HC Deb 09 May 1933 vol 277 cc1475-505

Order for Second Reading read.

9.49 p.m.


I beg to move, "That the Bill be now read a Second time."

The Bill has one operative Clause and one distinct purpose. The operative Clause is to increase the Exchange Equalisation Account from 150,000,000 to £350,000,000, and the purpose, as defined in the principal Act, is to check undue fluctuations in the exchange value of sterling. To "check undue fluctuations in the exchange value of sterling" means that we should make it our objective to keep sterling in its natural commercial relationship with other currencies, undisturbed as far as possible by seasonal or speculative aberrations. How is the relationship of one currency to another determined? It is determined, of course, ultimately by the balance of payments, and no proposal which we could make to the House would interfere with that law. Under a Gold Standard the balance of payments is kept in equilibrium by the use of the bank rate. When the bank rate is raised an inflow of currency is encouraged, and when it is lowered lending abroad is stimulated. Up to 1931 we had a favourable balance of payments, and we, therefore, were able to keep our exchange in equilibrium. By the end of that year we had an unfavourable balance of payments, but neither the raising of the bank rate nor the borrowing of money abroad was able to stem the drain on our resources, a drain aggravated by causes which it is not now necessary to explain.

We left the Gold Standard, and having left the Gold Standard our currency, instead of being automatically regulated, had like water to find its own level, and like water also it was apt to swell above or sink below that level. That would have been a matter of great inconvenience to our traders, and my right hon. Friend the Chancellor of the Exchequer had to devise a new technique for dealing with these variations. He devised accordingly that new technique when he established the Exchange Equalisation Account. The purpose of the Account, as defined in the Act, is to check these undue fluctuations, and it has served this purpose during the past year, at any rate up to the time of the recent disturbances which were not domestic in character. The hon. and learned Member for Bristol East (Sir S. Cripps) does not think that we ought to use the Exchange Equalisation Account for the purpose I have defined. On the Committee stage of the Resolution he pressed upon my right hon. Friend to consider whether it would not be much wiser to try and anchor sterling to wholesale commodity prices rather than continue to anchor it to some particular exchange. Or alternatively he urged him to go back direct to gold itself.

I have said enough to show that my right hon. Friend's intention never was, and never could have been, to anchor sterling either to the franc or the dollar. My right hon. Friend never set out to repeal the natural law of commerce under which the balance of payments fundamentally regulates the relationship of one currency to another. But even if we take the hon. and learned Member's standard, the standard of commodity prices, we find that in this country commodity prices have been maintained stable. I have got out the figures for various periods of the year; I will only mention two; the period when the Exchange Equalisation Account came into operation and March of this year. Our wholesale price level was 97.7 in July, 1932, and it was 97.6 in March. There is no other industrial country in the world which has maintained a price level as stable as that. It may justly be claimed that the Account, together with my right hon. Friend's policy of cheap money and abundant credit, has provided us with this very satisfactory result, incomparable in any other country. Therefore, if the hon. and learned Gentleman for East Bristol wishes to be just, and wishes to judge the working of this Equalisation Fund by his own standard, he must admit that even under his direction it could not have been more satisfactorily worked.

The hon. and learned Gentleman, together with other hon. Members who spoke in the Debate, represented to the House that we were engaged upon a wild gamble in the exchanges, and that we were bound to lose money. Nothing could be further from the truth. The controllers of the Exchange Equalisation Fund do not set out at random to buy all the dollars and the francs on which they can lay their hands. The reverse is the case. It is, as my right hon. Friend explained, other people who are coming to this country to buy sterling. They want to find a temporary refuge for their capital. "Well," says the hon. and learned Gentleman, "Why don't you keep it out? Why don't you tax.it?" But he on reflection will appreciate that it is quite impossible to distinguish between money which comes here for legitimate commercial deposit, at any rate in the initial stages, and money which comes here for speculative purposes. If you were to endeavour to distinguish it, as the hon. and learned Gentleman desires, you would have to make the most elaborate and intricate inquiries, and each transaction would have to be certificated. Every country that has adopted that method of exchange control has suffered in its trade.

The hon. and learned Gentleman had another criticism to make of this Account. He says it ought to be used for the purpose of an expansionist policy at home. I would remind him that the Exchange Equalisatio:a Fund is designed to provide us with a liquid reserve whereby we can meet our obligations in respect of foreign short-term money. The fund acquires currency or currency worth in those countries which have sent short-term capital here. If we had used the fund to invest in houses, harbours, railways and docks, as the hon. and learned Gentleman suggested, we should hardly be in a position to offer buildings to those who wished to withdraw the money in this country, and satisfy them. I am sure the hon. and learned Gentleman will realise that it is our obligation to keep this money in a liquid form.

The hour is late, and I hope I have said enough to show that the fund has served its purpose during the past year. It has been appreciated not only by the traders of this country, but by the traders of other countries. It is important to emphasise that my right hon. Friend never had in mind the giving of an advantage to this country alone. The policy is national and international, and everyone dealing with this country derives benefit from it. It has maintained the exchanges fairly level during the past year, and if the House admits that it will not begrudge the increase. The scales have been held reasonably level. My right hon. Friend showed how suddenly one of the scales is liable to be overweighted, and it is for that reason that we ask for a counterweight of £.200,000,000. He gave to the House full particulars of how he reached that figure as a desirable total. If the House thinks that the fund has been worked satisfactorily, it will not, particularly at this juncture of events, deprive my right hon. Friend of the resources for which he asks.

10.0 p.m.


I do not propose to repeal; all the arguments that I put forward on the Committee stage of the Financial Resolution, but I would like, first, to answer one or two of the points that the Financial Secretary has put forward in criticism of what I then thought I said, because I think he has slightly misapprehended one or two of the matters of which he spoke. I never suggested that the foreign Exchange Equalisation Fund should be used for an expansionist policy in this country. What I did suggest was that if there was £200,000,000 of money looking for a home it would be better to find it one in an expansionist policy than in the foreign Exchange Equalisation Fund, that there was already sufficient there for the purpose for which the Chancellor of the Exchequer wanted it, and if there was a further £200,000,000 which it was desired to use, it would be better to use it for an expansionist purpose in this country itself.

The Financial Secretary has said that I ought to be satisfied because the fund has succeeded in keeping sterling level on wholesale commodity prices. I am very satisfied that sterling has been kept level. But the hon. Gentleman has also stated that sterling has been kept substantially level on exchange value. He will no doubt appreciate that the only reason why it has been kept level on wholesale commodity prices is that they do not happen to have fluctuated on the other exchange value. The hon. Member cannot say that he has managed to keep the fund level on the foreign exchange and also on commodity prices unless the foreign exchange has itself been kept level on wholesale commodity prices. It is the only way in which you can achieve the two objects. My criticism was that, whatever may happen in this particular year as regards wholesale commodity prices and sterling values, the aim of the fund should be to keep sterling level on wholesale commodity prices and not to keep it level on one or more particular exchange.

