HC Deb 21 December 1934 vol 296 cc1544-622

Question again proposed, "That this House do now adjourn."

11.45 a.m.


When our proceedings were interrupted, I was speaking on the question of whether we had sufficient control over the direction of credit in this country, and I was going to refer to certain specific instances. Hon. Members will recall that in the Macmillan Report it was pointed out that a large amount of money was lost in 1928. The location of this money was examined, and it was shown that £115,000,000 of capital, issued in one or two months of that year, had, within a year, gone down in value to £65,000,000, and that companies with a capital of £20,000,000 had gone into liquidation. That is one instance of the kind of protection that the investor gets. We know that the National Government are very solicitous of the small investor, even for the person with a few pounds in the Post Office. It was that solicitude which, to a large extent, brought them into power in 1931. We want to know what kind of protection will be given in future.

I have been looking into some of the instances of 1931 and I want to draw attention to another thing which happened in which the investors' money was involved. In 1930 there was a lot of foreign money in this country. The big accepting houses, who, of course, do legitimate business in facilitating the trade of the world, attracted a large amount of money in this country. They called them deposits, although they were really loans, and they then proceeded to reloan that money to Germany at very profitable rates. They also granted huge credits to German industrialists, but they took no trouble to see how that money was going to be used, and they had no real security. Their operation was a pure gamble, as there was nothing substantial to set against it. It was quite unlike the ordinary business of issuing bills against goods. I am told that the total of about £65,000,000 was involved.

In July, 1931, Germany could not pay. The accepting houses were caught. What happened them? It was thought that those accepting houses must not be allowed to fail; they had made a bad break in their gamble and, therefore, the Bank of England induced the joint stock banks to come to their rescue. The joint stock banks came forward and used their depositors' money to get behind the gamblers and save them. That money is still locked up. I am told that the amount of frozen money in Germany is something like £40,000,000.


The hon. Member has several times made grave charges against those houses. Will he tell the House what authority he has for the statement that there was no proper backing against those bills? Is, it not a fact that the great majority are perfectly good bills even now? It was not a responsibility of those who issued the bills or of the accepting houses in this country, because it was purely a transfer matter.


This is information that I have received from people engaged in business in the City. I had it from one man who is particularly reliable, and I took the trouble of testing it by asking several other people whether they could confirm it, and they confirmed it in every respect. The hon. Member will have his opportunity of refuting it later on. I am told that the general opinion is that some £20,000,000 of this money is lost. The accepting houses got the money at something like 3 per cent. from the joint stock banks. They got 5 per cent. from Germany up to this year, since when they have had 4 per cent., 4½ per cent. and 4¼ per cent. They have, therefore, made a nice profit out of the transaction. The security of the accepting houses was the guarantee of their names, but their guarantee failed. They are actually making a profit out of their worthless guarantee. Meanwhile, the people who deposit their money, the British public, have to pay something like 4½ per cent. if they want a loan.

There was a standstill agreement made largely by the people in the accepting houses—many of whom seem to have rather Teutonic names. I want to know what control there is over this foreign lending business. It seems to be a very dangerous thing. The people in this business are upheld by the banks as part of the financial system. They gamble with the knowledge that if they lose they will be picked up. I have been given various instances of one sort and another of business which is still being done, and which actually means a financing of the import of foreign goods which, I imagine, is quite contrary to the policy of the Government. These people are strongly represented in the Bank of England. I understand that the Governor of the Bank of England himself started as a merchant banker. Do we know anything more about what is happening now? Suppose that there is a recovery and a sudden activity? Have we anything in the machinery of government to prevent that kind of thing happening again? If there is a boom at home have we anything that will direct investments into channels more useful for the country, and that will not merely result in waste?

I want a full account from the Chancellor of the Exchequer as to what his policy exactly is. I believe a number of people are quite puzzled. He has carried on a deflationary policy like his predecessor, and he has succeeded under that of bringing about large conversions. It is claimed that he sought to make money cheap, and he has. He has reduced the interest on debt. What is he going to do with his cheap money? That is what puzzles us. We have had explanations from the hon. Member for East Edinburgh (Mr. D. Mason), but I do not profess to be able to follow them. I should like to have an explanation from the Chancellor of the Exchequer as to what he proposes to do next. There is this cheap money. What is he going to do with it to increase production, to get people to work and to increase the real wealth of the country? It sometimes seems to us that Chancellors of the Exchequer get a habit of looking at things with Treasury eyes. They only see figures, and they do not see the real wealth behind them. As long as there is a general stagnation and an enormous body of unemployed, we are year by year definitely indulging in enormous waste. The President of the Board of Trade made a most amazing statement when he said the home market was nearing saturation. With that statement fresh in their minds, hon. Members then discussed for several days the appalling conditions in the depressed areas which, so far from being saturated, are being starved. You have appalling poverty there. You have the enormous area of Lancashire where it is quite obvious that the home market is nowhere near saturation as far as the needs of the people are concerned.

I hope the Chancellor of the Exchequer will give us some plan for getting out of the situation in which we are, because these facts are coming home to the public, and they cannot understand them. They cannot understand it when they see food being wasted which cannot be disposed of, such as herrings. They cannot understand why people should not be allowed to produce coal when so many people are fireless. They cannot understand why there are all kinds of restrictions. They cannot understand why it is not possible to get anything going in the way of cotton, when it is obvious that masses of the people who are now workless could absorb a great deal more cotton goods than they are absorbing to-day. I should like an inquiry to be made as to the needs of the unemployed for British products beyond what they are able to get now. Their present resources cover, perhaps, rent, a bare amount of food, and a minimum necessity of clothing. I should like an inquiry to be made as to what, if people were reasonably well fed and clothed, and had a reasonable amount of firing, and so forth, that would mean in the way of demand for British goods, and the extent to which that demand could be filled if people were producing goods which one set of them wants and the other set can produce.

All the elements are there, but they are frozen, and I think they are frozen by a false financial system. If we could arrange a credit so that a foreign country would take our herrings, it would be regarded as a success. If we could arrange a credit so that China should buy cotton goods, it would be regarded as a success. Everyone would say it was wonderful. But no one suggests that this should be done at home. The home market always seems to be neglected; it seems to be thought that we must always go abroad for our markets. That seems to be due to the bias, on the part of those who control our finances, towards foreign lending, and to the fact that they are not in the least linked up with any kind of national planning in this country for taking advantage of our real wealth. What I want is to get the medium of exchange busy, so that we can move commodities from the people who produce them to the people who need them.

Why cannot we get a big credit for that purpose? What stands in the way? A little time ago the Chancellor of the Exchequer wanted £150,000,000 for the Exchange Equalisation Fund, and he got it without difficulty. Why could we not have a Commodities Exchange Facilitation Fund What is the right hon. Gentleman afraid of? We have departed altogether from the realm of the old economics. It is true that the hon. Member for East Edinburgh and the hon. Member for Central Southwark (Mr. Horobin) still live in that realm, but everyone else has thrown over all the old canons, and no one is so unorthodox as the President of the Board of Trade, who at one time was one of the straitest members of the Manchester school. The present Government are not afraid of handing out a million here and a million there; why cannot they take their courage in both hands and resolve to be the masters of money, and not its servants?

I rather fear that the Chancellor of the Exchequer is afraid of the City of London. Every Chancellor that I have seen in this House since 1922 has been afraid of the City of London. They have all regarded it as one of those mysteries which they can worship, but into which they should not inquire too closely. I believe that, like other mysteries, there is a lot of humbug in it. I want to see the Chancellor of the Exchequer with something more than a Budget mind, realising that what we have to do is to increase the wealth of the country and the consuming power of the people. The Government believe in a planned economy, and a planned economy must extend to a planned credit system. I shall probably be told that this is the old cry for inflation. In these matters people are the slaves of words. Inflation means the getting of a large amount of money in hand and nothing else, but, although we have this potential production, somehow or other everything is frozen. The problem must be attacked in some way or other, and if the Chancellor of the Exchequer will not do it by dealing with our financial system, which is clearly outworn for its present purpose, he will have to give way to people who will. I believe there is a feeling in this country, not only in the ranks of our party but very widely distributed through all parties and in all quarters of the House, that people want to see something done to try to get rid of what seems to the ordinary observer to be the sheer lunacy of the position—people without food on the one hand, and, on the other hand, people wanting to produce, whom no power on earth seems to be able to bring together.

12.2 p.m.


The House will be very grateful to the hon. Member for Limehouse (Mr. Attlee) for raising this very important subject on the eve of the Christmas Recess. The "Times" newspaper, which is a very loyal supporter of the Government, referred in a leading article a few days ago to the need for a statement of the broad lines of a policy for this country, and an indication of the measures which will make that policy operative. That, I think, is really what we are trying to discover to-day. No one, at any rate on these benches, seeks for a moment to minimise or deny the immense value of the salvage work which has already been performed by the Government. They had a frightful mess to clear up, and have made a very good job of it. As a result of confidence, which they have restored; protection, which they have introduced; and cheap money which they have secured; we have staged a very considerable economic revival, soundly based on increased activity in the "capital" or "investment" industries of this country. Between the summer of 1932 and the summer of this year, the whole volume of home-produced output rose steadily by about £75,000,000 a quarter, or at the rate of nearly £300,000,000 a year; and to-day we have got practically back to the 1929 output. That is a very remarkable achievement. I do not think that any other country except Japan or Sweden can point to a similar achievement. But the tide is running very much more slowly now; and, despite what the hon. Member for Limehouse said, I am afraid that, unless fresh action is taken, saturation point as far as demand in the home market is concerned may be reached soon. We still have the depressed areas; we still have 2,000,000 people unemployed. What we are asking the Government today is, what are they going to do about it now?

During the last six months it has seemed to some of us that the Government have begun to falter in respect of economic policy, and to be no longer possessed of a theme; and the House of Commons has a responsibility and a duty to make some inquiry, at this critical juncture in the life of the present Parliament, as to objectives, and the course to be steered to attain them. In some quarters it seems to be considered tantamount to blasphemy to refer in public to financial and monetary policy. The Treasury and the Bank of England not only shroud themselves in mystery—they glory in it. They always have done. Anyone who seeks to pull aside the veil even for a moment, and peer into the recesses of our financial tabernacle, is bound to incur a good deal of moral stigma and odium. But some of us have to do it from time to time because, after all, financial policy goes to the very root of the economic problem, which is the problem of unemployment and poverty. After all, we have not done the Treasury so badly. We gave them an enormous amount of money to play with in the Exchange Equalisation Fund, and no questions asked. At the moment we do not know whether the Fund is £20,000,000 up or £20,000,000 down. We have really been extraordinarily good. No one wants to know about the details of financial administration, or day-to-day exchange operations, or projected conversion operations: but the House has a right to know the general lines of the financial policy that is being pursued, and the Chancellor of the Exchequer is really the only man who can enlighten us.

I hope we are not going to be too much lead away in the course of this and future Debates by the Labour party, and even by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), into the side issue, as I regard it, of the powers of the Bank of England. In the past I have often disagreed with the policy that is known to have been recommended to the Government of the day by the Bank, and by its present Governor-in-perpetuity. The return to the Gold Standard in 1925 at a totally artificial exchange rate; the subsequent four years of deflation; the use of British money to develop Central Europe, and in particular Germany, when it might have gone to the development of this country; the borrowing of money abroad in 1931 in order to try to maintain a quiet untenable position on the gold standard at that rate of exchange—all these actions, which were known to be the policy of the Bank of England, I regretted at the time, and said so, and I regret to-day. I think they were profoundly mistaken. But do not let us make any mistake as to where the ultimate responsibility lies. The ultimate responsibility lies now, and lay then, with the Chancellor of the Exchequer and the Government.

The relationship between the Chancellor of the Exchequer and the Governor of the Bank of England corresponds with the relationship between the First Lord of the Admiralty and the First Sea Lord. The First Sea Lord and the Governor of the Bank of England tender the technical advice, but the First Lord and the Chancellor of the Exchequer finally decide, and accept responsibility for, the broad lines of policy to be pursued. Mutual confidence is, of course, essential between the First Lord and the First Sea Lord and between the Chancellor and the Governor. But it exists, and it has always existed for the last 10 years. The almost mesmeric influence which the Governor of the Bank of England has exercised over successive Chancellors of the Exchequer is an indication of the power of his personality; but it does not really release those Chancellors of the Exchequer from their ultimate and final responsibility for the policy pursued, nor does it afford, in my opinion, grounds for changes in the constitution of the Bank, which, from a purely practical point of view, are quite unnecessary. The Government controls financial policy, the Chancellor of the Exchequer controls it, and he need not necessarily follow the policy of the Governor of the Bank of England at any time.

The Chancellor of the Exchequer, in reply to a question that I put a week ago, informed us that an essential part of the policy of the Government was the maintenance of cheap money. The very fact that he could make that statement shows that he regards himself and the Government as responsible for financial policy. What we want to know to-day is whether this is now the only part of the financial policy of the Government, and whether he thinks the present money rates are cheap enough. The real test of the efficacy of cheap money is the extent of the demand for it. At present that demand is insufficient, and tends to fall. The banks are gorged with money. I am told that one of the big joint stock banks have over £20,000,000 now on deposit, unused, in its own vaults. [Interruption.] I could not answer that question off-hand. I have tried to make inquiry, and I have found that the volume of foreign investments to-day is not so very great; and quite responsible people in the City take that view.

The deduction from this is that money has not yet become cheap enough to stimulate activity. There is not yet an adequate demand for it. The Government has still a lot to gain, and nothing to lose, by bringing its long-term borrowing rate down to 2½ per cent. They are interested in potential conversions totalling £1,322,000,000—Treasury Bonds amounting to £194,000,000, 4½ per cent. Conversion Loan, 5 per cent. Conversion Loan and 3 per cent. Local Loans. The drawing of these bonds at a very favourable rate, and the voluntary conversion of the two Conversion Loans, would bring immediate and substantial relief to the Exchequer and to the taxpayer; and I do not really see how the taxpayer is going to get relief in any other way. The calling of Local Loans, as the Government is entitled to do at 100, and the issue of a new 2 per cent. dated stock would bring similar relief to local authorities, who could borrow at perhaps 1 per cent. lower rate than they can do at the moment. It seemed until quite recently that this was the course upon which the Government had set out. The proposals in the Distressed Areas Bill, which I can really only describe as derisory in relation to the problem of the distressed areas, were accepted by some of us on the understanding that the Government did not wish to disturb the market pending conversion operations of one sort or another. Three or four weeks ago the gilt-edged market was heading rapidly towards a 2½ per cent. basis. The Chancellor of the Exchequer then went to Manchester, and made a lugubrious speech, in which he said he did not see much chance of a reduction of taxation, and every one got frightened and wondered what it was all about. We were all left once again in confusion and uncertainty about the broad lines of Government policy in relation to cheap money.

As long as uncertainty as to the intentions of the Government continues, activity is bound to be restrained. Nothing kills business like uncertainty. That has been the whole trouble with the "new deal" in the United States. If he knows what is going to happen, even if some of it may be very nasty indeed, the business man can always carry on. If he does not know the real fundamental policy of the Government, he is going to curtail his activities all the time. And until local authorities know what rate they will be able to borrow at, they will hold their hand, as I believe they are now doing.

But there are other and more urgent reasons for cheap money even than the relief of taxation. There is the cheapening of the cost of production to particular industries, owing to the lower rate of borrowing; and there is the chance, which may not recur, and certainty will not recur if hon. Members above the Gangway get back in large numbers at the next election, of doing something really big and cheap in the way of capital development. I should be the last to advocate indiscriminate expenditure on public works. The amount of money involved is out of all proportion to the number of people you can employ. At the same time we must realise and recognise that conditions to-day are entirely different from those that prevailed three years ago. Then spending of all kinds was highly undesirable from an economic point of view. To-day constructive expenditure on capital development is as highly desirable as it was undesirable three years ago; and the difference is really vital.

