HC Deb 18 June 1934 vol 291 cc25-57

The Irish Free State (Special Duties) Act, 1932, is hereby repealed, and any Customs duties imposed under that Act shall cease to be charged.—[Mr. G. Hall.]

Brought up, and read the First time.

3.21 p.m.


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

This is a short but important Clause. We are asking that the Government should take the initiative in an endeavour to arrive at a settlement of the unfortunate dispute which is continuing between the Irish Free State and this country. That dispute arose as a result of what may be regarded as default by the Irish Free State; there was a difficulty concerning the payment of Irish land annuities. Unfortunately these are the days of default. Very few debtor countries in the world are paying the debts they owe, but, if every nation had adopted the same attitude as this country did at the time when this difficulty arose between us and the Irish Free State, the world would be in a very sorry pass to-day. I do not intend to go into the history of the dispute; it is well known. For the last two years there has been a fiscal war between us and the Irish Free State. It is not altogether a question of a few million pounds per annum which is in dispute between us. We tax the commodities which they send to us, and they immediately retaliate by taxing the goods which they import from this country. This fiscal war is inflicting great damage on the trade of both countries; and I am not sure whether we are not suffering worse than the Irish Free State.

The position is serious enough in regard to the export of the commodity upon which South Wales depends. This fiscal war has affected that part of the country more than any other. For the first five months of 1932, before this conflict arose, we exported nearly 1,000,000 tons of coal to the Irish Free State, but for the first five months of this year it has been less than 500,000 tons. There are thousands of miners unemployed almost entirely as a result of this fiscal conflict between the two countries. It is not only the coal trade that is affected, although other trades may not be affected to the same extent. For the first five months of 1932 we exported 24,000 tons of cement from South Wales, but for the first five months of this year it was only just over 5,000 tons. The same can be said of almost every commodity. I have also figures of the imports into this country from the Irish Free State. For the five first months of 1932 the bacon imports were 83,000 cwt., but for the first five months of this year they were 120,000 cwt.

I am not basing my argument solely on the amount of money involved in this dispute. It is not so such a question of money as of getting rid of a state of mind so that negotiations may be opened up between us and the Irish Free State. If the Government would be generous and accept the new Clause, there is the possibility of a settlement of this unfortunate dispute. It is evident that this fiscal war, which has now lasted for two years, is not leading to a frame of mind which is likely to produce a settlement. Both sides appear to be determined to fight it out, as we were when the duties were imposed, but we on this side of the House are of the opinion that the time has arrived when a new effort should be made to try and arrive at a settlement. This country can afford to be generous. The dispute originated largely upon a question of money, other questions have been raised since, but, if we can dispose of the matter it would create an atmosphere which would lead to better relationships and probably bring about a settlement. For these reasons, we move the new Clause.

3.29 p.m.


As one who has not taken a keen interest in the dispute between the Irish Free State and ourselves, may I say how I view the situation. I support the new Clause, and the appeal made by my hon. Friend. Since the Government came into power we have made trade agreements with nearly all the countries of the world. Very recently we have decided that we shall not pay our debts to America if we can avoid it. Frankly, it seems to me the most strange thing of all, in the relationship between this country and foreign countries, that as a matter of fact we are least generous to the country that is nearest to us almost than we are to any other country in the world. We ought to make a gesture from this country to settle this problem. I speak with a little feeling because I live in Lancashire, and, as hon. Members know, the trade between Lancashire, and especially between the Ports of Manchester, Liverpool and Birkenhead, and the Free State, has been badly hit, and these ports feel very keenly the loss of trade, especially the trade in cattle from the Free State. In fact members of my own trade union have complained that they are out of work because the abattoirs on the banks of the Mersey and in Manchester have suffered by the loss of this trade.

I appeal to the Chancellor to do something in the matter. Let him compare the attitude of our country towards the Free State and towards other Powers. I understand that Germany has declared a moratorium. I have yet to learn that we shall do anything to penalise Germany in any trade agreement that we may enter into with that country because Germany may default in her payments to us. I am sure the Chancellor would feel very much offended if the United States of America, immediately we decided that we would not pay our debt to her, imposed such tariff barriers against us that she could get by customs duties the very money that we declined to pay direct. I see that the Postmaster-General is trying to help the Chancellor to find some arguments against our contention. I shall, therefore, be more delighted than ever to hear what the Chancellor has to say in reply.