I have never quite appreciated how the Chancellor of the Exchequer's object can in fact be achieved, that is, merely to iron out day-to-day seasonal fluctuations, without having any effect upon the long-term tendencies of foreign exchange. Let me give an illustration. Suppose that tomorrow the franc exchange rises. The Bank of England immediately operates to keep it down. How can the Chancellor of the Exchequer tell whether that rise is the result of day-to-day fluctuation or is the beginning of some general move- ment which is the result of the balance of payments between this country and France? I suggest that the right hon. Gentleman is wholly incapable, and that everyone is incapable of telling which of those two tendencies is in fact operating upon the franc At the particular moment.

The history of the last week or so, as regards the franc exchange, shows very clearly that that is the case. According to the financial papers francs have been bought in very large quantities by the foreign Exchange Equalisation Fund in an attempt either to support the franc or to keep down the price of sterling, whichever you call it. For instance, in the "Statist" of 6th May I see the following, dealing with the exchange fluctuations of francs: The story of the exchange rates these past 14 days will offer to posterity a very vivid reflection of the repercussions of the American abandonment of gold. In general, it reveals a steady weakening of the dollar, a drift of capital to sterling from the Continent, followed by energetic measures on the part of smaller Continental central banks to defend their rates on Paris, equally energetic action on the part of the Bank of England to keep sterling down on Paris … That surely is a perfectly clear statement that the Bank of England, of course through the operations of the Exchange Equalisation Fund, was intentionally operating to keep down what would otherwise have been a tendency, whether speculative or long-term, and in keeping down the sterling rate on Paris it seems to me impossible to distinguish at a particular date as to whether in fact you are operating upon some long-term tendency, or upon some speculative tendency, or upon some short-term tendency.

There is another point as to which I should like some elucidation. When the hon. Member says the object of the fund is to check undue fluctuations in exchange, which I think are the words of the Act, what exchange value does he mean? At the present moment is it the exchange on dollars, the exchange on marks, or the exchange on francs? Is it, in other words, the exchange on those countries which are still based on gold, and is it, therefore, in effect an indirect attempt to stop the fluctuation of sterling on gold; or is it to be used in the future, now that the dollar is off the Gold Standard, to attempt to regulate the exchange on America, which, of course, is a completely different proposition, as the hon. Member will appreciate? I am sure the House would like to know, in view of those altered circumstances—last year it was assumed that it would be used on the dollar and franc exchange, both of which were on gold—when the hon. Member speaks about fluctuations in the exchange value of sterling, what exchange value he means. Is it the franc, or the dollar, or something else? Quite clearly it cannot be both the franc and the dollar.

The right hon. Gentleman the Chancellor of the Exchequer must have his mind upon one type of exchange f uctuation, and as far as one can see from the course of the last few weeks since America went off gold, the operations have been designed to keep the exchange value of francs constant, and it is obvious that that must be what is being carried out. That, of course, brings one into very great difficulties and liabilities to misunderstanding so far as the dollar exchange is concerned, and I ask the right hon. Gentleman whether, in view of the imminence of the World Economic Conference, and in view of the suggestion now for a Tariff Truce, it does not appear rather unwise to take this hasty action, to acquire this new economic weapon, which may be used unintentionally, or may operate, if I may put it in that, way, to start upon some form of competition between the gold value of the dollar and the pound.

In view of the fact that the right hon. Gentleman told us that for the mere ironing out of exchange the present fund was sufficient and did not require any reinforcement, would it not be wiser to allay the suspicions of America and of France that we are operating in an economic war, via the exchanges, preparatory to the World Economic Conference, and to hang this matter up—it cannot be a matter of very great urgency—so that all these suspicions, though quite ill-grounded, I have no doubt, from what the right hon. Gentleman said, at least can be disposed of and will not be there wihen the Conference meets. He will appreciate that unrealities are very often just as dangerous to conferences as are realities, and the suspicion has been raised in the financial Press, in America and elsewhere, that this is a weapon which is being hastily acquired in order that we may be well prepared to enter the Economic Conference upon this monetary problem.

Would it not therefore be wiser not to make use of this weapon now, even if he thinks he must have it eventually, and to let this matter at least stand over until after the Conference on the same basis that the tariff truce is apparently to allow any further activities of the Tariff Advisory Committee to be suspended until after the Conference? I make that suggestion because the right hon. Gentleman did say that the £150,000,000 already in the fund was sufficient for the day-to-day work, and that this extra sum was required for another purpose, namely, to deal partly with seasonal tendencies, the autumn and spring tendencies, and partly with this bad money which is apt to circulate and to come into this country. That is not likely to raise any acute difficulty until after the World Economic Conference, one imagines.

There is one other matter about which I should like to say a word or two. I understand, from what the Prime Minister said this afternoon, that we are to work upon lines analogous to those of the United States of America, and surely, if that is so, this money ought to be used, not for the purpose of equalising or stopping fluctuations in exchange, but for the same sort of purpose that the inflationary money is being used in America, that is to say, for the purpose of public expenditure, for placing in industry in some way or another by the Government, in order to lead to an internal inflation, and it ought not to be put into a foreign Exchange fund where it will not have any inflationary effect such as it is anticipated the American money will have and is intended to have.

As I appreciate the American action, it is intended primarily to have an internal inflationary effect. It may and will, of course, have an effect on the external trade of America, but that is not its primary purpose, which is to get money circulated in America, in the industries and among the consuming population of America; and Mr. Roosevelt has stated that it is an antecedent condition that there should be a rise in wages. That is a very important factor. He urged the other day that even before the inflation takes its effect, the manufacturers and others should give an immediate rise in wages in order to in- crease consuming power, and if our Government would do what they have been urged to do on many occasions, and now that Mr. Roosevelt has given them the lead for which, apparently, they have been waiting, having no lead to give themselves, they might use this money for the purpose of public works, social services, and so on, and at the same time take care to see that salaries, wages, and so on are all increased, bringing themselves into line with Mr. Roosevelt's action in America, and thereby bringing about what apparently they desire, namely, an inflationary policy throughout the world.

Whether that is ever going to do any good in the long run, apart from having some slight kick or reaction for the moment, is a matter which history may or may not show, depending upon whether such a step is taken. We do not believe that any of these devices are going to cure the present ills of unemployment, but if this money is to be raised, as it is, we suggest that it should not be used in a foreign Exchange Fund, to stabilise an exchange, but that it should be used in accordance with the American precedent, so that we may keep in step with America and may use the money for an expansionist and wage-raising policy.

10.15 p.m.


I am in exactly the same position as the hon. and learned Member for East Bristol (Sir S. Cripps). I also know nothing about high finance, but the Second Reading of this Bill brings us back to one or two first principles with regard to the House of Commons to which I would direct the attention of hon. Members. The Financial Secretary told us that three things had brought great benefit to the country, namely, the Exchange Equalisation Fund, cheap money and abundant credit. However true that may be, neither cheap money nor abundant credit have anything to do with the Bill. Then the Financial Secretary, in the form of a rhetorical question, suggested that if the House thought that the system set up last year had worked satisfactorily, we must give the Bill a Second Reading. That is begging the question. One of the things which the House is not in a position to know is whether the activities of the fund during the last 12 months have or have not been satisfactory. But if we judge it by a very simple question. the fund was set up to stabilise the exchange. Has it done so? No. Therefore, there is a direct negative to the question which the Financial Secretary put to us.