I do not think we should pay too much attention to the comparative failure of the Labour Government's public works expenditure policy. They were working under impossible conditions. There was no confidence; they were tied to the Gold Standard at a purely artificial price; they were working under a free trade system at that time; and in a period of crisis. You ought not to judge the value of a public works policy by the comparative failure of their effort. What are the Government now doing with regard to public expenditure? I cut out a leading article from the "Financial News" recently. It is not generally regarded as a Socialist paper. This is what it says: Those who are hoping for a strong housing and public works drive in the autumn will not derive much encouragement from the report of the proceedings of the Public Works Loan Board in the last year. For it appears that advances from the Local Loans Board were actually 17 per cent. lower than in 1932–33…. But the need for an acceleration of capital expenditure is still apparent…. What is not generally realised is the extent of the 'socialised sector' in the economic structure. The key point, capital development, is very largely controlled by public authorities, both national and local. Public works contracting alone provides occupation for more men than either the steel industry, the motor industry, or the cotton industry. This is entirely under public direction. There are very nearly as many builders as coal miners and these are naturally, in spite of the revival of private building, very dependent on the policy of local authorities. When to these are added the powers for expansion of plant possessed by such authorities as the Central Electricity Board, the Metropolitan Water Board and the Post Office and the development of public utilities under municipal control throughout the country, the immense power of public authorities in stimulating capital development becomes evident. It is in this direction that we must now look for a further reduction in unemployment—and the Government, as the prime motive force, must set the example. It does seem to us that the Government have not really given an impetus to all these public authorities to drive forward, and that impetus, in the last resort, must come from the Government.

It would not, of course, be fair to give that as a picture of the total effort of the administration with regard to expenditure. They are, in fact, spending a good deal; but, in my submission, it is un-coordinated expenditure, and on the whole not effective expenditure—a subsidy here, a subsidy there; a couple of millions for tramp steamers, a couple of millions for pigs, a bit for milk, a trifle for beef, a couple of millions for the depressed areas. It is all haphazard, all essentially palliative measures, all unrelated to any central theme or general constructive economic policy. I would like to see a concentration of effort on two or three defined objectives, and the thing then done on an adequate instead of a hopelessly inadequate scale. It is not for private Members, any more than it is for the Opposition, to put forward a policy for the Government. We are here to criticise—constructive criticism if you can—but if I were asked for suggestions as to profitable lines of public expenditure, I could name three. First, we have had it in the Report of the Civil Lord of the Admiralty and in Report after Report of Commissions, and we know that the coal-owners—those at least of the wise ones—are quite satisfied in their own minds, that you will never be able adequately to reorganise the coal-mining industry until the State purchases the royalties. We have been told so over and over again. There is one line of constructive expenditure; and this is the time to do it when you can raise money at 2½ per cent.

Secondly, I want to say a word about transport. Hon. Members will have read in the papers this morning that casualties on the road were higher last week than ever, and they are not going to be stopped by Belisha beacons this year, next year, or any other year. The answer to this difficult problem is that until you do something to improve transport in this country you cannot stop accidents on the road. The right hon. Gentleman the Member for Carnarvon Boroughs has been much abused during the last few years for his road policy. It has been the salvation of this country. Hundreds of fresh motor-cars are put on the road every day—not every week—and it is the appalling congestion which, in my opinion, at the present time is more responsible for deaths and accidents than anything else. Take the City of London. The traffic in the morning and in the busy hours of the evening is a nightmare. You cannot get into the City in a vehicle in the morning, and you cannot get out of it in the evening under an hour. It is the same in more or less degree in all our cities. Here would be really profitable expenditure, because of the time which would be saved by improving the road facilities into and out of our great cities.

The third suggestion I would make is one which, I think, really appeals to the minds and hearts of the people in this country more than anything else. It is housing for the poorer classes in this country. The Government Bill has not been presented. We are told it is courageous and comprehensive, and I am sure that it is, but there is one thing also of which I am sure, and that is that you will never succeed in building houses for the lower-paid wage earners at rents within their compass if you leave it to private enterprise and the local authorities. It cannot be done. Do you know how much has been spent on housing since the War by successive Governments? £650,000,000. And how much of this has gone into the housing of the lower-paid workers? Less than 13 per cent.—about £84,000,000. Moreover, the houses have been erected in a most haphazard way, without any central planning, with all the horrors of ribbon development, and for the most part they are ramshackle and absolutely hideous. You have got to have some plan. There has been a lot of talk about planning. I am not so sure about the State planning of industry, but you have got to get some central planning for housing. There must be a central authority for these classes of houses, and a plan of approach, continuity of policy, standardisation and bulk purchase of raw material. You could bring down your costs by 20 per cent. if you could give your cement makers and your other manufacturers contracts lasting for 10 years ahead, because they could work on full capacity.

There is just this other point I would bring to the notice of the Chancellor of the Exchequer. He referred to it the other day. I am quite sure, as far as our big cities are concerned, that we have got now to go in for a policy of constructing flats in the modern style for the lower-paid worker. I have had the opportunity of inspecting the housing schemes at Munich, Berlin and Hamburg. The irony of it is that it is our money that built them, money which ought to have been spent on building houses in this country. At the same time, I am sure this is the future policy so far as the lower-paid worker is concerned. If you get drive, central control, standardisation, centralised finance—the Chancellor of the Exchequer could float a national housing loan at 2½ per cent.—and bulk purchase of raw materials, and you then get ahead with a definite programme, you can build and let houses at rents of 7s. 6d. a week. You will never do it, in my submission, in any other way.

There is one other subject on which I would like to ask for an opinion from the Chancellor of the Exchequer. That is the question of international trade. My right hon. Friend the Minister of Agriculture is sometimes very sensible about international trade, but at other moments he talks about it as if it were a kind of blight, an economic foot-and-mouth disease. We really do not know what the policy of the Government is. The bulk of our unemployed are nominally engaged in the exporting industries or in shipping, and some of us are a little alarmed when the Minister of Agriculture runs riot on this question of economic sufficiency, because we do not believe that this country will ever be able to realise the standards of life we all ought to realise for all our people if we exclude the possibilities of international trade. We used to hear a lot in the old days about Empire development. We do not hear so much now. Is it really wise to let the Crown Colonies go on paying six per cent. for their loans in this country? You are saddling them with a terrific burden. The only contribution the Government have made to Colonial expansion is to shut down the Empire Marketing Board, which was one of the most useful and economical boards this country had. I do beg my right hon. Friends to examine that point of view with the Treasury—the position of the colonies and the possibility of developing them.

If you are going for foreign markets, for goodness sake look at the countries where there is population—China for one, Russia for another. I hold no particular brief for the Soviet Government, but I would remind the House that during these three years they have repaid to the German Government 1,000,000,000 reichmarks which they borrowed at the very time that the German Government was borrowing from us. There are possibilities of trade expansion there, especially in regard to the barter system, if they offer payment in full. They cannot afford to default because, if so, their credit will fail all over the world. They can in fact afford to default less than any other country.

You will never really get international trade going on a wide scale until you get some degree of currency stabilisation in the world. Of that I feel certain. The Chancellor of the Exchequer has said that a condition precedent to stabilising the pound with the dollar must be the removal of exchange restrictions, but surely this is putting the cart before the horse. Until you get a stabilised dollar-sterling rate none of the countries on the "gold bloc" will budge from their position if they can possibly help it, because they have nothing solid to go to. They will go on imposing restriction after restriction and embargo after embargo in a frantic effort to help their present position, lest a worse fate befall them. But if you had a stabilised dollar-sterling rate, the whole position would be changed immediately, and all these other gold countries might be induced to reconsider their position and possibly to revalue to the new international currency which was to be established. If you want to get a stabilised international currency you must have international co-operation, and therefore you must go back to a managed gold exchange standard sooner or later, because you can get that co-operation on no other terms.

The Genoa Conference was a most tragic episode. The Genoa Resolutions on currency were altered a little, but not fundamentally, at the World Economic Conference. They remain the financial charter of the world, and sooner or later, if we are ever to get out of the mess, we shall have to go back to them. I remember the late Sir Laming Worthington-Evans once saying that they constituted a financial code just as important and as great as the legal code of Justinian. We have to try to get the other nations of the world to agree upon the basis of the Genoa Resolutions. The President of the United States and the American Ambassador have both thrown out hints recently that they would desire stabilisation, and I beg of my right hon. Friend to try to re-establish contact with the United States of America. I know that we were angry with them at the World Economic Conference because they went back upon what they had promised to do, but we ought not to forget the enormous difficulties with which President Roosevelt was contending at the time—difficulties in Congress of which we really did not know. I do not think that in the circumstances he could do otherwise, but I believe that now he can and would, and that would do more for international trade than anything else in the world.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

Does my hon. Friend propose to meet the pound with the dollar at the existing parity?


For my part, I would like to see a 50 cent. dollar and a 10s. pound, linked at an exchange rate of five dollars, and a gold price of 165 shillings. I think that that would do more to give an impetus to world trade than anything else. If in the meantime that was considered too ambitious, I should like to see an attempt at stabilisation at roughly the present rate of five to the dollar, with the price of gold 140s. or 35 dollars. If the President wants to go the whole way, to 50 per cent., I do not see why we should not meet him. The devaluation of currencies is the only way to get a revival of international trade, a rise in world commodity prices, a reduction in the real burden of debts and expansion based on adequate supplies of credit, which would involve a rise in the standard of living.

I believe that the whole future of our economic system and of our country and government, and I think possibly of civilisation, depends ultimately upon cooperation between ourselves and the United States of America. It we cannot get that we might as well throw up the sponge.

I hope that the right hon. Gentleman does not think that my speech is intended in any way to be unfriendly or unhelpful. It is not meant in that spirit. I feel a little melancholy because some of us have been coming to this House for 10 years and pleading for a constructive policy on broad lines, and nobody has paid the slightest attention to us at any stage throughout those 10 years. Yet looking back, and judging by the march of events, I am surprised at the number of times I have been right, and different Governments have been wrong. As I hear that we are to get a new deal from the right hon. Gentleman the Member for Carnarvon Boroughs later on, I thought that I would deliver my deal first, even if it were not for the first time. The doctrine of infallibility has always applied to the Treasury and the Bank of England. That we accept, and we cannot get away from it. But I have seen Ministers of three or four Governments gradually drift into a sort of trance of self-satisfaction and complacency from which it seems impossible to rouse them. They all do it—some sooner and some later. No Government in this country since the War has survived an appeal to the electorate—a very arresting and rather sombre thought. I do not think that the electors are as pleased with their Governments as the Governments are pleased with themselves. Our complaint now is that, having done the necessary salvage work, the Government have no theme adequate to the problem which confronts us. It is the absence of such a theme that we deplore. The Prime Minister as the head of the Government has not made one pronouncement on economic policy of real significance. We do not know his object or even if he has a policy.

The Minister of Labour has made some very interesting observations on the subject of leisure. If scientific invention is not going to give any increase of leisure, and only an increase in unemployment, it will be a curse and not a blessing. But the Minister of Labour gave no indication as to how he proposed to secure leisure. We do not want speeches but action, and the country wants action. We are going home for Christmas knowing that there are over 2,000,000 unemployed in this country, and we are spending £100,000,000 a year to maintain them— even the young men—in idleness. I ask the Government, Are they prepared to leave it at that? I am sure that the people of this country are not. You want a War Cabinet of four or five persons sitting day and night to consider this question, and nothing else—to consider the problem as a whole, and to plan action on the widest possible scale and give effect to it. In a historical letter which he once wrote, the right hon. Gentleman the Member for Carnarvon Boroughs ended with words: Vigour and vision are the supreme need at this hour. I suggest to the Government that those qualities are just as necessary to-day as they were in 1916 when that letter was written.

12.35 p.m.


I am sure that the overwhelming majority of the House will approve of the sentiments expressed in the closing sentences of the speech of my hon. Friend. We are not unmindful of the value of the salvage work done by the Government, particularly in the early months, of the restoration of confidence, of the policy of cheap money, and many other valuable measures. What we are still asking for, and what has not yet been furnished, is some clear statement of the general economic policy of the Government, particularly their policy in respect of the monetary situation. The great depression from which we are suffering has been going on for nearly five years. At the very beginning of that depression the late Government appointed the strongest Committee ever appointed in this country to investigate the problem. That Committee, Lord Macmillan's Committee, reported in the summer of 1931 that the world depression was mainly due to monetary causes, to the shortage of money in circulation resulting from the maldistribution of gold, and declared that a restoration of the price level to the 1929 level was imperative. They also declared that that was a matter which was within our power to deal with. They said that: An era of deliberate management must succeed an era of undirected natural evolution. That Report appeared in the summer of 1931. Before it was ever discussed in this House, before anyone in the Government would seem even to have read it, another Report appeared, the Report of the May Committee, and the serious budgetary situation revealed by that Report brought the Government down. The immediate salvage work of the emergency coalition in the autumn of 1931 was to deal with the situation revealed by the May Report. So far as I can make out, we have never yet had any declaration of Government policy as to what they mean to do with the situation revealed by the Macmillan Report, a situation in respect of which our freedom of action has been immensely enhanced by the fact that we went off the gold standard. We are no longer dependent upon the situation in other countries. Not only for this country, but for the whole sterling convoy, we are free to act as we wish. But ever since then we have been like prisoners whose doors have been unlocked and who refuse to believe that the doors are open to them to go out when they like.

There has been no kind of definite monetary policy announced as a government policy. There has been a good deal of reaction and deflation carried out by the Bank of England. Here, I should like to join with my hon. Friend in deprecating any attack upon the Bank of England and the City. The Bank of England and the City act naturally in accordance with their own immediate interests and in accordance with their traditions. It is for the Government to decide what the general monetary policy of the country is to be. In this matter we should not be governed by the views of bankers, however eminent. Monetary policy is a matter which concerns industry, agriculture, Empire development, international relations and innumerable things entirely outside the purview of the ordinary banker, even of those eminent men who direct the affairs of the Bank of England.

We have never yet had a clear statement of monetary policy from the Government. We have had a perfunctory admission that it is very desirable to raise the general level of prices. We are told that it is desirable to have cheap money. Certainly, cheap money, so far as it goes, can be a valuable contribution to the restoration of the price level. The whole object of bringing about cheap money in this connection is to induce people to take their money out of gilt-edged securities and to put it into industry. Cheap money is not an end in itself, but a means. It is the first part of a bridge across the stream of depression, but you have to build the other half, and if confidence is still insufficient in regard to the conditions of industry and that other half of the bridge does not come automatically, then the Government must take steps to see that that other half is built. My hon. Friend said, very truly, that there is still room for a great expansion of public works policy. I am not excessively enamoured of a policy of public works, but it is entirely unfair to judge it by the inadequate results of the policy of public works before 1931. The conditions have completely changed. My hon. Friend reminded us that in 1931 money spent on public works, so long as we were linked to the Gold Standard, only operated to raise the price level in the world as a whole. Money spent on public works was largely spent on foreign imports and so did not circulate to increase the demand for money within the country. From that point of view the conditions to-day are very different from what they were.