Of course it is said that if we had someone at the Dominions Office other than the right hon. Member for Derby (Mr. J. H. Thomas) we might make progress, and it is said too that if another President of the Irish Free State came into being we might make greater headway. Anyway we have these two gentle- men in the seats of the mighty, and we cannot alter the fact that the present President of the Irish Free State is the gentleman who occupies that position today. Of course we might with some effort change the personality of the right hon. Gentleman who is handling the problem on this side of the Channel, but that would be rather a dangerous argument to put forward, especially on my part. I hope we have put our case to the Chancellor in such a way that he will tell us whether there is a possibility of removing the difficulties between us and the Irish Free State, and whether he can hold out any hope that the feeling expressed in our negotiations with the Free State is likely to be altered for the better in the near future.

3.34 p.m.


Before my right hon. Friend the Chancellor of the Exchequer replies, I would like to point out that there is one branch of industry in this country which has derived some benefit from these duties. Both the Mover and the Seconder of this new Clause alleged that certain trades in this country were being penalised as a result of the tariffs imposed by both sides. "It is an ill wind that blows nobody any good." Although these duties were not originally imposed in order to benefit the hard-pressed British livestock raiser, yet they have done a good deal to mitigate the difficulties with which he has been faced in the last few years. I do not hesitate to say that if the Chancellor repealed the duties straight away and threw on to the British market a large quantity of additional Irish cattle, he would inflict a blow on the British livestock industry the consequences of which it would be difficult to foresee. The British livestock industry is suffering very acutely now. We have already to meet quite enough imports of meat. If the Government suddenly allowed Irish cattle raisers to send in any number of cattle, it would be a very serious thing. I hope the Chancellor will take this point of view into consideration in coming to a judgment on the matter.

3.37 p.m.


We have now had the cat let out of the bag. These particular duties which, it will be remembered, were put on most reluctantly, purely in order to protect revenues and to enforce the principle of the sacredness of contracts made between two component parts of the Commonwealth of Nations, are now frankly and blatantly advocated as pure Protection against what should be a part of the British Empire. It has been most significant, almost sinister, how the Minister of Agriculture has used this instrument in order to placate various interests in this country. I am very glad the Chancellor of the Exchequer is here. I hope he will make it clear not only to the Irish Free State but to the world that we stand firm in our position, that as soon as the Free State is prepared to negotiate about the annuities all these duties will be immediately swept away. If not an impression will be created not only in Ireland and in this country and in Europe, but particularly in the United States, that will react very quickly, because of the large number of Irishmen in that country.

I never defended the attitude of the Irish Free State about these annuities. I think the Irish Government made a blunder, undoubtedly because of promises made at a fiercely contested election. The present President of the Free State made pledges that once he got into power no longer would the annuities be collected and handed over to this country. I thought his attitude was most unfortunate. But I felt it was equally unfortunate that we had to resort to the unsatisfactory method of collecting these duties at the ports. That was not only injuring Ireland but injuring our own traders also. The dispute has interfered with a very important industry, particularly in Scotland—the fattening of imported Irish cattle. Birkenhead too carried on a considerable trade in the handling of these cattle and killing them at the port. The dispute has also interfered with out textile exporters and, as has been stated, with our coal industry. The tragedy of it all is that the longer this internal war goes on the more difficult will it be to end it. It is creating bitterness and bad blood which a few years ago had largely disappeared between the two countries, and, what is far more serious, it is setting a bad example to the Continent of Europe, where we have been constantly condemning economic tariff wars as being so harmful to the new States which have been created in Central Europe like Czechoslovakia, Hungary, Austria and so on.

I agree that this is a difficult problem. You are dealing with a difficult people and a very touchy people. They are suffering, perhaps, from one point of view, from an inferiority complex, as a small people, sensitive about being dictated to by a great neighbour and with a long history of domination. From another point of view they are influenced by a superiority complex and are anxious to show the strength and power of the newly-formed State. I realise, as every Member of the House must, how difficult the problem is. It is difficult to give way, to surrender revenue which we claim as our just due. On the other hand, I have always contended that this country, as the big brother, as the stronger hand, ought to be prepared to take the initiative. The Secretary of State for the Dominions is always riding the high horse and saying that we have made our offer and that the door is open, but the longer this controversy continues the greater the weakness cause to the Commonwealth of Nations. Ireland is our nearest neighbour and we are irretrievably bound together by economic laws. It is unfortunate that we should have arguments on this question like that put forward by the hon. Member opposite which are narrow and parochial arguments, when big political issues are at stake—


Since the hon. Baronet his pointedly referred to me, may I ask him why it is right for hon. Members opposite to put forward arguments concerning trades in their constituencies, while it is wrong and, indeed wicked, for me to put forward an argument about the trade which is affected in my constituency?