The general exchange situation to-day is not what it was when last year's Finance Bill was passed. Whether the effect of the Exchange Fund has been to make it a little more one wa), or a little more the other, is a matter for argument. The fact remains that it has not stabilised itself. But the Chancellor of the Exchequer said the fund has made a profit. It may have done so, but that is an entirely irrelevant consideration. It was not set up to make profits, but to stabilise exchanges. Suppose that a farmer set himself to stabilise his stock so as to win first prizes at all the county shows, but for some reason the stabilisation scheme did not work out and the bulls or the cows did not get first prizes but only seconds and thirds. He might turn round and say—on the analogy that gold is filthy lucre—"Yes, but we did make a bit of profit out of stable manure." Of course, it would be completely irrelevant, but it strikes me that it is just as irrelevant to say that this fund which was set up for quite a different purpose happens to have made some profit of an unknown amount—it may have been only Sufficient, however, for the Chancellor and the Financial Secretary to say that it was on the right side.

That is what has brought me to my feet. It is monstrous that the House of Commons should be asked to deal with any fund in this way. I admit that in these high financial matters I know nothing. Nor do the great majority of this House. Nor, I suspect, do some who sit above the Gangway. To put it in another way, suppose the Chancellor of the Exchequer or any Minister were to come down to the House, as they might very well do, and say they wanted to borrow £200,000,000 for housing. Would not this House at once begin to tack on every kind of condition? Would not hon. Gentlemen opposite have discussions about fixed baths and parlours, and would not there be questions as to what the local authorities auditing officers have to say about the matter? Would not the House want to be consulted at every stage? It may be that we all think in vast figures to-day, but to increase this fund from £150,000,000 to £350,000,000 is no light thing for the House of Commons to do, considering that at no stage of the proceedings has the House had a word to say in the matter. Last year the then Financial Secretary, possibly in a moment of Scottish expansion, told us that before the Finance Bill of the year was discussed: All these matters will be brought under review. At that time we can discuss the matter with advantage of the knowledge of nine months' working of the Account which will be open to all of us"— I do not know to whom it has been open, but not to all of us— not in a scrutiny of the books of the account but in the working of the exchange from day to day."—[OFFICIAL REPORT, 9th June, 1932; col. 2235, Vol. 266.] If we take it on that ground, and take the exchange on 9th June, 1932, and take it to-day, we find that there has not been any stabilisation, but that there has been an unknown profit. I understand from the speech which was made by the right hon. Gentleman the other day that of course there was no question of a big stabilisation. That, I thought, we understood last year, but the phrase this year was "ironing out." That was not the phrase last year. It is all very well ironing out, but how long do you iron for? [Laughter.] I am sorry that hon. Members think that that is funny, but it is very serious; it is the whole gist of the matter because the Financial Secretary says that it is very advantageous to traders to know that the fund is working for ironing purposes. Unless, however, they know that it is going to iron for a definite period ahead I do not see that it is going to be any use to them. They would like to know a month ahead if they could, but they cannot. The fund will not make any difference to them. As I see it from the experience of the last few months, and more. particularly of the last few weeks or days, these matters depend upon entirely different movements. They may be political reasons in one country or political reasons in another, but certainly not the existence of this vast sum at the disposal of some unknown advisers of the right hon. Gentleman.

Let the House remember that we do not even know who manipulates this fund. We have never been told that. When the United States went off gold at that opportune moment when the Prime Minister was on board ship and therefore without his knowing it, their action was surely for the time being sufficient to wreck any theory as to stabilising exchanges from the point of view of one country doing it. Surely the Prime Minister and the Government are abundantly right when they say that these matters must be dealt with internationally. That is the prime reason for the World Economic Conference. Of course, they are right about that; no sane man would deny it; but, because they are right about it, it does not follow that they are right in asking from this House a blind Vote of this vast loan for an unknown purpose in the meantime. Is it a sort of mass manoeuvre? Is it the G.H.Q. reserve for the Economic Conference? Are they going to throw it in at the last minute? Surely not. If they want an international roulette, let them have it and let the Chancellor be the chief croupier, and let them gamble in the Geological Museum as much as they like, but do not let them ask the House at this stage of the proceedings to give them this blank cheque when they refuse to give the House any kind of authority as to the way in which this money is. spent.

I press in the same way as I did last, year that if the Government feel, as I suppose they will—for I have no doubt they will have a large majority if they take it to a Division—I hat they must have-money, though some of us doubt it, I beg to them to try and think out some way-in which they can leave to this House some control in the ultimate as to what happens. Last year it was promised in reply to an Amendment of the hon. Gentleman the Member for Caerphilly (Mr, Morgan Jones); with which I was associated, in as definite a way as could be made, but nothing happened. There is no authority in this Ho-use, there is no Member who has any inkling as to how this fund has worked. I put it to Ministers on the Front Bench that it is the worst kind of precedent which they could establish to come to the House to ask for authority to borrow this vast sum of money -without any control of the public at all. Each of us here is a Member of Parliament representing the taxpayers—it is our prime functon—and they are just as much entitled as any of us to know how the Government spend money for which it asks authority from this House.

In this case £150,000,000 was asked for last year. A profit of unknown dimensions was made. Because there was a profit one would have thought that probably they would have had enough with which to carry on, but now they want more. We have had no distribution of any part of the profit and they want more money. If the House is willing to give it, for the reasons which the Chancellor of the Exchequer has expressed, I cannot stop it, but I do beg of the Government to take note that there are many hon. Members, both vocal and otherwise, who feel that the prime function of this House is, as always, to watch the interests of the taxpayers. Some system should be devised, which it is not beyond the ingenuity of the Chancellor of the Exchequer to devise if he sets his mind to it—anyone who could produce the formula he drew up for the Local Government Bill could certainly do it—by which some information could be vouch safed to the House and some kind of ultimate control still kept in the hands of hon. Members. For that reason I raise my voice, as I did last year, to beg of him to go very carefully in this unprecedented action he has again taken this year.

10.27 p.m.


Last year I was one of those who asked the Chancellor that some information concerning this fund should be put periodically before the House. I do not remember that on that occasion any adequate reason was given for refusing to do so. A quotation was read out from a speech made by the President of the Board of Trade in which it was suggested that if nine or 12 months after the event the state of the fund was revealed, speculators would still be able to take advantage of the position to operate in exchanges. I cannot conceive how the most clever speculator would be able to assist himself materially in operations in exchange by being made aware of the state of the fund—not even being told the details of the transactions—as it existed some nine or 12 months earlier. Personally, it has been a source of amazement to me that this House last year and again this year should pass legislation which enables £350,000,000 to go entirely outside its control without at the same time insisting on some provision which will ensure that from time to time it has an accurate account of what the state of the fund was at some definite period.