It is not only by the employment given that you can judge a public works policy. In this connection its importance lies in the effect it has upon the monetary situation, in the extra currency which passes into circulation and in the effect created upon the level of prices. It is from that point of view and not from the point of view of the number of men employed that all forms of public works, whether housing, roads, or whatever they may be, so long as they are intrinsically useful, should be judged. We ought to have a more advanced public works policy than we have at the present time. But it is not public works only that give employment. Anything else that we can do that can stimulate industrial activity is essential. We have a Protectionist policy to-day, and undoubtedly that has helped the situation very greatly. But it is also true that in the last 12 months our tariff has ceased to have its full helpful effect, because other countries have gone off the Gold Standard, while those who have remained on the Gold Standard have lowered their wages and reduced their internal debts in one way or another.

At the present time we are importing at least £100,000,000 worth of competing manufactured goods. I leave out of account some of the things that are not really competitive, such as non-ferrous metals and oils. The fact is that in manufactures that compete with our own manufactures we are importing at the rate of over £100,000,000 a year. As long as that state of things goes on we cannot talk about the home market being saturated. In that £100,000,000 worth of manufactured articles imported from abroad there is employment for 400,000 men. I do not say that we can entirely eliminate foreign manufactured goods, but if we could get the figure of these imports down to £50,000,000 we should have extra direct employment for 200,000 men. That would create a greater circulation of money, a greater demand for money in use, and so contribute to a rise in prices. We have not yet got to the end of the Ottawa policy in stimulating production in the Empire. That policy has been largely paralysed by the unfortunate results of the disastrous agreements which the President of the Board of Trade has made with the Argentine and other countries which hang round our necks for another two years and will hang round the neck of the Chancellor of the Exchequer, until the agreements are got rid of, in the shape of subsidies which he has to find as we cannot help agriculture by other means.

I do not wish on a day like this to delay the House by dwelling too long on the particular measures that might be taken. I believe that there are any number of them which would make the policy of cheap money effective, and until they are taken the policy of cheap money by itself cannot be successful. I would suggest that this matter is not one that can be dealt with between the Chancellor of the Exchequer and the Bank of England. The bias of the Bank of England may be all wrong. It is, I think, a bias which needs correcting, but it cannot be corrected by the Chancellor of the Exchequer alone, because he is only a Departmental Minister concerned with certain aspects of the national life. This matter concerns other aspects of the national life far more. There is the effect of the monetary policy upon industry. That is primarily a matter for the President of the Board of Trade. It is the monetary depression which has ruined agriculture here and all over the world. It is no use trying to raise the price of a particular article by restriction at the expense of the price level elsewhere in other articles. You have to raise the price level generally. It is, therefore, a matter for the Minister of Agriculture. It is also a matter for the Secretary of State for the Colonies. The hon. Member for Aberdeen East (Mr. Boothby) spoke of the hardship of the Colonies in having to pay 6 per cent. interest, but in terms of the goods which they produce the Colonies are largely paying 12 and 15 per cent. interest. Nothing has been more depressing to one like myself, who has taken a tremendous interest in the development of the Empire, to see the absolute standstill of that Empire during the last few years, the retrenchment that has been going on everywhere, the cutting down of valuable creative services and the impoverishment of the standard of living of the natives. This is an aspect of the matter which is vital to this question of monetary policy.

There is another matter which we have been discussing at no little length recently—India. Whatever the solution of the constitutional problem in India may be, the constitution will not work unless you have a better economic foundation than you have to-day. You will have endless struggles between Provinces and Centre, and between what are called the nation-building services and the defence services, unless you improve the economic situation of India; and the foundation of that is to raise the price level of the goods which India produces.

This is a matter which affects every department of State, and it can only be settled by having a Government policy. I do not believe that you can have a Government policy on this question, or on any other important question, so long as you have the kind of Cabinet you have to-day, a score of busy over-worked departmental chiefs meeting once a week with an agenda which cannot be got through, beginning with a little miscellaneous discussion on foreign affairs and then getting down to the agenda. It never has time for issues of policy. I do not think that I am betraying anything in the nature of Cabinet secrets when I say that any Cabinet Minister who at an ordinary Cabinet meeting starts a discussion on a great issue of policy is regarded by his colleagues as "Public Enemy No. 1.," a tiresome per- son who is standing in the way of his colleagues who have items on the agenda which have been waiting for weeks. Under these conditions you can have no Cabinet policy. You have a sort of standing conference of departmental chiefs, who try to get through their particular departmental items, who rejoice if they slip them through but who sometimes find themselves blocked and their policy spoiled by the objections raised by some other department. You do not get a Cabinet policy. You may get some rough-and-ready compromise between contending policies. Subject to that the Whitehall war goes on merrily. The Departments fight each other, and the Treasury fights everyone, but you have no Government policy on defence or monetary matters, or on any of the great issues which affect more than one particular Department.

The mere courtesy in the Cabinet prevents Ministers from raising issues which vitally affect them but which are supposed to be within the purview of a particular Department. Nobody except the Chancellor of the Exchequer is supposed to talk about monetary policy; it is considered rather tactless to do so. I do not believe that you can go on with a system such as you have to-day; this hugger mugger system. You want to separate great issues of policy from the overwhelming burden of departmental duties. It is the experience of all services where you have a big administration and great policy issues, that if the same persons are entrusted with the control of policy and routine administration policy, always gets left out. Routine is always the more urgent and requires far less intellectual effort, and, therefore, a sense of urgency and laziness combined makes you deal with matters of routine and leave over matters of policy. That is why you have a General Staff in the Army, and that is why, until you introduce the General Staff principle into the administration of the country, you cannot deal with the great problems of policy.

That was the lesson which the war taught us. No one knows better than the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George) how impossible it was to get either Gallipoli or anything else settled by the then Cabinet. If you left these matters to a Cabinet Committee they never decided; there was always some loose end which they had to refer to another department outside the Committee, or other matters which were so important that they had to go to the Cabinet itself. A solution was not found until the right hon. Gentleman had the courage, when he became Prime Minister, to say that he would only have five colleagues as Cabinet Ministers in the full sense, who would sit daily, as they did, to frame policy for the nation in war and at the same time be in constant contact with the departments outside. It was a small body who arrived at a single mind on these matters and carried the War to a successful issue. I believe that the issues to-day are just as complex and difficult as they were during the War, and that they need just the same kind of co-ordination. I believe that the method which failed us in the War is failing us in the peace, and that we must turn to the method which succeeded in the War in order to win our victory in the peace.

12.52 p.m.


We are indebted to the hon. Member for Lime-house (Mr. Attlee) for drawing our attention to this most important subject of national monetary policy. The hon. Member made an attack upon the banks. I hold no brief for the banks, who are quite capable of looking after themselves, but so far from the banks in the North of England having a stranglehold on industry, if they have erred at all it is on the side of being too free with their advances, and they have now great difficulty in getting back some of the advances they have made. There has been no difficulty, as far as I know, on the part of anyone who is credit worthy in getting an advance from the banks in the North of England or in the South of England. He made some sarcastic references to myself and said that he was not able to understand what I said. Mr. Gladstone, when constantly interrupted by an hon. Member who said that he could not understand what he was saying, said that he was not responsible for the hon. Member's understanding. Equally, I am not responsible for the understanding of the hon. Member for Limehouse.


Dr. Johnson said that.


My hon. Friend reminds me that it was Dr. Johnson. The hon. Member for Aberdeen East (Mr. Boothby), in his brilliant speech, said that these measures were mere palliatives. I agree. I am glad that he stressed the importance of restoring international trade. I have some interesting figures which indicate the state of unemployment in this country to-day, or as it was in the month of May this year. The average was about 16 per cent.; in woollens and general engineering it was slightly lower; in coal mining, 28.6 per cent.; in iron and steel over 20 per cent.; in cotton, 21 per cent.; and in shipbuilding, 47.6 per cent. That gives us a basis on which to approach this problem, because we find that nearly 50 persons in every 100 in the shipbuilding industry are unemployed. In reference to the speech of the right hon. Member for Sparkbrook (Mr. Amery), I would say that we are all agreed in asking the Chancellor of the Exchequer to state to-day more definitely what is the policy of the Government both with regard to foreign trade and monetary policy. The position to-day is that a large percentage of those in shipbuilding are out of employment, as are those in the great basic industries. That surely is a foundation upon which to base the policy of this country.

I agree that there is no one remedy. The Government have shown readiness to support a policy for getting people on the land and for a certain measure of public work, and the Chancellor of the Exchequer is to spend £5,000,000 on the new Cunarder. I have not the slightest doubt that the Government are quite prepared, if concrete schemes are advanced, to consider them, but they are opposed to the indiscriminate use of national credit for public expenditure when there is no definite policy or scheme before them. But when we find that a large proportion of unemployment exists in the basic industries, and in shipping and shipbuilding, we are driven to the conclusion that a policy which will help to restore our foreign trade, our export and international trade, really is the secret of the removal of the terrible distress which exists to-day. We have over 2,000,000 unemployed. I gave the figures the other day and quoted from the Report of the Civil Lord of the Admiralty that in the Durham district alone there are 85,000 unemployed, of whom 25,000 were in shipbuilding and 11,000 in engineering. I said that the scheme for voting £2,000,000 would obviously have little or no effect in getting back into employment the shipwrights, mechanics and engineers.

That brings me to what I might offer as some contribution towards the restoration of foreign trade. How are we to stimulate our exports? Our export trade surely depends upon stability of exchange. How are we to restore stability of exchange? Obviously only by achieving stabilisation of currency. The hon. Member for East Aberdeen, and others, have mentioned the subject. We know that to-day there is a system of barter in existence. I read an interesting article in the London "Evening News" the other day, which spoke of the Irish Free State seeking to barter Irish cattle for German coal. A day or two ago we heard of the exchange of Brazilian goods for British and other warships; of Germany exchanging manufactured goods for South African wool, of Australia exchanging wool for Japanese cotton, and so on. These things are all under negotiation. Is our civilisation reduced to a simple system of barter?

Surely the most important question at this moment is the restoration of stability of exchange, and that depends, of course, upon the stabilisation of our currency. There is the report of a great company, I think it was Agar Cross & Company, which mentions losses of £330,000 in the past year, compared with £227,000 in 1932–33, and of that total no less than £223,000 was due to exchange. Many people with investments in the Argentine and elsewhere know that to-day they cannot get any income from their investments. There are many industries prospering in these various countries and showing a profit there, but when it comes to a transfer there is no income to be gained from the investment. It all comes under exchange.

There is need for some policy in this matter. It was stressed the other day in a remarkable leading article in the "Times," which ended by stating that the need of to-day is a carefully developed policy of employment. There again, unless we can restore our foreign trade, how are we to get that policy of employment into being? Great Britain should take a lead in this respect. I happen to have sent over to President Roosevelt a report of the proceeding of the Sound Currency Association, of which I have the honour to be Chairman. I received a letter in reply, dated 15th Noember, from The White House, to the following effect: My dear Mr. Mason—Your letter of November 1, with enclosure, has been received. The President has asked me to acknowledge it and to thank you for your thoughtfulness in sending him a copy of the report of the proceedings at the annual meeting of the Sound Currency Association. I have also been in touch with Dr. Schacht thanking me for my help in connection with the Anglo-German payments agreement. In the course of his letter Dr. Schacht says: Even if the new trade agreement may fall short of the ideal, the prospect of a clearing house injurious to the mutual trade has nevertheless been avoided. Efforts must now be made on both sides so as to make the new plan as successful as possible. All of us will agree that unless we can establish stability of exchange we cannot facilitate or help transfers. Until you get stability of exchange and stabilisation of your currency you will not be able to recover your debt or get a greater income from foreign investments, which are still £3,000,000,000 to £4,000,000,000.

It might be asked, what should be our policy so as to arrive at stability of exchange? How are we to achieve it? I have often spoken on that subject in this House, and some reference has been made to it to-day. An hon. Member was asked by the Chancellor, did he support achieving parity with the United States dollar? I would not go so far as my hon. Friend, who wanted to de-value still further. It is very difficult to express an opinion upon what ought to be the rate at which we should stabilise, because of the inability to know what are the transactions of the Exchange Equalisation Account. There we have £350,000,000, and we do not know how it is being used, whether it is being used for the purpose of depreciating sterling with the object of stimulating our export trade, although I think that in large measure that is over-rated. It is very difficult to express a view, but I might offer an opinion, assuming that it has been used to depreciate sterling unduly. I hold that when the Government face this problem they will fix what might be termed a reasonable figure. If I owe a man 20s. and I only pay him 10s., I am repudiating a part of my obligation.


I do not want to interrupt the hon. Gentleman but I hope he will not go on repeating the suggestion that the Exchange Equalisation Account is used to depreciate the pound. As I have so repeatedly said in this House and elsewhere, that never has been the purpose of the Fund, and it has never been used for any such purpose.


I am very glad to have that statement. I assure the right hon. Gentleman that it was not my intention to misrepresent the position. I said that it was difficult to express a view because of our lack of knowledge of what the account is doing. The right hon. Gentleman has very frankly told us that it is not being used to depreciate the pound sterling. Then I assume that if it has been used at all, it has been used to maintain the pound sterling. I am glad to know that but I regret the state of affairs which necessitates borrowing to the tune of £350,000,000 for that purpose.


I am afraid that the hon. Member has not paid attention to the statements which I have made on numerous occasions about the actual purpose of the Exchange Equalisation Account. It is not used either to depreciate or appreciate the pound against the natural trend of affairs. It is used exclusively for the purpose of ironing out minor fluctuations in the pound which may arise from various causes but which do not affect the general and more permanent trend.


I appreciate that, and we will not quarrel about the phrase "iron out", but if to iron out means maintaining the pound by artificial interference then obviously it is having the effect which I suggest. If this great credit of £350,000,000 is used for a specific purpose and if it is not used for the depreciation of the pound but merely for ironing out these fluctuations, then unquestionably it is more or less maintaining sterling at or about its present figure.


In relation to what does the hon. Member say it is being maintained? Surely the statements of the Chancellor of the Exchequer and the terms of the original Act show that the object of the fund is to prevent undue fluctuations in the exchange value of sterling.


I am thinking of what is the amount of depreciation or appreciation which you are prepared to face. The real answer to the hon. Member is to ask what is the test of the unit which you propose, that is the test of depreciation in the pound sterling. It can always be arrived at by comparing the market value of gold with the Mint price. The difference between the market value which is round about 140s. per fine ounce and the Mint price of 85s. is the measure of the depreciation that exists. I wish to get as near as possible to the old parity. The difficulty is in arriving at the right figure, and that is the reason why I used the words "a reasonable figure". It is because of my inability to state exactly what that figure ought to be—due to the fact that I was unaware of the operations which the right hon. Gentleman has now told us take place in connection with the Exchange Equalisation Account.

Obviously, there is artificial interference with the real value of sterling, and if that were removed we should know what the exchange ought to be. The Government of course know all the facts and are in a better position to state a figure than we are who can merely make an approximate guess. The right hon. Gentleman has very kindly and courteously stated to-day, I think rather more than he has ever stated in the past, as to the operations of this fund. Of course, he maintains that he has always told us what its purpose is, but I think he has been particularly frank to-day, and if he goes on in that way, we may, perhaps, in time get a statement from him as to what the account is really doing.