Of course I know that a new atmosphere has been created during the last three years regarding trade considerations and political considerations, and that we are becoming accustomed to regarding Imperial problems from a narrow local point of view.


I think the hon. Member will have noticed that the arguments submitted in favour of the propased new Clause from these benches were arguments on national grounds.


I did not make any charge against my hon. Friends above the Gangway. I was referring to my hon. Friend opposite who is sensitive—and I am glad to see that he is sensitive—at the suggestion that he is taking a parochial point of view. This problem is much larger than the mere question of the levying of duties on certain Irish products for the collection of revenue which we regard as our due. It is a controversy which will weaken the Empire at its very heart and which must have reactions among the Irish race in Australia, in New Zealand, in Canada and also in the United States. Therefore, I hope the Chancellor of the Exchequer will send some message of hope to-day and will make it plain that these duties are only looked upon as temporary duties and that on any excuse or any opportunity which offers itself for doing so, they will be removed even at the sacrifice of some revenue.

3.44 p.m.


I do not think we can let the hon. Baronet get away with the suggestion that it is action on the part of this Government and this Parliament which is weakening the Empire. It is nothing of the sort and, as the hon. Baronet has had his little quarrel with the hon. Member for Horn-castle (Mr. Haslam), I would now like to make one or two comments on the speech of the hon. Member for Westhoughton (Mr. Rhys Davies). The hon. Member is usually so well-informed in his speeches, which generally show considerable thought and care, that one is surprised at some of the observations made by him just now. One can only suppose that this Debate having come on earlier than was expected he had not provided himself with any kind of brief and was merely waiting for whoever was to speak from the Opposition Benches to produce their case. He said first that it was very wrong of us to impose these duties with regard to Ireland at a time when we were making trade treaties with other people. Why not make a trade treaty with Ireland he asked, when we make such treaties with foreign countries? Such was the gist of the first part of his speech. Why not make a trade agreement with the Dominion which is nearest to us? He knows the answer. It takes two to make a treaty. We are making treaties with foreign countries because, as a result of the new system which has been introduced, they are only too willing and anxious to have trade agreements with us in order to retain at least some part of the market into which they used to pour their goods in floods.

It is an entirely different proposition, however, in the case of the Irish Free State. If they want an agreement they can have it. The Secretary of State for the Dominions has said so time and time again. But they have gone out of their way so as not to pay their just debts and it is not a question of an agreement there, it is a question of fundamental rights and of arrangements made between this country and the Irish Free State when the Free State was set up. This country has not been in the last two years at all backward in regard to a settlement. In fact the Government has gone a great deal further than many Members of this House desire them to go. That is the answer to the question, why do we not make a treaty with them as we do with foreign countries.

What was the second part of the hon. Member's argument? He said that just because the Irish Free State had not paid their debts to us, we had put on special duties to recoup our own Exchequer for what it has had to pay out in this respect and he asked what would we say if the United States Government thought that we had defaulted and put on high duties against our products in order to recoup themselves? The answer to that is that they have already got such high duties that that would be an impossible procedure for them to adopt. As a matter of fact if the hon. Member studies the latest returns, published only last week, of various tariff changes he will find that so far from having raised duties against us they have in certain specified commodities, more especially motor cars, reduced the duties. That is the end of that argument. His other point was that he wanted to get rid of the Secretary of State for the Dominions. I have no doubt that for purely internal political reasons the hon. Member would like to get rid not only of the Secretary of State for the Dominions but of all the occupants of the Government Front Bench. But he is not going to achieve that end by coming to the House on a warm afternoon and making the kind of speech which we had from him just now —though most Members, I imagine, were not listening to what he was saying.

This case has been argued several times in this House, and on every occasion the Government have fully justified the position which, unfortunately, they have had to take up. The Government and the Members who support the Government are by no means happy that this situation should have come about. We are only too glad to hear from time to time that there is no obstruction to the settlement as far as Downing Street is concerned. But it is no good for the hon. Member opposite or anybody else to seek to blame us for a situation which we did not cause. It was the Irish Free State, in the first instance, which defaulted, which refused to act up to its obligations and which has acted during the last few months in a manner contrary to the interests of the whole Empire. For the hon. Baronet the Member for South-West Bethnal Green (Sir Percy Harris) to say that it is the attitude of the Government which is doing harm to the Empire is absolute nonsense, and I am surprised to hear that suggestion coming from him—


I said that it was a great weakness to the Empire to have this open sore, but I did not put the blame for it entirely on this country. I did not defend the attitude of the Irish Free State in refusing to pay the annuities. What I said was that this canker should be removed because it was having a bad effect on the whole Empire.