This Government is different from any other Government. It did not come into office bound by any particular policy, but with a free hand, and it is my view that we who support it, and were elected to support it, have on that account not a less responsibility but a much greater responsibility than otherwise we should have. Generally a member elected to support a Government knows exactly what it has been pledged to do; he knows what its policy is and the country knows what its policy is; and therefore one might say that to that extent the responsibility of an individual member is considerably lessened. That is not the case here. I realise that the Government have special reason to be aware of the fact, and that their supporters ought on all occasions to give them loyal support, but just on that account it is more necessary that they should give a willing ear to those who feel—especially as this opinion is largely shared—that they are doing something which is not wise and not in accordance with the ideas of many of their supporters with regard to proper procedure.

The situation of the Exchange Equalisation Fund to-day is materially different from last year, when we wero told that it was for ironing out inequalities in the exchange. That was a new term. I think that the fund has been successfully applied to that purpose. It is fairly easy to understand that it could be so applied, and one thing was that we knew what we had to iron out, and there Was no doubt about it. The Exchange Fund was to iron out, from day to day, the currencies which were fixed to a gold standard, and it was not necessary, as the hon. and learned Gentleman for East Bristol (Sir S. Cripps) says, to have any clear idea of what the exchange was going to do. The object of the fund was merely to prevent unduly large fluctuations and not to prevent fluctuations. On the other hand, I do not find anybody to-day who knows how the fund is going to be used and whether it is going to iron out against dollars or francs. I do not sug- gest that it is desirable that the Government should endeavour, even if they can, to give this information. We are living in a very critical period, and I have no doubt that the Government would not ask for £200,000,000 if they had not a good reason.

I should, however, have thought that there was an easier way of modifying the speculation in exchange. I have always been given to understand that all the speculation in exchange takes place. in forward exchange operations, and I should have thought that control of forward exchange operations would reduce speculation in exchange to a minimum. That would require a very much less sum. I put it to the Chancellor of the Exchequer that he should make a suggestion by which this House may retain some kind of control over this fund, and by which it should be informed from time to time how the fund stands. One might, it is possible, lose £50,000,000 or £100,000,000, or might make £50,000,000 or £100,000,000, and I for one should like to know. I think that would be better for everybody, in a world where most things have been totally unforeseen. The fact that America went off gold the other aay was a calamity in many respects. It would have been a less one if one had been able to foresee it more accurately. It is just as important for the good of trade and commerce in this country that we should have some idea of how things are going with this fund, even when they are not going well. It might be said that the Fund is to stabilise and help to bring about a great degree of confidence. I have never known any operations in the past which were secret that have ever added to confidence. So far as I know, the reason why the figures of the Bank of England are published periodically is that the publication of them is supposed to inspire confidence.

10.34 p.m.


I have listened to the last two speakers with admiration. I sympathise with and understand the criticisms that have been made from the benches upon which I have the honour to sit, but I cannot understand what justification there is for two hon. and presumably patriotic Members on that side stabbing the Government in the back at a serious time like this. Surely the hon. Members have realised that the country is at war, and that the only people who have the right to be unpatriotic are those on these benches; we have staked out that claim for ourselves. We have seen in the last 20 years the greatest war in the history of our time. We have also seen the greatest tariff war, and now we are seeing the greatest exchange war. I cannot understand the apparent unsophistication of my hon. Friends opposite. They must realise that it is impossible for the Chancellor of the Exchequer to disclose his plans. He cannot disclose his plans here without at the same time disclosing them to France and America. We are at war, and he is entitled to the greatest secrecy about this matter.


The hon. Member will recollect that in time of war commanders-in-chief always publish their dispatches about six or eight months after the battle.


The battle is still joined; the verdict has not been declared; the poor Chancellor of the Exchequer is not in a position to declare his plans. France, America and Great Britain are at the present time engaged in manoeuvring for position at the Economic Conference, and it is unfair for hon. Gentlemen who should be patriotically defending the National Government to embarrass them by asking them to disclose their plans beforehand. I think I am entitled to complain of such unpatriotic conduct.

The United States complained, when we went off the Gold Standard, that we did so, not because we were compelled to do so, but in order to try to stab their export trade. They complained that it was a part of our tactics to gain a larger share of so much of the world's market as was going to be divided up. The right hon. Gentleman the Member for Hillhead (Sir R. Horne) has on several occasions deplored the deflationary policy of the Government, because it has hit the producing interests in Great Britain. He is ostentatiously silent on this occasion, but he knows very well that the Chancellor of the Exchequer is now engaged in the opposite tactics, that he is now attempting to put a bounty on exports and a limitation on imports in order to try to secure for Great Britain as large a share of the world market as possible. What the Conservatives are complaining about I do not understand. They complained against the Prime Minister to-day. I heard mutters behind me, and mutters all around me, that the Prime Minister was not putting the tariff high enough to provide them with good bargaining powers at the Economic Conference. But the Prime Minister did not need to raise the tariff walls of Great Britain, for he has instructed the Chancellor of the Exchequer to engage in an exchange war for the same purpose. The increase of the Exchange Equalisation Account to £350,000,000 will be quite as effective for Great Britain's purposes as raising a tariff barrier, and, indeed, even more effective. The accumulation of gold in the Bank of England is the expression of the Chancellor of the Exchequer's refusal to take goods.

We have been informed by the Chancellor of the Exchequer that he wants the additional £200,000,000 because there is an enormous amount of bad money in the world and a great deal of that bad money is finding its way into Great Britain. We were informed that we had to go off the Gold Standard because we had too much bad money. We are now informed that it is because we are off the Gold Standard that we are having the bad money coming here. I am really in a great difficulty in understanding these mysteries. Every one, however, realises that the accumulation of gold which has been bought by the Bank of England to prevent the value of sterling rising is not equivalent to the amount of bad money supposed to be deposited upon short call in London. Even the Chancellor of the Exchequer, extravagant though his claims have been, would not suggest for a moment that the accumulations of gold in the Bank of England are equivalent to the amount of short-call money on the London money market or the amount of bad money. He knows very well that the poor Governor of the Bank of England has been compelled to buy gold. It is not safe to buy anything except goods. You cannot buy dollars. If you bought too many dollars you caught it in the neck when America went off gold. My hon. and learned Friend the Member for Bristol (Sir S. Cripps) has been pointing out that now we are engaged in a war with the franc. We are bound to fight the franc. It is the only currency left on gold. But we dare not speculate too much with the franc. What is the poor Governor of the Bank of England going to buy?

This fund is not being used for the purpose of ironing out day-to-day fluctuations in the value of sterling. It is being used as a new mode of economic war. It is being used against France and against America as a means of competing for the ever contracting world market. It is a manoeuvre for the Economic Conference. The hon. and gallant Gentleman shakes his head. He had an opportunity. Did he venture any theory at all as to what it is being used for? He suggested that it might still be used for ironing out the fluctuations in sterling, but he wanted to know for how long the ironing was going on. The ironing will go on until the Economic Conference is over. This is a very grave situation. Look at America? Why did America go off gold? America had £900,000,000 of gold. She could not meet all her outgoings in gold without disturbing her internal position. No one suggests that America could have met her internal currency by gold payments. She never had anything like an eighth of the gold necessary to meet her internal obligations. She did not require gold for internal purposes, but she had £900,000,000 when she went off the Gold Standard. Why? No one suggests that, if all the short-call money had been withdrawn from New York, it would have depleted the American gold reserve to anything like a perilous level. America went off gold because she had decided to inflate internally, and she could not risk inflating internally without running the risk of Great Britain dumping goods into the American market.