If the Government take action to stabilise at a figure as near as possible to the old parity, it will benefit many classes in the country. It will benefit the rentiers who have investments abroad because the nearer we get to the old parity the greater the income from their investments. It will also benefit the wage-earner who is just as much interested in the value of the pound sterling as the rentier. If we get back as near as possible to the old parity, he; will get a more valuable pound and will have a higher purchasing power. I hope that action will be taken along those lines. Many years ago when we were faced with a commercial crisis the great American writer Emerson, who was then visiting this country, declared: I see her not dispirited, not weak but well remembering that she has seen dark days before; indeed with a kind of instinct that she sees a little better in a cloudy day, and that in storm of battle and calamity she has a secret vigour and a pulse like a cannon. I see her in her old age, not decrepit but young and still daring to believe in her power of endurance and expansion. Then apostrophising this country he went on to say: Seeing this I say, All hail! Mother of nations, mother of heroes with strength, still equal to the time; still wise to entertain and swift to execute the policy which the mind and heart of mankind require in the present hour, and thus only hospitable to the foreigner, and truly a home to the thoughtful and generous who are born in the soil. So be it! so let it be! If it be not so, if the courage of England goes, with the chance of a commercial crisis, I will go back to the capes of Massachusetts, and my own Indian stream, and say to my countrymen, 'The old race are all gone, and the elasticity and hope of mankind must henceforth remain on the Alleghany ranges or nowhere.' I believe that this country is capable and that this Government is capable of facing this commercial crisis. I believe that the same spirit exists to-day as existed 100 years ago when we had a similar crisis after the Napoleonic Wars. It is because I believe that, because I believe in the immortal words of Pitt, that Great Britain will save herself by her exertions and Europe by her example, that I ask the right hon. Gentleman and the Government to take action on the lines I have indicated.

1.14 p.m.


We have been treated to a series of discourses on finance. My hon. Friend the Member for Limehouse (Mr. Attlee) began by referring to the case of Lancashire and the cotton trade and commented on the fact that Lancashire had been left out of the Measure dealing with the depressed areas. He also referred to the question of the reorganisation of the industry, and pointed out that nearly 100,000 people in the industry were at present unemployed. I have no intention of following the financial arguments which have been put before the House this morning, but at the same time one realises that the arguments put forward may bear some fruit, and according to the hon. Member for East Edinburgh (Mr. D. Mason), if the Chancellor of the Exchequer would follow the dictates of the Liberal party, they would make a man of him. That shows that there is still hope for the Chancellor of the Exchequer. On the other hand, we had the right hon. Member for Sparkbrook (Mr. Amery) showing us the great brotherhood existing between all Departments of the Government, how they were usually anxious to help each other over their difficulties with everyone fighting for their own, which, of course, carries with it more than I can express, but it certainly points out that there is no co-operation between them, and so one need not wonder why there has been no progress made by the Government.

The hon. Member for East Edinburgh touched upon the question of the reorganisation of the northern industries, and I want for a few minutes to call attention to the reorganisation of the Lancashire cotton industry. The hon. Member for East Edinburgh said that the banks in the north of England had been too liberal in their advances, and I quite agree. They were so liberal in their advances that after the great financial slump in the industry practically speaking the whole of the Lancashire cotton industry is involved and under their control. We find that we are dealing with questions which need a wide interpretation, because this effort to reorganise the industry has been going on, for three or four years, and I do not see any great improvement in the conditions, either of the employers, manufacturers, or of the people employed in the industry. At the moment they are discussing the question of the elimination of redundancy, as outlined in a scheme submitted to them. Redundancy is a large thing indeed, because there are so many cotton mills closed in Lancashire that, redundancy is seen in almost every direction. There are so many closed, and so many that are only just existing, that, are not in any sense an asset to the industry as a whole.

It has been said during these reorganisation talks between the employers in the cotton industry that they have something like 10,000,000 spindles too many, I have been looking through some of the statements which have been made, and here is a statement by one newspaper: The Association scheme proposed suggested, in effect, a method of organised short-time working by pool and quota, if desired, whilst the redundancy scheme aims at a concentration of production. Obviously the effect, if both are adopted together, is different from that where only one is adopted. The most damaging criticism of the redundancy scheme has been that there are 9,500,000 spindles idle, of which 7,250,000 are in stopped mills, so that the elimination of a total of 8,800,000 spindles, or even 10,000,000 spindles, does not greatly affect the question of concentrating production and hence reducing costs. The menace to financial stability of surviving mills is the potential starting-up of the stopped mills rather than a present effect, but the price to be paid to remove it is fairly substantial.


The hon. Member has not made it clear that, although it is true that on an average there may be 9,500,000 spindles stopped, they are not always the same spindles, and you have a large proportion of them which one fortnight will be working and the next will be closed down. You get a greater number than 9,000,000 spindles closed at one time or another during the course of any three months.


It is just as easy to say that we have 2,000,000 unemployed but that they are not the same people all the time. They are there in the aggregate, and as a consequence we have to take things as they are.


The hon. Member was arguing for concentration of production, and if you can reduce spindles by a certain number, you will have steady work for the remainder.


You are no more sure of that than of the other, because in the stopped mills there are 7,250,000 spindles, so that 75 per cent., roughly, of the number of spindles supposed to be eliminated are in stopped mills and may become a positive danger at any time if those mills are restarted. I do not intend to follow that line very much further, but I think something will have to be done, either by the Government or someone else, to try to put things more nearly on a sound manufacturing basis than they are at the moment in Lancashire. I intended asking the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), in connection with the great financial ramp that took place in the cotton industry during 1920, 1921, and 1922, whether the Government of that day ever thought that the financial bungling at that time, which was allowed by the Government to go on unimpeded, would inflict a mortal wound on one of our greatest industries. It is no secret to us that in many cases the mills were refloated at eight, nine, and 10 times their original value, and so much capital was put into the cotton industry that it almost killed it at once, or at any rate made it impossible for it to recover. It never could and never can carry the capital which was invested during that period, and that brings me back again to the point raised by the hon. Member for East Edinburgh, when he said that the banks had been too free in their advances. They had been too free in their advances.


I do not think I said that. Not being in a position to know exactly why the banks made advances, I should be sorry to offer a criticism of their policy, but I think I said that if they had erred at all they had erred in being rather too free with their advances.


I took down the hon. Member's words, and I think he said that the banks had been too free with their advances to industry in the north. Whether they have or not, it remains true that the industry is labouring under a very heavy burden, and the problem to-day is not one of the people in the industry, but of placating the people in the banks who control the mills and the industry as a whole. I think we ought to get down to that particular fact, because that is the point at which the difficulty arose and the great trouble commenced, and until something is done there, they are not likely to arrive at any kind of agreement which will bring prosperity to the industry. We have it that the number of people unemployed in the cotton industry between 60 and 64 years of age has dropped heavily since 1923. I am only quoting these figures to justify my belief that this will be a continual thing, that we shall have this reduction in the number of people employed for a considerable time to come, until indeed a satisfactory basis is found upon which the whole industry can be rebuilt.

The mining industry has suffered even more heavily than cotton, but in the last four years the insured population in the cotton industry has dropped, as was mentioned, I think, by my hon. friend the Member for Limehouse (Mr. Attlee), by something like 100,000 people. When one looks at that figure of 100,000 people in one particular industry it shows at once that there is something radically wrong and something into which it is necessary to inquire very closely. During the last 12 months the reduction in the number of people employed was quicker or heavier than it was in 1931–2. The only thing that is being done to reduce some of the difficulties in the cotton industry is to introduce a larger number of looms per weaver. That may mean a larger output, but it is bound to require a smaller number of weavers. I notice in the Press that the principals of the Oldham Technical College and the Harris Technical Institute, Preston, are bemoaning the fact that their students are falling off heavily. The principal of the Harris Technical Institute said that parents looked for any avenue of employment rather than the cotton trade for their children. That does not refer to the children of the ordinary weaver or spinner as a rule, for these institutes are used mostly by the sons of the people who hold responsible positions in the industry.

That leads one to think that the heads of the industry are losing faith in it, and are prepared to put their children to any other profession or opening rather than tie them down to the industry in which they themselves are earning their living. The export trade of this industry occupies a very inferior position from that which it occupied some years ago. Although there are so many conferences taking place between the heads of the industry we do not seem to find any great desire to save the industry. It seems to be hanging, as it were, in space. What is done to-day is undone to-morrow. What is agreed on to-day is broken to-morrow. There is no faith or confidence in each other among the heads of the industry. Mr. John Grey, the Chairman of the Master Cotton Spinners' Association said recently: Scrambling by too many spinners and too many weavers wanting to employ their machinery when the amount of trade available was not adequate was bringing the trade into a condition of internal competition that almost amounted to a dog fight. It would continue so until some more rational measure was adopted whereby the potential supplying capacity of Lancashire could be more closely related to the potential demand. It is a problem that is not outside the wit of man. The trouble is that when you have an industry that comprises such an enormous number of individual units, it is a terribly difficult thing to get unity on anything, or even to get a sufficient working majority. But I am hopeful that we shall get a Government that has, shall I say, some backbone that will refuse to allow minorities always to be in the ascendancy and will really control an industrial policy of a great industry like the cotton trade … Until the industry had been given more confidence in itself there would be a situation which would grow gradually from bad to worse. That is a confession of failure among the heads of the industry showing that they are not able to conduct their own business, but are waiting patiently, almost abjectly, for a Government of backbone so that they can have somebody to show them how to control their industry. As the principal of the Harris Technical Institute of Preston states, a man of vision is wanted, but they cannot find him and they are waiting for something to turn up like one of the great characters of Dickens. In the nine years from 1923 to 1932 the export of cotton goods fell from £22,000,000 to £11,000,000. Mills standing idle are not a very high tribute to the cotton manufacturers in the county. I would like to refer to a statement made by the hon. and gallant Member for the Exchange Division of Liverpool (Colonel Shute) who is Chairman of one of the sections of the cotton industries. The Press report stated: The suggestion that the cotton industry had a strong case to demand from the Government a very substantial grant towards the cost of purchasing redundant spindles was made by Colonel J. J. Shute, M.P., at the annual meeting of Combined Egyptian Mills, Ltd., in Manchester. However, if the trade had to find all the purchase money the annual charges and sinking fund necessary would not be unduly onerous. Colonel Shute, referring to the German debts to Lancashire yarn exporters, recalled that in August it had been unanimously decided not to make further deliveries or to enter into any new business pending a favourable outcome of the negotiations. It was a regrettable fact, he alleged, that instances had come to his knowledge where those who had agreed to that resolution had delivered yarn in direct contradiction to their expressed intention. That was one of the bugbears they had to face in trying to arrive at any fair arrangement for the benefit of the trade as a whole. That striking statement shows not only that the cotton manufacturers can not arrive at a settled policy, but that, when they do arrive at a unanimous decision in their conferences, some of the people turn tail on the resolution that is agreed to and break faith with the people with whom they are associated. This statement is evidently a forerunner of an approach to the Government for a subsidy. We are getting so accustomed to subsidies that we should not be surprised if a pawnbroker or somebody like that asked for one, because everyone who wants money is turning his eyes towards the Government and asking for it to be given out of public funds. It may be a good thing or a bad thing. I think it is bad and should be discontinued altogether unless the circumstances are so strong that a subsidy has to be given. It is evident that this industry is going to seek assistance from public funds to bolster up a financial position which cannot live, and not a penny of any subsidy granted to the Government will ever be reflected in lower hours of work or higher wages to the worker. A subsidy would be nothing more nor less than a sop to the bankers because they are the people who have to be placated and who have the industry under their control. If the industry makes a request to the Government for money, it knows very well where the money will go. It has been mentioned that the industry cannot rely upon the loyalty of the people in it, yet they are going to ask for money to help that conditions of things to continue.

I want to point out a few things as I find them in Lancashire, and to mention one or two cases of poor relief to show that the people in Lancashire in not only the cotton industry but other industries are going through a very hard time. If the cotton industry could be put into a satisfactory position it would have a very great effect on the whole of trade throughout Lancashire and bring a considerable improvement. I am informed that the cost of poor relief in Oldham has increased fourfold in the last 3½ years; that in Manchester the Public Assistance authorities paid out £7,333 a week in 1931 and now are paying out over £14,000; and that the Lancashire County Council relief payments have increased since 1930 from £4,499 per week to more than £10,000. Those are a few facts which denote the conditions of the people there. They do not apply to cotton workers only, but are spread over the whole of the population. I should like to call to notice what the hon. and gallant Member for Accrington (Major Procter) said in a speech in this House on 2lst November: I rejoice that unemployment has gone down in Lancashire—in my own constituency from nearly 16,000 to just under 6,000."—[OFFICIAL REPORT, 21st November, 1934; col. 187, Vol. 295.] It is very evident that his knowledge of Lancashire is very limited, that he is viewing Lancashire through one eye only, if he regards that state of affairs with any satisfaction. He ought to look further afield. Towards the end of his speech he asked the President of the Board of Trade whether, if the Lancashire cotton trade put forward an agreed scheme, he would give them a clear cut promise of financial aid. It is evident from that that it is in the air that a request should be made for a subsidy or a loan. As a further comment on the speech of the hon. and gallant Member for Accrington I would point out that in the period January, 1934, to November, 1934, there was a reduction of 6,000 in the number of people employed in the cotton industry. The numbers in the coal industry decreased in the same period by 4,000. The net decrease in the mining industry in 1933–4 was over 42,000. In the period 1932 to 1934 there was a decrease in the cotton industry of over 50,000. In the spinning section between 1932 and 1934 there was a reduction of over 24,000 and in the weaving section a reduction of over 25,000. In the two sections there was a decrease of something like 50,000 people.

Recently I put a question in the House, asking the number of mills which had been closed down in Lancashire in the period between 1932 and 1933, and the reply was that 58 cotton mills had closed down and 64 cotton weaving mills. Between October, 1931, and October, 1933, 30 limited companies and one firm in the cotton industry centred in Lancashire either went into liquidation or had become bankrupt, and 31 mills owned by those concerns were closed down. In April, 1932, the total number of looms installed in the Lancashire cotton mills was 601,750, whereas the figure for 1930 was just about 704,000. Those figures show the great need for something to be done promptly if we are to bring satisfaction to the minds of our people in Lancashire. The efforts which have been made touch little more than the surface of things. Whenever the employers are in any difficulty all they can think of is asking the employés to agree to an extension of hours or a reduction of wages, and that kind of thing ought to be stopped.

I would like to quote one or two paragraphs from a speech of Mr. David Atkinson, the principal of the textile department of the Harris Institute, Preston, on "What is wrong with the Lancashire cotton industry." The height of prosperity was seen in the boom after the War, and since trade had been sinking. At the time when money was being made very easily—so easily that pound notes were pushed under office doors—more prudent measures might in many cases have been adopted. But expensive cars were taken out and big villas built. London heard and financiers came down and killed the goose that laid the golden eggs. The trade was now in the hands of the cotton people themselves, trying to get it back from the dust where it was left after the recapitalisation of numerous mills—a recapitalisation out of all sense and reason and on which it was never going to be possible to pay dividends…. So the cotton trade had been bled. Were they not surprised that hard-headed Lancashire men allowed themselves to be sprung on in that fashion? The wiser among them said, 'Don't spend this money, but keep it. It will have to go back'. He went on to say: There was plenty of money in the country for commercial enterprise, but none for cotton. Parents looked for any avenue of employment rather than the cotton trade for their children … Work people in our mills were the best in the world but their looms were not fitted for the making of cloths upon which in many, cases they were engaged. Yet the work was being done successfully. These people could not do anything to improve the trade. Apparently they were only asked to co-operate by working longer hours or at less wages or both. It was at the other end of the scale where they wanted the planning for improvement. Manufacturers were scrambling for orders like a dog fight. They needed a clear mind and there was not one visible. Plenty of men were capable of leadership but they were worried about things low down. They wanted somebody with a real vision to see things. I think that is a fair view of the Lancashire cotton industry as we find it. I may have exaggerated or fallen short in my statements in some particulars, but it is very apparent that something must be done to put the cotton industry on its feet. I am not saying that it is in a worse position than the coal industry, because it is not. The coal industry has been in a worse depressed condition than the cotton industry for a longer period, but it has been trying to improve all the time. All the same, a large number of collieries have been closed down, and a large number of workmen are not likely to get employment again as miners.

