MONETARY POLICY. (Hansard, 7 February 1934)

§ Mr. DAVID MASON
We have had a most interesting and valuable Debate, and I am sorry to trespass on the patience of hon. Members in order to raise a question which this occasion affords the only opportunity of raising. To-day I put a question to the Chancellor of the Exchequer to the following effect: Whether he will consider the advisability of appointing a committee, with wide powers of reference, for the purpose of investigating and making recommendations on monetary policy? I received, through the courtesy of the Financial Secretary to the Treasury, the following reply: In the judgment of my right hon. Friend, no useful purpose would be served by the adoption of the hon. Member's suggestion. I should like to offer some precedent for the procedure I suggested. This House, after the Napoleonic Wars, when we were passing through a somewhat similar experience to that of to-day, appointed committees for the purpose of investigating the financial situation at that time. We all remember the classic case of the Bullion Committee of 1810, on whose valuable report Sir Robert Peel based his policy which led up to the restoration of specie payments in 1821. In connection with so complicated a subject as this, on which there are hardly to be 1270 found, whether in this House or outside, two men of similar opinion, there can be no question as to the necessity for a committee. I say this, not in any sense as an attack on the Government, but with a view to the investigation of such questions. The committee should have the widest possible powers of reference, so that witnesses may be called, just as bankers were called 100 years ago, and the famous report of 1810 was produced, which, after 100 years, still remains a classic and one of the most valuable treatises in existence on sound financial policy. It has never been refuted; it is unanswerable. I should like to say how much I appreciate the courtesy of the Financial Secretary, who, I understand, has given up an evening engagement to be present here. I would ask him to convey to the Government the advisability of reconsidering the question which addressed to the Chancellor of the Exchequer to-day.
Let me give a foreign example. In 1925, France was passing through a very exciting time. The franc was fluctuating, they were changing their Finance Minister nearly every week, and were at a loss as to what course they should pursue to arrive at some solution of the extraordinary state of financial chaos and confusion that existed in that country at the time. I sent certain contributions to the Press and addressed M. Herriot, through a mutual friend, suggesting the appointment of a financial commission. In 1926 I visited Paris and, through the courtesy of our Ambassador, was put into communication with the Governor of the Bank of France and other bankers, and I pressed on them the appointment of a commission of commerce. I met Monsieur Berthelot at the Ministry of Foreign Affairs, and he invited me to submit a memorandum on French finance to be brought before his colleagues. That I did, and I emphasised that it seemed to me that only through the appointment of a committee of expert bankers would a solution of the existing confusion be arrived at. They accepted my suggestion, and a committee of leading bankers was appointed, which went very minutely into the whole financial state of France, with the result that the Government accepted their report, the franc was stabilised, and a solution was arrived at. I hope I have said enough for the Government to reconsider their decision. I 1271 believe that a committee of all parties, composed of people who have made a study of this, in conjunction perhaps with some of the leading bankers outside, would be able to draw up a report. I do not want to obtrude my own views on the House. We may differ in our views on monetary policy but I believe in all parties we are agreed as to the necessity and value of an inquiry. As a result, for example, of the Bullion Committee of 1810 it was shown that the price of gold bullion was not due so much to an increase in the value of gold as to a fall in the value of paper, and that is what we are suffering from to-day. Even now bankers, in their annual speeches, are at a loss to know what policy to pursue. The Government have not given us any indication of their policy, though they have been pressed on many occasions. I hope they will accept my suggestion in the spirit in which I submit it and I ask them to reconsider the question.

§ The FINANCIAL SECRETARY to the TREASURY (Mr. Hore-Belisha)
Of course I accept the hon. Gentleman's observations in the spirit in which he makes them, and although he was kind enough to say that it was at some inconvenience that I came here to answer them, I can assure him that whenever he thinks that the public interest is involved, I will be present as it is my duty to be. The story which the hon. Gentleman unfolds loses none of its force by repetition. His Majesty's Government are well acquainted with the case which the hon. Gentleman desires to present. He seeks to avail himself this evening of the opportunity which the Adjournment affords to propose an investigation into our monetary policy, with a view to making certain suggestions of policy.
The hon. Gentleman will agree that our monetary policy may legitimately be divided into two provinces, the domestic and the international. Our policy in the domestic province has been to provide industry with cheap and abundant money, and I notice that there was no complaint in the speech of the hon. Member of that policy. Indeed, it has resulted in providing industry with the means of that revival which is now becoming apparent.

§ Mr. MASON
The Government, surely, do not provide the cheap money. The cheap money is largely the result of the contraction of trade throughout the world.

§ Mr. HORE-BELISHA
That is not a judicial statement of the case. The hon. Member is well aware of the mechanism by which money is provided in a modern State. I was observing that no criticism had fallen from the hon. Gentleman of that policy of cheap money which I have described as the domestic policy of His Majesty's Government. The hon. Member is aware that as a result of that policy the burdens of the State and industry have been lightened. When we come to the international policy, however, we are in a province in which we do not exercise exclusive control and the mere appointment of a Committee here could hardly be expected to influence the course of policy in other countries. The restoration of a satisfactory international standard which shall be free from the factors which caused the breakdown of the last international standard must be dependent upon conditions which I need not now specify, but which are certainly not present at the moment.
My right hon. Friend the Chancellor of the Exchequer has on many occasions laid down with the utmost clarity of language the conditions precedent to a restoration of an international standard. In the meantime we are pursuing, in conjunction with those who are in agreement with us, the policy explained in detail in the Declaration signed by the members of the British Empire Delegations at the London Conference. All those parts of the British Empire which have put that Declaration into operation are now experiencing the benefits of a revival of trade. His Majesty's Government fail to see how the appointment of a further committee at this moment could achieve any good purpose whatever. The hon. Gentleman himself referred to the fact that the Bullion Committee which was appointed in 1810 had no effect upon the British Government's policy until 1821. Indeed, its report was rejected by the House of Commons. I am quite ready to acknowledge the debt, if it be within my duty to do so, that the Government of France may owe to the hon. Gentleman for the advice which he tendered. I am quite ready also to acknowledge that His Majesty's Government is conscious 1273 of being constantly reminded by the hon. Gentleman of the policy which we should pursue, but I hope that he will agree that in the present unsettled and fluctuating conditions the appointment of a committee would serve no practical end. If a committee at any time could serve a useful purpose this is not the moment and this is not the occasion on which it should be established. I do not wish in the least to disparage the views held most sincerely by the hon. Member, and which have been so persistently and so lucidly advocated upon all occasions.
1274 We know what he desires, that the committee, if established, should report. He will not be satisfied with the appointment of a committee unless it report in the sense which he believes to be the right one. I am sure that the hon. Member has only suggested the appointment of a committee in order to remind us once more that nothing is gold that does not glitter.