President Roosevelt armed himself for the Economic Conference by saying, "I propose to inflate my internal currency so as to wipe out the rentier and the moneylender who has crushed the economic life into paralysis, but I dare not run the risk of raising the price level in America while on the Gold Standard and encouraging the dumping of goods into the country. At the same time, I dare not put up the tariffs, because it would put America in a very foolish position at the Economic Conference. I will do the next best thing. I will go off gold, and by going off gold restrict the importation of goods into America." I do not see what complaints hon. Members have against the poor Chancellor of the Exchequer who is entitled to give Great Britain the same weapon with which President Roosevelt has armed America. We are at each other's throats like Kilkenny cats, and we all might as well have the same sharp claws.

I protest against the Chancellor of the Exchequer getting up in the House of Commons and saying that he does not want the Exchange Equalisation Account for carrying on an exchange war. For what purpose does he want it? He wants it for no other purpose. He knows that very well, and it is a lot of cant and hypocrisy to come to the House of Commons and suggest that he wants it for any other purpose. You are manoeuvring for position. I challenge the right hon. Gentleman and any right hon. or hon. Gentleman in the House to get up and point out that the Exchange Account is wanted for any purpose except for an economic war which is embittering national feeling and which is likely, in the course of the next two years, to bring the world to the verge of the greatest catastrophic outbreak humanity has ever seen. The suggestion is made that we might have an inflation policy in Great Britain. You cannot have an inflation policy in Great Britain without running the risk of having goods dumped into Great Britain. It was explained in the House with the greatest precision and cogency by the right hon. Member for Hillhead, by the Foreign Secretary, and by a large number of hon. and right hon. Gentlemen in my hearing, that the one great danger for this country, having gone off the Gold Standard, was to have a rise in internal prices. We had lost the sheet anchor, we had lost the linchpin, we had been cut loose from our moorings, and unless we guided the ship with the greatest possible care we should go on to the rocks. So we had to deflate. Deflation in Great Britain has been rendered necessary because we have ourselves gone off the Gold Standard. If we inflated in Great Britain the consequence would be to encourage dumping of goods into Great Britain. We dare not inflate at the moment because the Exchange Equalisation Account we can accumulate will not be large enough to prevent the dumping of goods into the country.

The suggestion has been made from all quarters of the House that the Chancellor of the Exchequer should embark upon a great construction scheme in Great Britain. There is considerable support for it. I would support it. But suppose he embarked upon a construction scheme of that description and there were rising internal prices as a consequence, the effect would he to encourage the importation of goods into Great Britain, and we should either have to put our tariff walls mountainously high to prevent it, or do our best to keep the value of sterling as low as possible in the world market, just as President Roosevelt is doing, in order to prevent the dumping of goods here. I am sure that hon. Members will see that we are in the inextricable difficulty that in Britain we cannot possibly inflate. Internal inflation, we are told by everybody, is absolutely necessary for the maintenance of the capitalist order and to wipe out all rentier claims, but we cannot accumulate an Exchange Equalisation Account of any size large enough to enable us to inflate in safety.

I suggest to the Chancellor of the Exchequer that the only safe thing for him to do is to go quietly on the road he is going at the moment. The poor man is in the more dreadful difficulty, and the only hope he has is that the road to the cemetery is longer than the road which America will have to travel, and that America will reach the graveyard before he does. You have no hope of ultimately escaping the cemetery, but you hope that your rivals will reach there before you do. I am, therefore, suggesting that if we are to have any reality at all in these Debates, we should discuss this from the point of view of what is the real intention of the Chancellor.

I will put some specific questions to the right hon. Gentleman. What is the cause of the continuous accumulation of gold by the Bank of England? If this accumulation is not the expression of the long-term policy of the Government, what is it? If it is the expression of that policy, what is that policy? Is it to get the value of sterling down below the point at which it is justified by the balance of payments, and, if so, what is it for? Is it intended at the international Economic Conference to arrive at a new parity with the dollar, and, I so, how is the parity to be arrived at? We have been told by the Prime Minister that at the World Economic Conference an attempt is to be made to arrive at a new gold parity. We are entitled to know at what point that gold parity is to be fixed. Do we understand that at the moment the accumulation of gold is designed to fix that gold parity at as favourable a position for Britain as possible?

I would not object to it—nobody does—but I do suggest to the House that if that is the case, there is no need to approach the Economic Conference in any other spirit than the spirit of gladiators armed to the teeth, providing themselves with, all the appurtenances of war. Is it to be a tourney or joust of armed knights, each one hoping to escape with the trophies of victory? If the Chancellor will state that frankly, we will accept it from him and that Britain is engaged in an exchange war, but, for heaven's sake, cut out the cant and hypocrisy that you are asking the House of Commons for anything at the present time except an addition of £200,000,000 to the war chest of Britain.

10.55 p.m.


I do not rise for the purpose of following in detail the paradoxes of the hon. Member who has just sat down. It is true that he has not played the part of a kind and genial Cassandra. He enjoys prophesying the imminent fall of the capitalist system and is prepared to play a part, any part, in its burial except that of mute. I rise only for the purpose of asking, or underlining, a question already asked, to which we are entitled to an answer from the Government, as to what really is the purpose of this fund. In what final form do they propose to administer it? It is suggested that there is a short-term purpose and a long-term purpose for a fund of this description. The short-term purpose, as the hon. and gallant Member for Gainsborough (Captain Crookshank) said, is to iron out the temporary difficulties and fluctuations in the rate of exchange. As regards that object of the fund, most hon. Members must wonder—of course, we have not the advantage of seeing the account—if it is true that considerable profits have already been made why such large additional amounts are required for this comparatively limited purpose. We all know the form of gambler who says:

"I have done very well, but I should like some more money with which to go on gambling." If it is really necessary to make this very substantial addition to the total amount involved in the fund, surely it must be that the long-term purpose is the more important part in the real object which the Government have in view.

I do not know whether the Chancellor of the Exchequer can tell us, but I take it that the long-term purpose is to prevent an undue rise in the value of sterling. I do not wish to raise any awkward difficulty, but I do feel that the House is entitled to some explanation as to the attitude of the Government, who are so cautious in their internal policy and so speculative in their exchange policy. When we ask for some quite small sums of money compared with this sum to be embarked in internal schemes, in development, in loan expenditure and the like, we have an attitude from the Government which is that of the cautious caretaker of the national funds. We have a rigid, oblique and austere Budget. We may not speculate in any direction, but when we come to this unaudited fund, then we have a very much more genial and expansive spirit, and the Chancellor of the Exchequer, who is so rigid as to what we can do in our internal expenditure, is prepared to risk these very considerable sums in what is, after all, a merely speculative undertaking on the exchange. It reminds us of a character we all know about, the person who objects strongly to any form of modest raffle at a church bazaar in England, but who, on his holiday, gambles at Monte Carlo.