We want the Government to take upon itself the supervision of Lancashire as an industrial area. We want the Government to make a report upon it similar to the reports which we have had from what are called the depressed areas. We are quite sure that as much poverty and as many hardships will be found to exist in Lancashire, although the people there are as strong a people as are to be found in any part of Great Britain. Lancashire people have suffered intensely, but they cannot submit to such suffering year in and year out. I appeal to the Government to take into consideration what is said in the annual report of Sir George Newman, the Chief Medical Officer of schools: A state which allows its young people to degenerate, physically or mentally, because of unemployment is incurring a very grave responsibility. Perhaps of all the disadvantages of prolonged unemployment in youth the worst are the disappointment and demoralisation which ensue upon this enforced idleness and the more or less complete wreck of psychological aspirations and hopes. Such young people are liable to become embittered and mentally depressed and they lose the ground of hope. Have authorities failed hitherto to recognise this? I sincerely hope the Government will do something to bring this industry, and Lancashire as a whole, into a state which is more in keeping with the great traditions of the past. I am not saying that Lancashire is a bright example of what everything ought to be, but I do claim that Lancashire has stood its ground through thick and thin, through well and through ill, and that its people have never run away from their responsibilities. That being so, they ought to have consideration by the Government. If the Govern- ment will undertake an inspection or survey of the depressed areas in Lancashire, I am sure that not only will the cotton industry be taken over by them and given a directing hand, but if they agree to assist the cotton industry, that assistance should carry with it some Government control. I hope that the survey will be made, because the Government will find that there is great justification for putting such a measure in hand. It would give great satisfaction not only to the working people of the county but probably to all those manufacturers who are unable to agree among themselves as to what should be done in their own interests.

1.46 p.m.


I am sure that the Financial Secretary to the Treasury, when listening to the last part of the speech of the hon. Member for Wigan (Mr. Parkinson), remembered his own experience in Lancashire. During the years that he was there he made many abiding friendships and I am sure he grew to admire the character of the cotton operatives. Nobody has suffered more hardship, not only during the last four years but during the last 15 years, than the operatives, and nobody is more deserving than they of a little encouragement. So much I endorse of the speech of the hon. Member for Wigan. I was sorry at the reference made by the hon. Member to the speech of the hon. and gallant Member for the Exchange Division of Liverpool (Colonel Shute), in regard to yarn prices. Undercutting is a practice adopted not merely by one section of the cotton trade; there was under-cutting in trade union labour by weaving operatives themselves, who agreed to under-cut in order to be able to go on working. I say that not to exonerate those who practised under-cutting, because the practice was wrong and bad, but it has happened on all sides of the industry. It is one of the things that have to be stopped, not by employers, banks or the workers separately; we have to get together.

I had prepared a speech on the cotton industry without knowing that the subject was to be raised, and I wanted to talk about the general financial policy of the Government in relation to the old basic industries. I did not know that the hon. Member for Limehouse (Mr. Attlee) was to raise that very subject. In discussing this problem one can reasonably put two questions, on the answers to which everything turns. The first is, is it economically desirable that the Government should assist the older industries especially to obtain finance? The other question is, do the Government include the re-habilitation of the older industries in their financial outlook, and if so, on what conditions? Nobody wants to see money poured away, except perhaps the right hon. Gentleman the Member for Caernarvon Boroughs (Mr. Lloyd George), whose figures very often frighten a great many people. In studying these two questions one is entitled to make two assumptions. The first is that the old, basic industries, for example, the cotton trade, cannot obtain money at the present time through the ordinary financial channels.

If we look at the financial history of the cotton trade for the last 12 years—the hon. Member for Limehouse touched upon it—it will be found particularly tragic. There was the effort of hon. Members opposite five years ago in establishing what is locally called the L.C.C., or the Lancashire Cotton Corporation, by the purchase of 9,500,000 spindles through the Bankers' Industrial Development Company, itself an off-shoot of the Bank of England. If those spindles had been bought for the purpose of putting three-quarters of them out of the running, that would have been well, because even at that time the productive capacity of the industry was far too great. Most of those spindles were very old and ought to have been out of action.

The management of the Lancashire Cotton Corporation, under Sir Kenneth Stewart, became the worst under-cutters of the whole lot for years. Finally they had to allow their principal public critics, Mr. Frank Platt and Mr. John Grey, whom the hon. Member has quoted, to take over the management, and they at once shut down a great many spindles that were engaged in under-cutting and reduced the losses of that firm very substantially. The effect of that influx of capital into the cotton industry has been very unfortunate, and has made the word "amalgamation" stink. But the previous influx of capital, in the boom years, was equally lamentable. In that respect what the hon. Member for Limehouse said is quite true. I do not blame the banks. It was just a colossal miscalculation, in which everybody shared, and the people who lost most were the cotton operatives and the small cotton employers, whose business had often been in the family for 100 years and whose sons worked in the mill like any of the operatives before going into management. They had put all their savings into the industry, but at that time the worst sort of financial sharks came up to Lancashire, exploited the boom and got out at the top. That influx of money into the industry has also had the effect of making any person in the city who suggests putting money into the cotton industry be regarded as certifiable for a lunatic asylum.

The only way in which to get money into the industry is by some Government guarantee of the finances, on condition that the industry shall make itself efficient. If it is a true assumption that the money cannot be got by ordinary means, I think it is also a true assumption, as the hon. Member for Wigan indicated at the end of his speech, that if money is to be encouraged to go into the industry there must be a definite understanding that the industry shall make itself efficient. I do not say with him that there must be Government control of the industry, because I do not think that that would make it efficient. I would rather say self-control of the industry, and power to the industry to control its own minorities.

I want to raise the whole question of industrial efficiency in relation to this policy. Hon. Members cannot have it all ways; they cannot have industrial efficiency and do the sort of thing that was recently done in my constituency by the trades unions. An American manufacturer came there, with the idea of setting up automatic looms. He was proposing to start them at 20 to a weaver, and afterwards to increase them to a limit of 40 to a weaver. I may say that in America they work 50 or more, and in Japan 100 to a weaver. I do not think that any trade union would say that 20 was any hardship for a weaver because there is no fetching or carrying to be done.

The American manufacturer went to a local trade union leader and asked for his support and agreement. The local trade union leader refused, on his own initiative, to agree to supply trade union labour for the purpose. The town council had offered the manufacturer all sorts of facilities and he was taken to London, where he interviewed leaders of the trade union movement—among them, I think, an hon. Member sitting on the Opposition Front Bench—but he was refused permission to start work with 20 automatic looms per weaver. The trade union may have had a point in doing so, that is the danger of immediate displacement of labour. I suggest that industrial efficiency in this country cannot be built up simply upon a labour basis; you must go for industrial efficiency as an objective, and solve your labour problems then. The actual result of that incident was that the American employer in question—who tried Leicester, and failed there also—went to Belgium, and he is now employing 2,500 people in Belgium in direct competition in the European market with Lancashire goods. That is a very bad way of tackling the problem of efficiency in these matters. If we want co-operation, we want it on the basis of putting new life-blood into these industries, on a basis of absolute, and not relative efficiency.


If the hon. Member will excuse my saying so, his statement is purely ex parte, and perhaps there is another side to the question.


That may be so. Hon. Members will have the right to put the other side. I want to return to my original question—is it economically desirable at the present time for the Government to assist the City to grant finance to the old basic industries? A few years ago the Prime Minister was at the head of a Government which, in a limited, not in a Rooseveltian way, was backing the policy of public works. The reason that Nietzsche chose Zarathustra as the expounder or embodiment of his superman was that he considered the real Zarathustra, or Zoroaster, to be the most mistaken philosopher of all, and therefore the most likely soonest to see the truth. That might apply to the Prime Minister and public works. Is the truth of this present policy really proved? Is this financial stringency—because there is financial stringency in Lancashire—so desirable to-day? Have not the circumstances altered the case? The hon. Mem- ber for East Aberdeen (Mr. Boothby) made the point, but there is no harm in repeating it, that we are not now on the Gold Standard, that there is confidence, that we have a tariff—that all the circumstances have changed. May not the very policy which was in fact a failure under the conditions which existed when the Prime Minister was practising it be a success under the very different conditions under which the Prime Minister is refusing it? Circumstances do very often alter cases.

If it is desirable to encourage internal expenditure, one way of encouraging it is to help to make the old basic industries efficient, and I would suggest that, before the unemployment problem in any of these areas can be tackled, it is essential to tackle the old basic industries, or rather, enable them to tackle themselves. That is essential for the areas themselves, it is essential for those who look for secure, and not precarious, employment in those areas, and it is essential for the employers themselves, many of whom are willing now to submit schemes for their own self-control, and many of whom are finding more obstruction in the corridors of the Board of Trade than is to be found even here in the middle of an all-night sitting.

There is another thing to be said about that question. A definite, an emphatic, and an urgent mood is to be observed all over the country, and I am not such a poor democrat that I believe that an urgent, surging outcry, such as there is up and down the land for a policy of reconstruction, can be ignored for very long. The country is crying out for it, and the country will get it eventually, but I want to see it come under this present Government, because I believe that they can bring it about under better circumstances and conditions than any other government.

Are not the Government, in fact, halfway across the Rubicon? Can they boggle at the question of financial assistance? I do not want for a moment to advocate the policy of subsidies, the policy of the beggar's cap. It is a bad policy in principle, and it may have been carried too far already, but in fact a great deal of money has been given to industries—to the beet sugar industry, to tramp shipping, wheat, the new Cunarder, and agriculture in various directions. Above all, there is the Government's responsibility for the dereliction of these areas—an enormous responsibility, which, in itself, amounts to a Government responsibility for the efficiency of the industries in those areas. If the Government are half-way across the Rubicon as regards the question of granting money to assist industries to support themselves, are hot the Government half-way across the Rubicon—or perhaps I might say, half-way across the Red Sea—in the granting of powers to certain industries to help them to reorganise themselves? We all welcomed the reception which Lord Colwyn's scheme had from the Government. There are many other examples of Government intervention on similar lines, like Road and Rail Traffic, London Passenger Transport, railway amalgamation, the Coal Mines Act, and the Cotton Wages Act. Every one of those Measures has granted privileges to majorities, and a certain suppression of the badly used rights of minorities. Can the Government halt half-way across the Red Sea if they do not want the waters to close in over them?

I see that the right hon. Gentleman the Member for Carnarvon Boroughs has taken his place. I listened with the very greatest interest the other day to the speech that he made in this House. It was a grand paternal speech—a very wise speech, I thought, in almost every way; and I feel almost impertinent in addresing him and the House when I remember that my own grandfather was one of his colleagues at the time when he was passing perhaps the greatest social legislation of this century. There is, however, just one quarrel that I would like to have with the right hon. Gentleman. I am frightened of his use of figures—astronomical figures, they have been called. I am not encouraged when I look back into history. The Liberal party are an historic party, and when I look back I cannot help remembering, while I have great sympathy with the right hon. Gentleman's marauding expeditions, that the Welsh marauders never got very much out of their predatory expeditions after the Norman Conquest.

I cannot help thinking that the right hon. Gentleman's use of figures, which frightens so many people, is also going to frighten the Governor of the Bank of England into entrenching himself ever more firmly along the Western marches of financial orthodoxy. If that be so, I would beg the right hon. Gentleman not to allow the Chancellor of the Exchequer to "get away with it" to-day by being able to point out the too wide sense of the right hon. Gentleman's use of figures. Let him be circumspect in their use. In Africa, if you talk to a native, the native has only one way of telling you how far off a thing is. If you ask him how far it is, he will say it is a long way. That means that it is quite near. If he says it is a long long way, you know you have to look for miles for it. It is that element in the right hon. Gentleman's expression of figures that frightens so many people so much.


The noble lord the Member for Hastings (Lord E. Percy) made the same sort of suggestion. He suggested that the figures were wrong. The only figures that I used at all were figures of the sums of money actually paid to the unemployed since the War. If the hon. Member will take the trouble—I will not say which I did but which I got someone to take for me, and add up the figures of the sums actually paid to the unemployed, not merely by the Government but by way of outdoor relief as well, he will find that, so far from being astronomical, they are the actual sums of money which have been paid up to the present. They are very easily ascertained.


I assure the right hon. Gentleman that I do not question his figures. I only regret the tone of voice in which he sometimes expresses them. These are days of transition more than ever before. Many of us feel it acutely in this Session of Parliament more than at any time before in this Parliament. We are feeling it every day and we are anxious for the future. I believe it is true to say to-day The clamouring country rightly now esteems The young men's visions more than the old men's dreams. Old men are apt to dream of keeping the status quo and to think that things are better going on in their natural course a little longer. We are frightened of that because we see ourselves approaching a very difficult time. If we cannot see the programme, at least we want to see the mountain looming out of the mist.

2.7 p.m.


I want to intervene on a matter that concerns the financial policy of the Government very closely. I want to narrow my remarks to the particular controversy which I have had with the Treasury on the Red Star Line and the efforts made to secure it. I have repeatedly asked the Chancellor of the Exchequer to remove the ban which he placed on that purchase, but by the answer that he gave yesterday he made it perfectly evident that he had dug his toes in. Three ships have gone out of five. One has gone to a foreign flag and two have gone to the knackers' yard. I have some very pertinent questions to ask the Chancellor as to the methods employed for stopping this purchase. When he was informed by the Bank of England that this purchase was taking place and was asked whether he approved of it, will he deny that he did not approve of it and that, as a result of that, the Bank of England, through its Governor, brought pressure on financial houses to prevent any issue of capital so that these ships could not be purchased? From the answers that he gave to my questions on 30th November, 4th December and yesterday, I think he will not be able to deny that that is in substance what happened.

I should like to ask him what Parliamentary authority he had for taking such high-handed procedure, which seems to me nothing more or less than Star Chamber methods. Why should he not bring the whole matter to the House for its decision? It would be perfectly simple. It would have been far better to employ that method than to give strength to the cry against the banks. The method that he employed I can only describe as lamentable. It reminds me of a book called "Alice in Blunderland." Why should this enterprise be strangled? The Chancellor of the Exchequer obviously does not believe in waiting to see which way the cat jumps. He drowns the kitten and then argues that that is-sterilisation of the unfit. The north Atlantic cannot be run on parochial, parish pump methods. We are entitled to know which trades are still open to private enterprise. Is the lending of public money to be a sure and certain sign that the road is barred to all except tram line traffic? The House wants to know, the country has the right to know, and every enterprising business man has the right to know before he sinks his money and energy into an enterprise that it is a legitimate enterprise.

Is it the considered financial policy of the Government to prohibit, accepting always foreign competition in world trade, the entry of British energies into any new trade into which they put their money? I quite understand the Treasury position. They put money in and they want to guard it and look after it. But the Chancellor of the Exchequer must get beyond the Treasury outlook and take a more statesmanlike outlook. There is more in it than mere cash. Here was a scheme, apparently legitimate, attractive to the public, of benefit to the shipyards, bringing trade to the ports, especially to the Merseyside, and employment to officers and men, and the whole of the energy put into that scheme after months of organisation is wasted. It was not until Major Bustard went to get the money over the counter that a blanket was put down. Months have been wasted. All the money has been wasted. It was not his fault at all. We must know what trades are barred. This sort of wasted energy to my mind is not rationalisation. I think we are entitled to have some clear cut policy and let people know, so that we can remove this uncertainty, which is the biggest hindrance to trade that exists. Once we know exactly where we are we can get on with the job. On 4th December the right hon. Gentleman said that I expressed my criticism in forcible, not to say violent, terms. I think there was an occasion for criticism and I trust that he will answer the questions that I have put to him to-day. In the interests of the country and of trade in general it is imperative that these questions should be answered properly. I am a supporter of the Government. I think they have done magnificent work, and the Chancellor's personal contribution has earned the admiration of a great many and it merits high praise, but you do not make progress without making mistakes and, if a mistake is pointed out, I urge that it should be rectified at the earliest possible moment. It can be done as quickly as the printer's error was rectified the other night. I urge the Chancellor of the Exchequer to correct his mistake and, whatever happens, to be absolutely clear and decisive as to what one can do and what one cannot do in the matter of trade.

