the certificate would have a value approximating to the amount of the duty on the cwt. of oats. I think, therefore, that the hon. Member will agree that the system presently in vogue is in the nature of a drawback. I say nothing of the new system to which the hon. Member referred, with regard to which I will have inquiries made at once in view of his having drawn my attention to it. Let me remind him, not on oats, but on some other products in which he has taken a very active and powerful interest, that the advantages of a drawback have been pressed by him upon the Government and upon successive Governments.
Mr. STUART: Does the right hon. Gentleman really think the Scottish farmer is interested in the German method of subsidising oats?
Sir G. COLLINS: If it was a bounty a new question would arise. I suggest to my hon. Friend that the present system is in fact not a bounty, but a drawback.
Mr. STUART: We do not mind what you call it.
Sir G. COLLINS: In negotiating these matters with other countries we must come down to the actual facts of the case. Let me remind my hon. Friend of the amount of oat products which have come to the shores of Great Britain frail Germany during the last two years. In 1931 the total quantity was 26,000 cwts. In 1932—the latest figures available to me, although the hon. Member mentioned the figures for January of this year, which are not yet in my possession—the figure was 87,000 cwts. Having regard to the vast consumption in this country—although I readily admit that a. certain quantity thrown on to the market at a particular place and at a particular moment does affect the price—we have to take the broad view as to the total quantity of oats coming into this country and must not be unduly influenced, however much we may sympathise with those who suffer at a particular moment, but must have regard to the total quantity
1314
coming in and shape our policy accordingly.
The request for an increased duty is presently before the Import Duties Advisory Committee, and if and when that committee comes to a decision a new situation arises, it will be highly improper for me to ask this Committee to act in one way or another, or even to act quickly. When this House entrusts these very arduous duties, these very difficult duties, to a body of men, the least this House can do is to extend to them that confidence which the House has always extended to those who take up a very unpleasant task and carry it out.
It being Half-past Eleven of the Clock, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
Adjourned at Half after Eleven o'Clock.