When we ask for money for expansive purposes in this country we are told that it is impossible, but when we are dealing with external affairs we cheerfully vote £200,000,000, a sum equivalent to one-quarter of the national Budget, practically without consideration and Debate. I am not one who by nature or character objects to this speculative attitude of the Chancellor of the Exchequer, but I suggest that if the long-term purpose of the Account is to prevent an undue rise of sterling, if we are anxious that there shall be no successful attempt by speculators to get an undue rise in the international value of sterling, surely there are other methods by which that could be achieved. The Governor of the Bank of England has been buying gold. I am not at all sure that the same effect would not be obtained by buying houses for the people of England, and it is arguable that you would at least have the advantage of having the houses instead of being left with a commodity which may be of little value. I do not wish to press that argument too far. I know the immense difficulties before the Government at the present time, and it may be very difficult at the World Conference to take a determined line of policy, but I hope that we shall not be told in future, when we are pressing for a rather more expansive policy with regard to our internal development, that there is no money available, that the cup-board is bare, that there is nothing that can be risked, that no risks of any kind are to be undertaken, and at the same time vote £350,000,000 for the purpose or gambling in the future values of the exchange.

11.3 p.m.


I want to mention briefly the point put by the hon. and gallant Member for Gainsborough (Captain Crookshank). The fund has not prevented short term fluctuations of the exchange or prevented long term fluctuations on the exchange. It has kept the exchange down in terms of the £ with the dollar, and now that the dollar has gone it is being used to keep down the value of the £ in terms of the franc until the franc goes down. The point I want to mention is that of the profit. It has been generally assumed that the account has made a profit. This was the point made last year, and I want to remind the Chancellor of the Exchequer of some words he uttered when he introduced this proposal. He asked this question of himself: Will these operations involve the Exchequer in a loss? …. I think the answer must be that that is a very conceivable possibility."—[OFFICIAL REPORT, 19th April, 1932; col. 1428, Vol. 246.] We have been told that this year the account shows a profit. Of course it does, if you could realise at the present price of gold; but that is not the point. The point is whether it will show a profit when it is wound up. Last year we were responsible for securing an alteration in the conditions under which the fund is to be wound up, and the Chancellor of the Exchequer in connection with the ultimate fate of the fund, said: If, in the long run we were to return to gold in such a way that the pound stood at a higher gold value than the average level at which purchases of exchange had been made, the transactions would inevitably show a loss."—[OFFICIAL REPORT, 19th April, 1932; col. 1428, Vol. 246.] My objection to this Account is that the Account must inevitably show a loss, unless the pound is eventually stabilised at a gold value something like the present value of gold. One cannot tell exactly, but one presumes that gold and gold exchange have been bought on behalf of the fund during the past year at a price of something like £5 15s. and upwards.

I ask the Chancellor of the Exchequer this specific question: If the pound is eventually stabilised at a higher gold value than that, will the fund make a loss when it is wound up? If he says that it will make a loss, I go on to ask the House whether there is the slightest likelihood of America agreeing to a stabilisation of the dollar at an exchange value of about 3.40 to the pound? If the House agrees that there is not the slightest likelihood of America agreeing to that, you are driven into the position that the Account when wound up must make a loss. We have these ready assurances from the Front Bench that the Account shows a profit at present. Of course it is a purely paper profit, based upon the artificially high price of gold at the moment. The real point of importance is whether the Account will show a profit or a less when it is wound up. On the Chancellor's own statement last year it must inevitably show a loss and a very considerable loss. On those grounds, and on those mentioned by the hon. and gallant Member for Gainsborough, I very strongly object to this Bill.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I am certainly not one to under-rate in any way the importance of the measure contained in the Bill. It relates to a very large sum of money and must affect the interests of British industry and trade. But the Bill has been made the text for considerations which really have very little to do with it, and I do not intend to follow at any length some of those considerations. With the best will in the world I am afraid that I could not follow all the excursions and divagations of the hon. Member for Ebbw Vale (Mr. A. Bevan), because I only understand two of his statements. First of all he accused me of not having told the truth. He said, moreover, that I knew I had not told the truth, and that I was only exhibiting cant and hypocrisy in my statement of the intention of the Bill. Another thing I understood was that he himself did not understand matters of high finance.

With regard to the hon. and learned Member for East Bristol (Sir S. Cripps), he suggested that we must, in the operation of this fund, find it impossible to tell at any moment whether a variation in the exchange was due to some temporary fluctuation or was the beginning of a more permanent step. I certainly am not disposed to deny that those who are operating the fund have great experience, and I do think that as a rule they have a pretty good idea as to which of these two things it may be. But they cannot be certain first of all. They have perhaps to assume in the first instance that it is only a temporary movement, but presently they may make up their minds that it is something more than that, and in that case they would not attempt to prevent what is, of course, quite beyond their powers to prevent, if they wished to do so.

He went on to suggest that we must be in some difficulty because of the fact that America had gone off gold, and he asked what exchange we were following. Of course, we must have regard to the countries on the gold exchange, and although for the time at any rate the dollar is not on the gold exchange and, therefore, we cannot pay attention to the relative values of the pound and the dollar, we must look to those countries which still remain on gold. Then the hon. and learned Gentleman suggested that if money to this extent was looking for a home, it might be spent much more advantageously on an expansionist policy than in the Equalisation Fund. I think that there he was not distinguishing between short-term money and long-term money. This is short-term money. When you come to deal with a policy of expenditure upon public works, then you have, of course, to deal with long-term money, and there is nothing in what we are asking the House to sanction here which will interfere with the supply or the use of long-term money.

The hon. Member for Stockton (Mr. Macmillan) seemed to be a little nettled at what he termed an inconsistency on the part of the Chancellor of the Exchequer. I believe that those who have been crossed in love are always a little ill-tempered for some time afterwards, and I conceive that the hon. Member is smarting a little under the disappointment which he experienced over the Budget, but if he would be kind enough to read the speech which I made when moving the Resolution governing this Bill, when I think he was not here, he would see that I answered, by anticipation, the little difficulty which he has put before the House to-day. As a matter of fact, there are not two purposes in this Bill. It is not the case that there are a short-term policy and a long-term policy, except in this sense, that some of the fluctuations that we are trying to deal with are fluctuations which may take place from day to day or from week to week, and others are fluctuations which arise for longer cycles or periods of time—those seasonal fluctuations, for instance, the peaks of which come in the spring and autumn respectively, and of which I spoke on the Resolution. I should not call that a long-term policy, although they are longer-term fluctuations than the shorter fluctuations which may be produced by temporary speculative efforts.

Let me say that, although the situation has been described as one of war, if there be any war, it is not a war between this Government and the Government of any other country. If we are carrying on any war, it is a war against certain individuals who are, for purposes of their own convenience or their own profit, attempting to use the exchange to the detriment of this country, and it is to defend the people of this country against movements by individuals, or collections of individuals if you like, of that kind that we are asking the House to give us this Bill.