2.14 p.m.


I should like to come back to the wide issues which were opened by the spokesman of the Opposition, and which some of us came to the House to-day understanding that they were to be the principal matter for our consideration. I am not one of those who believe that the fact that our banking system has, almost alone in the world, come through these trying times with success is a sufficient reason for seizing every opportunity of undermining public confidence or denying the great credit to the banks which is really due to them. I find myself in a little difficulty, because I think that everybody who has listened to this Debate throughout will feel that in the absence so far of the speech of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) it has been a Debate apparently without, I will not say the Prince of Denmark, but the Ghost. We have very little so far to answer, but there were two points, besides the one with which I dealt in an interjection, in the speech of the opener that might be disposed of with advantage. He made two criticisms of the banks, which incidentally throw some light on the frequent assertion that the Treasury and the Bank are so mysterious. I am not quite certain that it would be very much of a service if they were less mysterious. We have already had the instance of my hon. Friend below me being quite incapable of listening to the Chancellor of the Exchequer, however often he says a thing in very simple words.

There are two more cases in point in the speech of the opener of this Debate. He made certain references to moneys which had been lost by investors. Everybody knows that if you are ever to make progress, ever to invest in new things, there are bound to be losses, but it is quite unfair to take particular eases and not to take the case as a whole. I happen to have here the Bank of England's figures for what has in fact happened to the securities of investors in recent years. If we take the level of 1923 as 100, at the present moment if you had invested in gilt-edged securities you would have made a profit of 24 per cent.; in the best business securities a slightly bigger profit. First-class business securities stand about 19 per cent. up and less good, about 16 per cent. up, and even very speculative securities stand considerably higher than they did 10 years ago. It is not playing the game to suggest that the investor has been rooked on the average. Of course, some people have made losses, but on the whole the matter has been exceedingly well handled. Take the matter of foreign investment. We all know the difficulties, most of them entirely outside the control of either the joint stock banks or even the Bank. But it cannot really be said that the investors have done so very badly when it is considered that between £3,000,000,000 and £4,000,000,000 of our savings that have gone abroad are still earning over 4 per cent., when you take full account of all the difficulties. It is doing an ill service to our country to suggest that, taking it by and large, the savings and financial affairs of this country are in the hands of crooks and fools. It is not so. I take the hon. Gentleman's second criticism. He said that there is far too much attention given to foreign investments. It is not quite so ludicrous, if I may say so without offence, as his previous point.


I was basing myself on the Macmillan Report, and I think that the Macmillan Report is almost as authoritative as the hon. Member.


Unfortunately, the hon. Member takes only little bits out of the Macmillan Report. He does not take it as a whole. Is he merely forgetful or is he misleading the House deliberately when he omits to tell the House that on his own chosen point about the acceptance houses, that they demolished his illusion that the acceptance houses were borrowing enormously greater sums from abroad and relending them in insecure conditions? It was one of the Macmillan Report's specific conclusions that there was not an atom of truth in his statement. He made a statement of fact. He said the discount houses were using enormous sums from abroad with which they were gambling in an insecure way. The Macmillan Report exploded that completely. He simply cannot claim the aid of the Macmillan Report for his views. Taking it by and large, so far from leading one to suppose that a complete overhaul, headed by nationalisation of the Bank of England was required, they in terms rejected such a diagnosis.


Is the hon. Member now trying to persuade us that in his opinion the policy of the merchant banking houses of the City which lent largely to Germany between 1924–29 was a right one? Because I do not think that any of those merchant banking houses would agree with him.


I suppose that if one Member will not listen to the Chancellor of the Exchequer, I can hardly complain if another will not listen to me. I said nothing of the sort. We are not now discussing whether the merchant bankers were wise in lending that money. The question was whether they were gambling with other people's money. It is easy to be wise after the event, and it was not the merchant bankers who were responsible for the transfer difficulty which has caused the necessity for the standstill agreement. The hon. Gentleman referred to the overemphasis on foreign loans. Here, again, the facts are quite simple. If we take the proportion of new capital issues which have gone abroad in the last few years, I find that in the 12 months ending in April, 1932, it was 33 per cent. Following that it was just over 30 per cent. and in the following year it had fallen to 27 per cent. That gives a greatly exaggerated picture of the proportion of savings that go abroad, because everybody is aware that the great bulk of new capital that is going into home industry does not involve a capital issue at all.

The facts, which ought to be known to everybody, do not lend any support to the main criticism which has been made this afternoon. Is the record of the State on the whole in dealing with investments such as to encourage the country to trust politicians rather than private investors and their technical advisers to deal with it? Shortly after we come back we shall have an opportunity of discussing our affairs in sugar, where a large sum of money has been invested. I might remind the House of ventures such as the Tin Restriction Scheme which is at the present moment resulting in tin being sold at about twice the price at which the entire needs of the world could be produced at a profit. I might remind the House of the State's record in housing. We all know what the State's control of our investments there did to interest rates and the cost of building. I submit that the record of the politician, hindered as he is with the necessity of getting a certain type of quick result with which he can go to his constituents, is not such as to encourage the Government, with all their many difficulties and problems, to take on the problem of handling other people's money for them. I do not say that it should never be done. In difficult circumstances it may be inevitable, but it should not be done unless you are compelled to do it.

I understand that there is a great deal of criticism in some quarters as to currency management and its results in this country. I am not certain whether the argument is that purchasing power is too little. If so, it is difficult to see what more can be done, seeing that in the course of the depression the total of banker's deposits has about doubled. It is now higher than it has ever been, or certainly very much higher than it had been years before the crisis. What, in fact, happens, as is well known, in these difficult times, is not that deposits go down; it is the people's use of them. Whether you look at the experience of America or at our own, at no time has there been a really large fall in the total deposits at the disposal of the banks. Even in the United States before the bank crash, when the avalanche was impending, as indeed it was, there was only something like a 25 per cent. fall in the deposits outstanding before the moratorium. What happened was the catastrophic fall in the circulation of money. It was not a fall of 25 per cent. The speed with which people were using their money in the United States fell by three-quarters. In this country a one per cent. change in the velocity of circulation, in the turnover of money in the banks, would have the same effect as a 10 per cent. change in the deposits which stand at the credit of customers. Deposits in this country have at no time decreased as much as 10 per cent., and they are very much higher than they have been for years.

The power of the banks is being wildly exaggerated. The banks are merely trustees for other people. They merely carry out the demands of their depositors, and their primary duty, and, it is almost true to say, their sole duty, is to ensure that every morning when they open their doors at nine o'clock, if people come to them in sufficient numbers, they can sell out all their assets and pay off all their debts and shut up their shop at night having paid 20s. in the £. Obviously, that is impossible if either advisedly or through sheer disregard of consequences people go out of the way to undermine public confidence in the banks. During the few weeks which heralded the complete bank moratorium all over the United States, less than five per cent. of the deposits were actually paid off in cash, and it only required such a very little to bring the whole machine to a dead stop.

I put it to right hon. and hon. Gentlemen who spend their time criticising and undermining confidence in the management of British banking, that they are playing a very dangerous game. It is not a question of a few bank directors getting together and causing a smash or a general closing; it is the hundreds of thousands, or millions, of taxpayers who every morning carry out a little general election of their own, upon the result of which depends whether the banks have to shut up shop or not. I beg of Members of this House who have a sense of responsibility not to minimise what we owe in this country to the fact that at no time hitherto has there been serious fear of the stability of British banks.

That brings me to the last point with which I wish to trouble the House. What are the relations of banks to investment? Why are right hon. and hon. Gentlemen so keen to get hold of the banks? There can be only two reasons. First of all, they want to get hold of the Bank of England because the people there know too much, and, if they are to have these flighty experiments in spending vast sums of money, it would not do to have the news all over the City in half an hour that they had invested people's money in things that were not going to bring any return. The second reason, which is to get hold of the joint stock banks, is perhaps more important. Why is it necessary to control the banks in order to make it possible to borrow these large sums of money? Banks are only dealing with the money of their depositors. Why cannot these gentlemen go to the depositors and put up a proposition about which the depositors will say, "This is such a good thing that I am going to draw a cheque on my account and apply for shares." They know that such a proposition is not good enough. Their quarrel with the banks is not that they have a very good thing and they are not allowed to put it across, but that they have a very bad thing and want to be in a position to compel the boards of the banks to put the money of their depositors into things about which the depositors themselves should have the sole right to decide. No one has any right to decide, neither the Leader of the Opposition nor anyone, what we shall do with our money in the banks. It is for us to decide.

I submit that right hon. and hon. Gentlemen on that bench cannot get away from the dilemma. If they are in a position to put schemes before the public which are financially sound, they will have not the slightest difficulty in finding subscribers to any proposition they may put forward. In fact, already they have to-day been talking about Lancashire. I think that that is one of the very few episodes that many people would not consider to be much of a credit to our post-War financial policy. But why did that question arise? It arose in circumstances of very lax inflationary Government finance, and, secondly, it was due to lending too much money. They cannot have it both ways. They cannot say at one moment "You have ruined Lancashire by lending them too much money, but please will you come and ruin something else by lending more money?".

I submit that as regards the currency policy of this country, the primary duty is to secure that personal savings and current accounts are not only safe, but are known to be safe. That is the only policy and it has so far been a successful one. Whenever a Government have regulated the handling of the investment policy of this or any other country, there has been no ground for saying that the results have been preferable to the results of those whose special business it is. It is within the recollection of the House and of those who have studied their own and American experience in the last few years, that the one way in which you can be certain both of causing doubt and justifying doubt in the security of a banking system is to encourage, or ultimately to enforce, the banks to load themselves up with all sorts of securities, which, the moment they try to realise them, can only be realised at such a loss that they become themselves frozen and embarrassed and have to put awkward pressure upon their customers. And so you get the snowball of enforced liquidation which caused the disastrous events in the United States in the last two or three years, results from which we have been mercifully preserved, largely because so far we have managed to keep both the joint stock banks and our central banking divorced from politics, and preserving a friendly, intimate and not too public relationship, which has served this country very well in the past.

2.35 p.m.


The hon. Member for Oldham (Mr. Crossley) has referred to the conditions in Lancashire as being largely due to inefficiency. I speak as a Lancashire man, although I represent a southern constituency, and I say without hesitation that the condition of Lancashire is not due to inefficiency in that industry and is not due to the lending of too much money to Lancashire, but is due entirely to the loss of markets. The question is, how can those markets be regained?


The hon. Member cannot get away with it in that way. There are many causes of depression in the industry. He will not deny that 70 per cent. of the machinery was installed before 1910 and 30 per cent. before the first motor car was invented. He will not deny that the organisation of the industry at the present time is far behind that of our foreign competitors.


I say again that the position of Lancashire is not due to the inefficiency of the cotton industry. I admit that there is much machinery in Lancashire that is out-of-date, but what are the causes? If you see an industry which is losing its markets and its reserves, what is the inducement for them to replace their out-of-date machinery by new machinery? Therefore, I come back to my original point. It is not the business of the Government to place money at the disposal of the cotton industry or any other industry if the depression is due to their failure to see that every possible step to make the industry successful has been carried out. My view would be that the Government should adopt a policy that would give the industrialists in the Lancashire cotton trade a square deal in all matters, and particularly in the home market. A large amount of textile goods are coming into the country which could be more efficiently produced by the mills and workers of Lancashire. It was not my intention to have made any reference to this particular point had it not been for the observations of my hon. Friend the Member for Oldham.

I rose really to make some criticisms of the opening remarks of the hon. Member for Limehouse (Mr. Attlee). He attributed the conditions which exist to-day to the failure of the capitalist system. I would ask him in what way he measures that failure. I admit from the start that there is a great deal of room for improvement, but let us take the capitalist system at its face value, and I say to the hon. Member for Limehouse that if we under the capitalist system can support a social service which is costing this country over £400,000,000 per annum, if within the last 30 years the expenditure on the social services has increased approximately by 14 times, and that there are about 8,000,000 families in this country who are in receipt of approximately £1 per week, which is the equivalent of the social services which they are receiving, I cannot agree, with these facts in front of us, that the capitalist system has failed. It is even carrying us from the cradle to the grave. We start with maternity benefit, we have free education, free meals and old age pensions. Therefore, a very unjust criticism has been made of the capitalist system.

What is the alternative of the party opposite? There was no definite reference in the speech of the hon. Member for Limehouse as to his alternative, other than the raising of credit; but know that the policy of his party is nationalisation. I do not mind nationalisation if he have evidence that such a policy would give to the people of this country happier conditions than they are experiencing to-day, but when I look round and try to find out where there is any evidence of what nationalisation has done, I find that the country that has adopted that policy as an alternative to the capitalist system, is Soviet Russia. What are the conditions there, where nationalisation has been carried to the extreme? We find that the people of that country are starving in millions, and every person in the country is on a poor ration. Nationalisation, then, is the policy of the Socialist party. Conditions being as they are, we on this side of the House are by no means satisfied that we are winding up the year 1934 with an unemployment register of just over 2,000,000. I regard that as being a disgrace to civilisation. But this Government have done a great deal to improve conditions, and I have confidence that they will go further and do much more, in spite of the fact that they have been accused of resting somewhat upon their laurels.

The position throughout the world is not what it was before the War. Almost every country has adopted the policy of economic nationalism. Why should they not do so? Who are we to say that other countries should not manufacture this or that? The conditions following the Great War have forced those countries to adopt this economic policy, and it is not for us to dictate to them that they should change that policy. Our Government must be alive to the conditions as they exist to-day. Those conditions have brought about such a state of affairs that international trade will probably never regain the level at which it stood in the past. That is the position that the Government must face. The right hon. Member for Sparkbrook (Mr. Amery) referred to this question. Foreign restrictions and foreign exchange restrictions are a cause of the trouble. I agree that there must be adjustment of these matters, but whatever we do to adjust them, that in itself will not bring about any great influx of international trade.

While I would like to see some international understanding I am not looking in that direction for material help for the industries of this country or of the world, because of the development of economic nationalism. Where can we look for the possibility of getting these 2,000,000 people back again to work? Obviously it is the home market. The revival in trade which has taken place is largely attributable to the home market. Have we finished? I submit that there is a great possibility of going further, but there seems to be some mysterious hand which is restraining the Government from going forward with their economic policy as progressively and as aggressively as they might. If they would only show the courage and enterprise they showed in the early part of this Parliament, I believe that the home market could be made more prosperous than it is, and that a larger number of our people could be put back again into work.

What is one of the factors which may be influencing the Government? Our international trade has been referred to. Before the War I was brought up in the atmosphere of international trade, and Free Traders will, of course, always maintain that that is the only way to solve the problem. But the policy of the Government has put 900,000 people in work. That is very creditable and justifies the policy of the National Government. My point is that there are certain members of the Cabinet and of this House who are influenced by this international trade. What has international trade done in the past, and what is it going to do? In the past a little over 20 per cent. of pre-War production went into the international market, and the price of these goods was governed by the wage level of world goods, not necessarily, the prices of the home market. Then the wages of the rest of the workers of this country, approximately 80 per cent., were governed by what you could pay the 20 per cent. to enable them to get their goods into the world market.