I would like to say a word on the question raised by my hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) and also by my hon. Friend the Member for Gravesend (Mr. Albery), who referred to the position which they took up last year, when they stated that it was unreasonable and must be unconstitutional for the Government to ask the House to sanction the extension of the resources of the fund by this vast amount. when in fact it would have no control over the expenditure of the money. My hon. Friend the Member for Gravesend said that if we were going to make losses of fifty or a hundred millions, he would like to know it. As I explained the other day—I am afraid that my hon. Friend did not appreciate fully what I was saying on this point—you cannot really say that there is a profit or a loss until the fund is finally wound up. At the same time, seeing that some hon. Members prophesied freely that there must be a gigantic loss, and rather suggested that losses had already been incurred, I thought it desirable to reassure hon. Members who held those views or expressed those fears and to show that so far as we have gone, if we actually wound up the fund at this moment, no such losses would be found to have been incurred. An hon. Member put a specific question to me, whether, in certain hypothetical cases, there would not be a loss on the fund. I am not going to answer hypothetical questions of that kind. The answers would almost certainly be misleading because we cannot tell what the conditions would be. All I say to my hon. Friend is this. If when the end of the fund comes and everything is wound up, it is found that we have paid more for these exchange assets than we have got for them, then we shall have made a loss. In the contrary event, we shall have made a profit.

I turn to the argument which was put in such an entertaining manner by the hon. and gallant Member for Gainsborough. What is it that the House is to ask for in the matter of control? I must say that, as put by the hon. and gallant Member, his argument sounded very reasonable and I have every sympathy with the desire of the House, not to allow expenditure of the taxpayers' money pass out of its own control. But I ask him to consider whether it is possible, for the successful working of this particular kind of operation, that there should be published to the world from time to time, details of the transactions in which we have been engaged? The purpose of the fund is to stop the operations of speculators. As a matter of fact, my own belief is that the knowledge that this fund exists for the purpose will, in itself, check the operations of speculators. But if we were to tell them exactly how we are using the fund, in what circumstances we did use it in a particular way, would not that be giving them the very information which they would most desire to have.


I do not think the right hon. Gentleman has understood us rightly as asking for all the details of the fund. All we are pressing for is a valuation statement which could be in quite a simple form and need not consist of more than three items.


That is the hon. Member's own idea of what is being asked for but I do not think he is correct in saying that that is exactly what is desired by other people because it has been put forward in various ways. I have to consider all those ways—the hon. Member's way as well as the others and I say this. You have this fund audited by the Comptroller and Auditor-General. He has to certify that the fund has been operated in accordance with statute. That is all he is obliged to do at present. What more could he do? He could give a report. That is one suggestion. I think one hon. Member in the course of this Debate suggested he should give a report stating how the fund had been used. Let me point this out to the House. I think one hon. Member asked what would be the use to the speculators of knowing nine months afterwards what had been done. What use would it be to the House, nine months afterwards? How would the House have control? The only information the hon. Member now says is wanted, is whether on a particular date a profit or loss has been incurred. Of course, it could be stated whether on a particular date a profit or loss had been incurred, but it would always be misleading because the situation might be changed since that account had been made up.

There is no purpose in this inquiry whether a profit or loss has been made until the whole fund has come to an end. The dilemma in which I find myself is this: either you must give information to the House which will enable it to control the operation of the fund, in which case you cannot confine it to the House, but must give it to everybody, including the speculators; or you must give the information so late that it is no use to the House. In these circumstances, if this fund is to be operated successfully, I see no alternative but to trust those in charge of it to operate it according to the general directions given to them by the House. I have stated the purpose of the fund, and I repeat that we are not attempting, and we could not if we tried, to affect the actual alteration of the permanent exchange value of the pound in regard to other currencies, but I believe

that the fund will be invaluable in the future, as it has been in the past year, in maintaining the pound against those fluctuations, that pumping up and down, which are so disturbing to traders and those who carry on commercial transactions. We believe that with the additional resources for which we are asking in this Bill we shall be able to do the same service in future years as we have been able to do in the past year.

Question put, "That the Bill be now read a Second time."

The House divided: Ayes, 238; Noes, 41.