I think we should be making a mistake if we paid too much attention to international trade, when we have the home market which is employing nearly 80 per cent. of our people. I feel that this 80 per cent. would to-day have a higher standard of wage if we had not paid so much attention to the 20 per cent. I am not arguing that we can do without international trade. As we are still the largest purchasing nation in the world we must have some export industry. Until the Minister of Agriculture can get more out of the land of this country we must continue to import a very heavy percentage of our foodstuffs. As long as we have to import food we must export to pay for it. But there are other causes than the alleged failure of the capitalist system for unemployment. I have heard no reference to machinery to-day, but the progress that has been made in machinery is in itself one of the causes of unemployment being so high. It is a cause which I maintain we should have dealt with. We can deal with it under a proper policy, but one cannot say that the Government are dealing with it efficiently and effectively so long as we admit £100,000,000 of manufactured articles to come into this country. Another interesting point is that the volume of production to-day is approximately at the level of 1929, but if you compare this year with 1929 unemployment is not far short of a million more. Therefore, we have a situation where we are producing an equal volume of goods but a greater number of people are unemployed.

I do not hesitate to say that we may find a solution down the avenue of shorter hours. I am glad that the Government are going to make some sort of investigation, but I hope they will not repeat the mistake they made at Geneva when the question of a 40 hour week was considered. There has been a slight falling off in hours during a period of years. When I served my time I worked 10½ hours a day, at the present time is is eight hours, and there has been no great upset because of it. People are infinitely better off and receive a much higher wage than they did in my time and, therefore, I feel that we should approach this proposal as one which is likely to provide a solution, because we have seen that hours can be reduced and wages raised without any serious dislocation of industry. While the Government are investigating this matter they might pay some attention to the question of overtime. There is far too much overtime worked. If a man has worked eight hours a day you cannot expect him to retain a high state of efficiency if you ask him to work nine hours and 10 hours a day. There comes a time when the human machine must inevitably break down, and weaken, as I have seen it do so in many cases.

In conclusion may I join with those who have appealed to the Government to come to a final decision regarding their monetary policy. I have tried to find out what is the Government's attitude, but I have not succeeded. I want to point out that for this country to come to a final policy means much to the merchants, industrialists and financiers not only of this country but of the whole world. They want to know what is going to be the international value of the £ sterling, and that cannot be known unless the Government declare their policy. It has been suggested that back bench members are not in favour if they put forward proposals. I do not presume to do that, but I would suggest that the Chancellor of the Exchequer in considering what is to be the monetary policy of this country should consider whether it is not advisable to base that policy on the British Empire and link up sterling with the dollar, and by that combination make some approach to America with the idea of co-operation. If such a policy could be based on such a foundation we could look forward in this country, and in most parts of the world, to a period of prosperity such as the world has never known in the past. If we cannot do so, then all the efforts of the scientists and all the efforts of industry are merely wasted. The time has long since been due when this country should be going through a period of prosperity, which I certainly hope would give to the workers of the country a better standard of living.

We hear about the Government's great housing proposal. One hears and reads much as to how it is to be supported. The suggestion it that it is to be supported by subsidy. Again I say that the solution of that problem is not going to be achieved through subsidy. It is merely a wage question. I have referred to international trade bringing about a wage level which is prejudicial to the great percentage of the workers of this country. It is inevitable as a result that we shall have to pursue the same system of subsidy in this direction and that direction, to support the big programme of housing which I understand we are to have. But it is a wrong policy. We should put the people of this country on a basis on which they can afford to pay an economic price, whether for housing or cigarettes or whatever it may be. I appeal to the Chancellor of the Exchequer to appreciate how important it is that he should make some declaration as to what the policy of the Government is to be.

2.57 p.m.


We are separating in a few minutes, and I feel that it would be quite inappropriate to make anything in the nature of a controversial contribution to our last Debate before adjourning. Therefore I shall just continue the tone of inquiry which was initiated in the Debate by my hon. friend the Member for Limehouse (Mr. Attlee), and has been pursued by every speaker since, with one possible exception. We had from the hon. Member for Central Southwark (Mr. Horobin) the usual rather crude, elementary and pretentious lecture on finance. It was quite news to me that depositors decided what their money was invested in. I thought that that was left entirely to the banks as trustees. The Government are trustees for public money. No one suggests that they should dispense public money except in the spirit of trustees. When I heard that if there were any enterprise which in itself was worthy of financial support, that support would always be forthcoming, I wondered on what principle the Government had advanced the money for the new Cunarder. I thought the money was advanced because it was quite impossible to secure any advance from the public generally, and that the Government very properly stepped in and provided the cash.

But I rather rose to press further upon the Chancellor of the Exchequer the question, what is the policy of the Government with regard to the very grave state of unemployment? Every speaker who has addressed the House—except one hon. Gentleman, who seemed to think that everything was admirable, that there was nothing to worry about, that the banks were doing their best, that the Government were doing their best, that everything was on the firmest foundation—has asked practically the same question, even the hon. Member for Southampton (Mr. Craven-Ellis) to whom we have just listened. Have the Government anything to say as to what their policy is in reference to unemployment? I am not going to enter into the question whether Free Trade or Protection is the soundest policy, or whether the result of protectionist policy has been to restore the home market. For the purposes of my question I will assume all that. But the more I assume it the more imperative it is that the Government should answer the question.

For the moment I am not challenging the statement that credit has been restored. No doubt public credit is very high. Look at the price of securities. In 1929 War Loan was about 98. Whether that was before the Labour Government came in or after I do not know. It does not matter. War Loan went down to 98. The point I am putting is that what happened is to the credit of the Government. My point is that at the present moment War Loan is infinitely higher than it was in 1929. I have not the exact figures with me, but the quotation is higher now than it was then. I am not going to enter into the question of why it is higher. Government securities are always higher when trade is bad, because there is nothing else in which the public can put their money—nothing else in which the country has such confidence. War Loan and Government securities are to-day at a very high quotation. Now I am told "The Government has improved public credit. It is completely established. There is real confidence. The Budget is balanced."

Having assumed that, I ask what is the policy of the Government with regard to unemployment? What are they waiting for? Are they waiting for securities to go higher? Why do they tarry? They have protected the home market: that is their claim. They have re-established: that they claim. Let us assume all that, and supporters of the Government must assume it. I want to know what they are waiting for, and when they are going to deal with this very grave problem, when 2,100,000 are out of work. That figure does not take into account the unregistered unemployed. It will probably be found that the real unemployment figure in this country is nearer 2,500,000, and that is after the Government have restored public credit, after Protection has had its full sway, after we have come to the point at which, according to the President of the Board of Trade, protectionist policy has reached saturation, which means that nothing more can be done with Protection. What are the Government waiting for? Surely the Government are not going to part for a month and just tell us that the only contribution they propose to make is the £2,000,000 grant for capital expenditure in a part of the affected areas of this country. In those areas you have only one-fifth of the unemployed, and if you take the sum which is spent annually in those areas it is £20,000,000, upon the basis of one-fifth. If you take it up to the 31st March it is about £6,000,000 upon that basis. What you will spend between now and the 31st March will be something near £6,000,000 in the depressed areas alone—and then there is this £2,000,000 grant for capital expenditure.


Initial expenditure.


Until 31st March, and nobody suggests that you are going to spend any more. Is that the last answer of the Government upon this question? Foreign trade is growing but not very rapidly.


Very soundly.


Well, soundly but at the present rate you will not get back to the figure of 1930 for about 50 years. [HON. MEMBERS: "No!"] In 1929 our export trade was £671,000,000 for the 11 months up to November. What are the figures up to November of this year? £361,000,000. At the present rate it will take you a very long time to reach the figure of 1929. I ask the Chancellor of the Exchequer in all sincerity what proposal has he to offer. This is the Parliament of Britain. We are the Commons of Britain. Each of us is responsible and must answer to his constituents. What then is the right hon. Gentleman's outlook? Upon what basis is he making his plans—and I will ask him afterwards what are his plans? We have now 2,100,000 unemployed and for the moment the tendency is up rather than down. At any rate, as the last report of the Midland Bank puts it, there is a check for the time being, in the revival.

Does the right hon. Gentleman look forward to our being down to a figure of 1,000,000 unemployed by this time next year? Does he expect that it will be 1,500,000 by next year? Does he think that in two years we shall be down to 1,000,000? It is not an irrelevant question because we here are bound—to use the old phrase—to take into account the state of the nation. If this were a board of directors we certainly would have to look forward for a year and two years and in a short time the Government would have to make their own estimate with a view to submitting estimates for next year as to the sum required for the unemployed. Have they formed any estimate in their own minds as to what is going to happen next year? I do not like to predict, but, if it is said that we expect to come down to 1,500,000 by this time next year, I should say that it is a very sanguine estimate. If the right hon. Gentleman, with better sources of information than I have, naturally—he has all the sources of information at the disposal of the Government—says that he thinks it will be, everyone in this House will rejoice, and everyone throughout the country will rejoice, but does he really contemplate our going on like this, with 2,000,000, or maybe 1,500,000, by this time next year? Have they no plan for absorbing the unemployed and providing work for them? Is there no scheme? Has he nothing more to say to us except this plan—I am trying to avoid controversial words, but it is very difficult—of dealing with one-fifth of the areas?

Surely the Government must have thought it out. Surely they have some sort of scheme. To drift is dangerous. I listened to some of the debates on the regulations, and it struck me that we were facing the dilemma of a humane people. What is it? Take the average wage of this country. It is just to provide the workers of the country with the essentials of existence, without much of a margin, if any, for leisure, for the amenities of life, and for the emergencies of life; and there is a population of about 7,000,000 which is condemned to live year by year far below that minimum. How is that operating? The regulations prove it. When we first introduced unemployment insurance into this country, we did it on the basis of making a small contribution per week to help people to get over a temporary emergency. Unemployment was over in a short time, and the numbers were not very great. Then came the pressure, when unemployment became a more permanent business, and in 1920, I think it was, we had to put it up to something like a minimum subsistence level. It was two or three times what we originally proposed. In 1921 we found that that did not keep people from starvation, and we had to raise it. In 1924 my right hon. Friends beside me and their supporters came in, and it went up again.

This last week we have been discussing something which puts it up again, and we have put it up, as far as some people are concerned, to a wage which is equal to what certain workers earn. What does that mean? Let us really face it. We cannot look at millions of people in this country living year after year—look at the figures; some of them have been over two years out of work—on an allowance which is below the very minimum of decent subsistence. The House of Commons cannot face it, and gradually Governments have been forced up, one Government after another, to increase that allowance. Well, it is not going to stop there. The Debate was a Debate where it seemed to me that the balance of appeal was on the side of those who wanted to give more. But is that merely the answer? Is the answer that you are going to put up your allowances for worklessness, Government after Government, Parliament after Parliament, until there is no difference between work and no work? That is the serious problem which we have to face. Is it not better that the Government should boldly confront the problem of providing work for these people?

I agree that the Government are the trustees of the nation for the finance of the nation, and that you ought not to expend any money upon foolish enterprises that are not productive, that are not useful, and that will not contribute to the general welfare; but I ask any man to look round his own constituency or the neighbourhood where he dwells and see whether there are not a great many things that can be done there to improve the conditions of life, to improve the efficiency of the neighbourhood and the people who dwell in it, and whether expenditure would not leave that area in a better condition than it was in before. There is an abundance of things of that kind that could be done, and the country would be the better at the end of it than it is at the present moment. I ask the Government in all solemnity whether they have any policy. What are their proposals? Do they propose to wait until the tide turns and we get such a boom in this country that it will flow to every industry, that everybody will find work, and that the country will return to normal? If they do not, will they then propose that we should have a minimum of 1,500,000 people living upon public charity—a most demoralising thing?

There is nothing that struck me more when I went down to one of these areas than to see the complete listlessness which prevails. The people there have ceased to take any interest in work, they have ceased to agitate for work. There is a complete lack of hope, and there are thousands and scores of thousands of young people coming in who have never known work. Can that continue without disastrous results to the community? The present condition of things, where there is no work, no hope or prospect of work, to the adults is misery; to the young it is mischief.

3.18 p.m.


When the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) began his speech by saying that at this festive season he desired to avoid all controversy and only to ask a few helpful questions, I knew exactly what sort of speech we were going to get. When the right hon. Gentleman was Prime Minister he was the greatest optimist of us all. What has become of his optimism since he left office? I find now that it is entirely reserved for the Governments of other countries. Yet there are some cheerful features in the situation of the country to-day which we should do well not to forget altogether when we are going home for our Christmas holiday. Only this morning we read how the note circulation had reached a new high record, showing how the measures which have been taken by the Government have increased the purchasing power of the people, and how the gradual return to prosperity is spreading even to the lowest strata of society in the matter of social position and wealth. Only last week, I think, I saw a report of a speech by one of our industrialists in which he said that this year there had been a record output of steel. And so we may go on looking round in all sorts of directions and we shall see, if there is a big problem still in front of us, that on all sides we are making progress, and are making greater progress than is to be seen in other countries. If, indeed, we could feel that the progress in the future was to be maintained at anything like the rate in the past, then we might all go home unqualified optimists.

We have had an interesting Debate and a number of interesting speeches, and I hope that the right hon. Gentleman will not think that I am discourteous to him if I say that I think the most interesting and helpful speech was the one which was delivered by my hon. Friend the Member for East Aberdeen (Mr. Boothby). It is quite clear that he had given a great deal of thought to the substance of his speech, and, although I do not profess that I can agree with all he said, I nevertheless find myself in agreement with a good many of his points. I agree, in the first place, with his view that by bringing about cheap money the Government have made a very important contribution to the general return of prosperity. I am not quite sure that it is fully realised how far the influence of that cheap money has spread. The first thing that comes to my mind is the saving in the interest on the National Debt. By the conversion of the five per cent. and other loans we have effected a permanent saving of £37,000,000 a year in the interest upon the National Debt. Then, of course, there has followed on that a consequential reduction in the rate of interest on short money, and although that is not of the same permanent character it is helping our finances at the present time; and between those two—the long-term and the short-term reduction of interest—we may say that we have been able to bring down the cost of interest and management of the National Debt by something like 20 per cent. since 1931. That in itself, of course, is a very considerable alleviation of the burdens of the country. But it does not stop there.

Hon. Members will no doubt have observed how the fact that interest rates have fallen so heavily in London has redounded to the benefit of the other parts of the Empire. There have been a number of conversions by the Dominions, and, in particular, hon. Members will recollect that Australia has been able to effect some very important and considerable conversions of her debt, which in turn benefits the finances of Australia and increases her purchasing power, which, as we are the principal beneficiaries of any increase in that purchasing power, again helps us at home. Then, again, there is the position of the Colonies. I was astonished to hear my right hon. Friend the Member for Sparkbrook (Mr. Amery) speak about the position of the Colonies in such terms as those which he used. I understood him to say that development in the Colonies, since he left the Colonial Office, had completely stood still.


Since the depression.


That is much the same time. My right hon. Friend cannot have followed what has been going on. I have here the last report of the Colonial Development Advisory Committee, down to 31st March, 1934. Under the heading of finance I find that the amount of assistance applied for during the year was £952,000 and the total amount of assistance recommended was £849,000, or 89 per cent. of that applied for. The speech of my hon. Friend the Member for East Aberdeen might almost give the impression that the Colonies have not shared in the reduction of interest rates, but I am sure that he appreciates not only that the Colonies have been assisted by my right hon. Friend the Colonial Secretary to carry through conversions wherever practical, but that the 6 per cent. or 5½ per cent. loans of which he spoke are those which have not yet arrived at a period of maturity and which, therefore, cannot be converted—unless my hon. Friend wishes to suggest that there should be some sort of compulsory conversion, which is sometimes called by another name not altogether so complimentary. I am sure that the hon. Member did not wish to suggest anything of that kind. It is a fact that loans are now being raised by the Colonies on practically the same basis as those raised over here by the British Government. The Colonies have fully shared in the advantages which have come about by the introduction of the conversions.