Division No. 162.] AYES. [11.22 p.m.
Acland-Troyte, Lieut.-Colonel Elmley, Viscount Law, Richard K. (Hull, S.W.)
Adams, Samuel Vyvyan T. (Leeds, W.) Emmott, Charles E. G. C. Leckle, J. A.
Agnew, Lieut.-Com. P. G. Emrys-Evans, P. V. Leech, Dr. J. W.
Aitchison, Rt. Hon. Craigie M. Entwistle, Cyril Fullard Leighton, Major B. E. P.
Allen, Sir J. Sandeman (Liverp'l, W.) Erskine-Bolst, Capt. C. C. (Blackpool) Lennox-Boyd, A. T.
Allen, Lt.-Col. J. Sandeman (B'k'nh'd) Essenhigh, Reginald Clare Liddall, Walter S.
Apsley, Lord Everard, w. Lindsay Lindsay, Noel Ker
Aske, Sir Robert William Flelden, Edward Brocklehurst Little, Graham-, Sir Ernest
Atholl, Duchess of Fleming, Edward Lascelles Llewellin, Major John J.
Baldwin, Rt. Hon. Stanley Foot, Dingle (Dundee) Lloyd, Geoffrey
Banks, Sir Reginald Mitchell Foot, Isaac (Cornwall, Bodmin) Lockwood, John C. (Hackney, C.)
Barclay-Harvey, C. M. Fremantle, Sir Francis Lovat-Fraser, James Alexander
Barrie, Sir Charles Coupar Ganzonl, Sir John MacAndrew, Capt. J. O. (Ayr)
Beaumont, Hon. R.E.B. (Portsm'th,C.) Gibson, Charles Granville McCorquodale, M. S.
Bernays, Robert Gillett, Sir George Masterman Macdonald, Capt. P. D. (I. of W.)
Birchall, Major Sir John Dearman Gilmour, Lt.-Col. Rt. Hon. Sir John McEwen, Captain J. H. F.
Bird, Ernest Roy (Yorks., Skipton) Gledhill, Gilbert McKie, John Hamilton
Bowyer, Capt. Sir George E. W. Gluckstein, Louis Halle McLean, Major Sir Alan
Broadbent, Colonel John Goff, Sir Park McLean. Dr. W. H. (Tradeston)
Brocklebank, C. E. R. Goodman, Colonel Albert W. Magnay, Thomas
Brown, Col. D. C. (N'th'l'd, Hexham) Graves, Marjorie Mander, Geoffrey le M.
Brown, Ernest (Leith) Grenfell, E. C. (City of London) Margesson, Capt Rt. Hon. H. D. R.
Brown, Brig.-Gen.H.C.(Berks.,Newb'y) Griffith, F. Kingsley (Middlesbro',W.) Mayhew. Lieut.-Colonel John
Browne, Captain A. C. Gunston, Captain D. W. Mills, Major J. D. (New Forest)
Buchan-Hepburn, P. G. T. Guy, J. C. Morrison Mitchell, Harold P.(Br'tf'd & Chisw'k)
Burghley, Lord Hacking, Rt. Hon. Douglas H. Monsell, Rt. Hon. Sir B. Eyres
Burgin, Dr. Edward Leslie Hales, Harold K. Moore-Brabazon, Lieut.-Col. J. T. C.
Burnett, John George Hanbury, Cecil Morris, Owen Temple (Cardiff, E.)
Butler, Richard Austen Hannon, Patrick Joseph Henry Morris-Jones, Dr. J. H. (Denbigh)
Campbell, Edward Taswell (Bromley) Harbord, Arthur Morrison, William Shepherd
Campbell, Vice-Admiral G. (Burnley) Hartington, Marquess of Muirhead, Major A. J.
Caporn, Arthur Cecil Hartland, George A. Munro, Patrick
Carver, Major William H. Harvey, George (Lambeth,Kenningt'n) Nation, Brigadier-General J. J. H.
Castlereagh, viscount Haslam, Henry (Horncastle) Normand, Wilfrid Guild
Cazalet, Thelma (Islington, E.) Haslam, Sir John (Bolton) North, Captain Edward T.
Chamberlain, Rt. Hon. N. (Edgbaston) Headlam, Lieut.-Col. Cuthbert M. Nunn, William
Chapman, Col. R.(Houghton-le-Spring) Herbert, Capt. S. (Abbey Division) O'Donovan, Dr. William James
Choriton, Alan Ernest Leofric Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Oman, Sir Charles William C.
Clarke, Frank Holdsworth, Herbert O'Neill, Rt. Hon. Sir Hugh
Cochrane, Commander Hon. A. D. Hope, Capt. Hon. A. O. J. (Aston) Ormsby-Gore, Rt. Hon. William G. A.
Colville, Lieut.-Colonel J. Hore-Bellsha, Leslie Palmer, Francis Noel
Conant, R. J. E. Hornby, Frank Patrick, Colin M.
Cook, Thomas A. Horsbrugh, Florence Peake, Captain Osbert
Cooke, Douglas Howard, Tom Forrest Peat, Charles U.
Cooper, A. Dulf Hudson, Capt. A. U. M. (Hackney, N.) Penny, Sir George
Courtauld, Major John Sewell Hudson, Robert Spear (Southport) Percy, Lord Eustace
Craven-Ellis, William Hunter, Dr. Joseph (Dumfries) Perkins, Waiter R. D.
Crooke, J. Smedley Hunter, Capt. M. J. (Brigg) Petherick, M.
Crookshank, Col. C. de Windt (Bootle) James, Wing-Com. A. W. H. Pickering, Ernest H.
Cruddas, Lieut-Colonel Bernard Janner, Barnett Pickford, Hon. Mary Ada
Davies, Maj. Geo. F.(Somerset, Yeovil) Jesson, Major Thomas E. Potter, John
Donner, P. W. Jones, Sir G. W. H. (Stoke New'gton) Power, Sir John Cecil
Drewe, Cedric Jones, Lewie (Swansea, West) Procter, Major Henry Adam
Dugdale, Captain Thomas Lionel Ker, J. Campbell Raikes, Henry V. A. M.
Duncan, James A. L. (Kensington, N.) Kerr, Lieut.-Col. Charles (Montrose) Ramsay, Alexander (W. Bromwich)
Eastwood, John Francis Kerr, Hamilton W. Ramsay, Capt. A. H. M. (Midlothian)
Edge, Sir William Kimball, Lawrence Ramsay, T. B. W. (Western Isles)
Ellis, Sir R. Geoffrey Lambert, Rt. Hon. George Reid, William Allan (Derby)
Elliston, Captain George Sampson Law, Sir Alfred Remer, John R.
Rentoul, Sir Gervais S. Skelton, Archibald Noel Thompson, Luke
Renwick, Major Gustav A. Slater, John Titchfield, Major the Marquess of
Robinson, John Roland Smiles, Lieut.-Col. Sir Walter D. Todd, Capt. A. J. K. (B'wick-on-T.)
Ropner, Colonel L. Smith, R. W. (Ab'rd'n & Kinc'dlne.C.) Touche, Gordon Cosmo
Rosbotham, Sir Samuel Somervell, Donald Bradley Tryon, Rt. Hon. George Clement
Ross, Ronald D. Southby, Commander Archibald R. J. Wallace, Captain D. E. (Hornsey)
Ross Taylor, Walter (Woodbridge) Spears, Brigadier-General Edward L. Ward, Irene Mary Bewick (Wallsend)
Rothschild, James A. de Spencer, Captain Richard A. Warrender, Sir Victor A. G.
Ruggles-Brise, Colonel E. A. Spens, William Patrick Waterhouse, Captain Charles
Russell, Alexander West (Tynemouth) Stanley, Hon. O. F. G. (Westmorland) Wedderburn, Henry James Scrymgeour
Rutherford, John (Edmonton) Stevenson, James Whiteside, Borras Noel H.
Rutherford, Sir John Hugo (Liverp'l) Stewart, J. H. (Fife, E.) Williams, Herbert G. (Croydon, S.)
Salmon, Sir Isidore Storey, Samuel Windsor-Clive, Lieut.-Colonel George
Salt, Edward W. Strauss, Edward A. Winterton, Rt. Hon. Earl
Samuel, Sir Arthur Michael (F'nham) Strickland, Captain W. F. Wise, Alfred R.
Samuel, Samuel (W'dsworth, Putney) Sueter, Rear-Admiral Murray F. Womersley, Walter James
Sandeman, Sir A. N. Stewart Sugden, Sir Wilfrid Hart Wood, Sir Murdoch McKenzie (Banff)
Sanderson, Sir Frank Barnard Summersby, Charles H. Worthington, Dr. John V.
Scone, Lord Tate, Mavis Constance
Shaw, Helen B. (Lanark, Bothwell) Templeton, William P. TELLERS FOR THE AYES.—
Shepperson, Sir Ernest W. Thomas, James P. L. (Hereford) Lieut.-Colonel Sir A. Lambert Ward and Mr. Blindell.
Attlee, Clement Richard George, Megan A. Lloyd (Anglesea) Maclean, Neil (Glasgow, Govan)
Banfield, John William Greenwood, Rt. Hon. Arthur Mainwaring, William Henry
Batey, Joseph Grenfell, David Rees (Glamorgan) Mason, David M. (Edinburgh, E.)
Bevan, Aneurin (Ebbw Vale) Hall, George H. (Merthyr Tydvil) Maxton, James
Cape, Thomas Hirst, George Henry Milner, Major James
Cocks, Frederick Seymour Jenkins, Sir William Parkinson, John Allen
Cripps, Sir Stafford Jones, Henry Haydn (Merioneth) Price, Gabriel
Daggar, George Jones, Morgan (Caerphilly) Thorne, William James
Davies, David L. (Pontypridd) Kirkwood, David Tinker, John Joseph
Davies, Rhys John (Westhoughton) Lansbury, Rt. Hon. George Williams, Edward John (Ogmore)
Dobbie, William Lawson, John James Williams, Thomas (York., Don Valley)
Edwards, Charles Leonard, William
Evans, David Owen (Cardigan) Llewellyn-Jones, Frederick TELLERS FOR THE NOES.—
Evans, Capt. Ernest (Welsh Univ.) Lunn, William Mr. John and Mr. D. Graham.
George, Major G. Lloyd (Pembroke) McEntee, Valentine L.

Question put, and agreed to.

Bill accordingly read a Second time, and committed to a Committee of the Whole House for To-morrow.