The same applies to the local authorities in this country. Hon. Gentlemen have probably seen the prospectuses of some of the larger authorities who have raised loans quite recently. They have been able to get their money at a little over 3 per cent. When we turn to the smaller authorities we see that they have been able to borrow from the Local Loans Fund at about 3¼ per cent. Those are long-term loans, whereas the loans of some of the larger authorities have been short-term loans. That does not by any means exhaust the benefits that have been provided as a result of cheap money. The reduction in interest rates has now been extended to all long-term borrowers, and one may say that to-day the long-term borrower who is creditworthy may probably get money at something like one-third cheaper than at any time since the War. That has undoubtedly been of very great advantage. Industrial borrowers have been able to convert something like £100,000,000 since the present Government came into office, which has resulted in a saving to them of, I suppose, £1,000,000 a year.


Does the right hon. Gentleman suggest that the Government have been entirely responsible for cheap money?


Most certainly I do. I will say something about that a little later on. A good deal has been said about the position of Lancashire. I do not think anybody can say that it is difficult to get money for any remunerative enterprise in the country to-day. Probably hon. Members know that there is in existence an institution known as the Bankers' Industrial Development Co., Ltd., which has been formed largely at the instigation, and with the assistance, of the Bank of England, for the purpose of financing large industrial operations after examination of their prospects.

That institution has been responsible for some considerable financial operations, among which I might mention, as an example, the installation of the very large and important steelworks at Corby, in Northamptonshire. There has also been formed another institution called Credit for Industries, Limited, which is designed to fill what has been generally said to be a gap in our financial system, and to provide medium-term loans of smaller amounts to smaller firms who are not in a position to raise big issues and would not be able to obtain from joint stock banks the sort of financial accommodation that they require. I am bound to agree with the hon. Member for Lime-house that a good deal of the trouble in Lancashire did arise out of the financial chaos which in turn arose during the inflationary boom of the years 1920 and 1921; but I would remind the House that this Government was not in office at that time, and that the Prime Minister then was in fact the right hon. Gentleman the Member for Carnarvon Boroughs.


Who was the Chancellor of the Exchequer?


Perhaps the right hon. Gentleman will supply the information. He was the Prime Minister at the time, and I presume, therefore, that he approved of the policy of his Chancellor of the Exchequer. At any rate, all I want to say is that, much as we regret the misfortunes which have arisen in consequence of that inflationary boom, I think the lesson we should draw from that experience is that we should not repeat it, and should not try to take measures which might bring other parts of the country into the same condition.

My hon. Friend devoted some part of his speech to the very difficult question of stabilisation, and he desired, as I understand, to suggest that some effort should be made to bring about a stabilisation of values between the pound and the dollar. The hon. Member for East Edinburgh (Mr. D. Mason) also devoted some attention to that subject, and to the question of the level at which such stabilisation should be effected. But, if I may say so, I do not think that either of the two hon. Members really appreciated what seems to me to be the great difficulty of attempting any stabilisation of the exchange at the present time. Everyone recognises, and certainly no one more than the Members of the Government, that it would be very helpful if we could get established once again a common international standard of currency. We all hope that that may be achieved. But we have ourselves made perhaps the best contribution that we could in the circumstances, by securing stability in the sterling area, and the policy we have followed there has, I think, achieved a very considerable measure of success. The level of currencies in the countries of the Empire, and in those countries which are linked up with sterling, has remained really very steady for a period of two years, and the exchange of goods, the trade of the countries in the sterling area, has shown a very gratifying increase at a time when international trade generally was inclined to shrink.

But at present we have on one side of us what is called the gold bloc, the European countries which are on the Gold Standard, and on the other side we have the dollar, which is also on gold, and we hold an intermediate position between the two. But the difficulty of the situation, and one which we ourselves cannot control, is that the dollar and the franc are not in harmonious relations with one another, and the pound, which stands between the two, is dear in terms of dollars but not so dear as the franc, and it is weak in terms, of francs but not so weak as the dollar. In our present condition, if in consequence of this disharmony between the gold bloc and the dollar, also based on gold, there is a pressure and strain upon the pound, there is freedom to move in either direction, but if we have stabilisation we lose that freedom. We cannot then move either in one direction or the other, and the only result of trying to stabilise while this disharmony exists will be that we might find ourselves in a position where we have either got to go off gold again or to follow that policy of deflation which I am sure my hon. Friend would be the very last to wish us to pursue. Therefore, it seems to me that, granted that my hon. Friend is right in saying it would be desirable to get stabilisation when we can safely do so, in the present circumstances of the time we cannot afford to run the risks which undoubtedly would come upon us if we did take away from ourselves the freedom of the pound to move, and we must wait until there is such a change in price levels as may bring the dollar and the franc into greater harmony with one another, a position which I understand it is the object of the United States Administration to bring about and in which I for one wish them all possible success.

My hon. Friend goes on to ask whether the Government, which has adopted and carried through successfully a policy of cheap money, wants to slop there or whether it is prepared to go further and to cheapen money still more. My hon. Friend would like to see our credit upon a 2½ per cent. basis. I am not quite sure how he proposes that we should go further. I am not quite sure what his view is as to how we got where we are, but I suggest to him that we have got where we are by sound finance and by creating confidence in the country. That is what has brought us where we are and has raised the credit of the country to a point at which it is possible to borrow at 3 per cent. If the continuance of the policy that we have hitherto followed does in fact bring the interest rate down still further, I should very gladly welcome it, but I would again suggest that if any policy that created doubts as to the soundness of our finance, and which began again to shake confidence, was to be adopted, my hon. Friend and I would both have to abandon all hope of seeing interest rates go down further. On the contrary, we should see them very quickly going up. My hon. Friend says, "What use are you going to make of your cheap money?" Although he disclaimed belief in a policy of relief works, yet it almost seemed to me that that was, in fact, the policy he was recommending. That is the policy the right hon. Gentleman the Member for Carnarvon Boroughs wants to pursue.


Not relief works.


He does not call them relief works, but I do.


I simply want to put this point. Does the right hon. Gentleman think that, assuming he was able to get money on a 2½ per cent. basis by the flotation of a reasoned housing loan, this would necessarily diminish confidence on the part of the City in the financial policy of the Government? I do not think it would.


I am coming to the point which the hon. Member raises. He was good enough to disclaim any duty to put forward suggestions, but he did make suggestions, and I want to say a word on them, because I rather fancy that at bottom he and I do not take very different views of the way in which the Government should approach this matter. His first suggestion was the unification of mining royalties. That is a very big question. So far as I, personally, am concerned, I am in favour of it. I believe that the unification of royalties would solve some very difficult problems and would certainly facilitate the more economical development of coal mining. I go so far as to say that it seems to me almost indispensable to get some unification of royalties if you are properly to control the ordinary development of our coal fields. While I express this personal view, I want to say further that it is a matter which obviously bristles with difficulties. There are a good number of difficult questions involved, and it is a problem that cannot be solved by a stroke of the pen. It wants very careful investigation. That investigation is going on now, but that certainly is not excluded from what I should call the very proper use of the credit which we have got down to present rates.

The next point he made was on road facilities. There I think I shall have to part company with him. I doubt very much whether a policy of duplicating the main roads into our big towns, which would certainly cost very large sums of money, would result in such an expansion of business generally as he seemed to think. It is a matter of opinion. My own view is that we are spending quite enough upon roads in general. I am not speaking of exact figures, but speaking generally, in proportion to the income of the country and the needs of the country in all directions, I think the roads are getting a very fair share.

Now I come to the question of housing? There, again, I am partly in agreement and partly in disagreement with my hon. Friend. I am in agreement with him when he desires to see an extension of flats for the poorest members of society in the big towns, because I know that in many cases building has gone on to such an extent in recent years that you have to go further and further out from the centre in order to find sites for new houses. Among the poorer classes whose work lies in the centre of the town, it is becoming more and more difficult to find the extra money which is required for transport and the extra time which is required to get to and from their work. I couple with that the fact that the design of flats has been so enormously improved in recent years, that the prejudice which I myself felt very strongly at one time against the use of flats for working people has been largely removed. I am satisfied that this is the only way of solving the problem of overcrowding.

Where I differ from my hon. Friend is in his idea that this problem cannot be dealt with by local authorities. Obviously, it will be outside the scope of private enterprise, but I do not think that local authorities can deal with this question themselves. I think that they are the right people to deal with it, and I would say to my hon. Friend that they would have no difficulty in raising housing loans at the current market rate today. I do not think finance is going to be difficult in carrying out housing improvements. I would like to say now, while I am on this question of housing, that, in my view, it is a mistake to suppose that the only way in which you can get money to circulate is for the Government to spend it. The intention of the Government is rather to create those conditions in which money will be spent by other people. That is what we have been trying to do, and that is what I claim we have very largely succeeded in doing.

Take the question of housing itself. I often think that the extent of the work which has been done in housing during recent years has been obscured by the fact that the figures have not been put together. Take last year. In England and Wales alone, and apart from Scotland, private enterprise, largely owing to cheap money, built over 250,000 houses. That means a capital expenditure of at least £125,000,000 in building alone. It does not stop there. As everybody knows, housing is perhaps the industry which gives rise to more employment among subsidiary trades than any other, in the making of building materials, in furnishing and equipment, in new roads being made and in transport which has to be put upon the roads—all these ways have given rise to a great increase of employment, and I am sure that they are responsible for a good deal of the improvement in the number of people in employment to-day. Do not let us forget that if you create these conditions they will be taken advantage of, sooner or later, by private enterprise. At a time when things begin to revive, at the end of depression, you find a great many concerns, industrial and otherwise, throughout the country with considerable debts in the shape of overdrafts and with a large amount of machinery and equipment which is not in full use. The first effect of the revival is that those overdrafts are paid off, and, consequently, the put- ting of more money at the disposal of the banks accounts to some extent for these bulging money bins which we are continually hearing about, and also the machinery which has been idle is brought into use, and that must be a precedent to the ordering of new machinery. The ordering of the new machinery, the expansion of enterprise, would come in time, and it would come all the quicker if there was any expansion in international trade.

I want to say one or two words about the relations between the Government and the Bank of England, because I think there is a good deal of misunderstanding upon this point. Frankly, I accept the view put by my hon. Friend that the ultimate responsibility for the monetary policy of the country must lie with the Government. I should like to explain the relations between the Governor of the Bank of England and the Chancellor of the Exchequer, in accurate terms. I would remind the House of the evidence of the Deputy-Governor before the Macmillan Committee, because there seems to be a notion in some quarters that the Bank of England is a private concern, run for private profit on a policy which is based upon financial interests alone, without any consideration of industry or of general national interests. The Deputy-Governor said: The Bank of England is in daily touch with the Treasury, sometimes many times a day. Probably twice in the week the Governor himself will pay a visit to the Treasury, sometimes accompanied by myself. When he is away I pay such visits in his place. We have no secrets from them. We keep them fully acquainted as to the general trend of affairs in the City and the outlook as we see it. We, on our part, never venture to interfere in any question which is considered a political question, unless we are asked to express an opinion as to what the financial effect of any political operation may be. The Treasury, on the other hand, are good enough to reciprocate. That is to say that, while we keep them fully informed as to the general trend of affairs in the City and as to any occurrence affecting the position of finance and credit, they do not seek to dictate any alternative lines of financial policy if we, in our judgment, consider a particular line of policy essential for the protection of the country's main reserves. We have to remember that we were on the Gold Standard at the time that that evidence was given, and now that we are not on the Gold Standard, of course, the relationship between the Treasury and the Bank of England has to be necessarily closer than ever. Indeed, the whole policy, the whole management of sterling is one which is discussed continuously between the representatives of the Treasury and the representatives of the Bank of England. May I call attention also to the generally accepted Resolution at Genoa which was passed in 1922, which said: Banks, and especially banks of issue, should be free from political pressure and should be conducted solely on lines of prudent finance.


Hear, hear.


I am glad to hear the right hon. Gentleman cheering that, because the other day he said: I have always been in favour of national control of the Bank of England. I scratched my head when I read that statement, because I recollect something different in a publication which we all know as the Yellow Book. The right hon. Gentleman perhaps may not remember it, but the Yellow Book, in the Preface, says: For the final form in which the Report appears the Executive Committee is alone responsible. On the first page, after the name of the chairman and the vice-chairman of the Executive, I find the name of the right hon. Gentleman. I conclude, therefore, that he is responsible for the final form in which it appears. On page 414 the Yellow Book further says: We are not in agreement with those who would nationalise the Bank of England, much less our banking system as a whole. On the contrary, we regard the Bank of England as an admirable specimen of Socialised institutions, which represent, in our view, the true line of development. We are clear that for this purpose the Bank of England should be in essentials retained in its present form.


I presume that the right hon. Gentleman or his Secretary has made these investigations. If he had pursued his investigations a little further he would have found a recommendation there for a very considerable change in the constitution of the Bank. I am still of the opinion that you must not have political control of a financial organisation and that it must be completely independent but that is quite consistent with a complete change in the method of creating the Board of the Bank of England.


I did not trust my Secretary in regard to this matter. I looked up the passage for myself. It goes on: In the last resort ultimate responsibility for a sound currency and credit system must rest on the State. If this vital responsibility is to be entrusted to the Bank of England it should be made evident that the Bank is a national institution, as indeed it is already in all but form. After mentioning the changes it proceeds: We do not contemplate that this change would in itself make any material change in its actual method of operations. The right hon. Gentleman has modified his views as to the methods by which the Bank of England should be conducted. Seeing that it is not suggested by the right hon. Gentleman that any change should be made in the essential features of the Bank of England I think it would be a pity to begin altering its form, which might perhaps shake the confidence with which the Bank of England is regarded not only in London but in the capitals of the world, for the sake of a change merely in form. Hon. Members have asked what is our financial policy.


Unemployment policy.


Our unemployment policy is to continue as we have been doing. As to our financial policy, I do not think it is very wise or helpful to be continuously trying to frame afresh a description of our financial policy. After all, conditions are changing, and changing more rapidly than they used to do in the past, and the formulation of a policy which seems completely applicable to to-day might to-morrow seem to have some significance which was never intended when it was framed. May I remind hon. Members that we did declare our financial policy, indeed the financial policy of the Empire, in terms at the conclusion of the London Conference. It has not materially changed in any respect since that declaration was made. I do not in any way desire to alter what I have said about the desirability of raising wholesale prices. We have not been unsuccessful on the whole in our attempts to raise prices. The prices of primary commodities have risen something like 30 per cent. and at the same time the cost of living has not gone up in this country. If we continue to pursue the policy as laid down at the conclusion of the London Conference, and it continues to produce the same results, I see no reason why we should not anticipate a further rise in the wholesale prices of primary commodities, which I think would do more to overcome the inharmonious elements which are to be found in the currency systems of the world to-day than anything else.

I look forward with confidence to the day when we shall be able, once again, to embark on an international currency standard and, in the meantime, I do not think, whatever may be clouds upon the horizon, that anybody has any reason for pessimism. Even if we cannot maintain the rate of improvement which naturally was at its highest when we changed over from a system of free imports to protection I do not think that we have yet reached saturation point in our home market, and our foreign trade, while it has not gone back to the old level, still shows an upward trend.

Question, "That this House do now adjourn," put, and agreed to.

Adjourned accordingly at One minute before Four o'Clock until Monday, 28th January, 1935, pursuant to the Resolution of the House this day.