I am glad to have given the hon. Baronet an opportunity making clear how he stands in regard to this matter. Of course, it is a source of weakness when any member of a family behaves in a naughty way, but because the Government have seen to it, as far as they can, that the taxpayers of this country shall not suffer because of the naughtiness of one of the children of the family, it is no good blaming overmuch, as he tried to do, the attitude of the Dominions Secretary and the Government. I certainly hope that this new Clause will not be adopted. We none of us like the existing situation, but it is the only way that anyone has been able to suggest so far for dealing with the difficulty, and we shall not solve the difficulty by running away from it, as the Labour party would like apparently that we should do this time as they themselves have done before.

3.51 p.m.


The House has listened with great interest to the speech of the hon. and gallant Member for Gainsborough (Captain Crookshank), but I was rather surprised at some of the things that he said. He referred to the Irish Free State as a naughty child. In fact, they do not admit themselves to be children at all. We claim them as children, but they want to be claimed as brothers, and while we may differ from them very profoundly, we are bound to say that they have as much right to their opinion as we have to ours. This dispute has arisen, and, if we were going to consider it as a father dealing with a naughty child, the first duty of a father, if he is an intelligent father, with great experience, as this father has, would be to consider the circumstances from which the naughtiness arose, and not seek blindly to punish the child in the hope that some sort of repentance would be extracted. I do not think there is any Member of this House who knows the Irish people and who has followed the history of the Irish nation who can be anything but certain that no settlement of this dispute is to be made along those lines, and that, when the right hon. Gentleman the Dominions Secretary took this line in dealing with what is admittedly a highly difficult problem, he took the one step that made a settlement impossible. Anybody who understands the Irish people will know that that is true. It is in fact a tragedy, not only for Ireland, but for Great Britain, if I may say so with respect, that the office of Dominions Secretary, under which this problem falls, should be held by the right hon. Gentleman who occupies that position.


The hon. Member refers to some step. Will he mind telling us what step? The right hon. Gentleman the Dominions Secretary made an offer of arbitration when a dispute fell out over a difference in regard to the tribunal. Is that the step to which he refers?


I should have thought the hon. and learned Member would have appreciated the step of which I spoke, but, if he is not quite clear, I will indicate it. It is the very step which we are trying to undo m this Clause, namely, the step of imposing a duty as a means of settling a difference of opinion, a dispute arising out of very much deeper and more fundamental causes. The final manifestation of the dispute was an argument about the form of a tribunal. It seems to me remarkable that statesmen should try to solve a problem of that kind, a problem which has its roots right down in racial history, by clapping on a duty. Of course, no solution is to be found on those lines. The hon. and gallant Member for Gainsborough said that the party to which I have the honour to belong would run away from this question, but I think he would find that if that party were in power, so far from running away from the question, they would settle it. [HON. MEMBERS: "How?"] They would settle the question to the honour of both sides. [HON. MEMBERS: "How?"] Hon. Members say "How?" In the only way that such a dispute can be settled.


We are not concerned to deal with the Government of Ireland. The only question before the House is the discussion of the proposed new Clause.


I bow to your Ruling. The hon. Member opposite spoke of recouping the Exchequer, and I think it will be very interesting to learn from the Chancellor of the Exchequer how the revenue from these duties is being treated. Is it being treated as just revenue, as the revenue from any other tariff or duty is being treated, or is it being set off against the liability? If a settlement is reached with the Irish Free State, is the amount which has been collected by way of duties on goods imported from the Free State to be set on the credit side against the debit of payments due? If that were the case, there might be, upon those lines, a way of opening this door, which seems to be now for ever closed.

The hon. and gallant Member for Gainsborough referred to the American debt, and I am glad he did. What I think is happening in America is what eventually will happen in Great Britain. The wheel will come full circle, and we shall realise the economic fallacy that every nation can export and not import, the fallacy of believing that prosperity depends upon keeping goods out, and we shall find that in destroying the imports, we have not only destroyed the relative exports, but we have also destroyed the whole system of international payments. The German default is merely a symptom of the disturbance of international trade caused by these various methods of implementing the fundamental fallacy that the less goods you have, the richer you are, and I hope the Chancellor of the Exchequer will indicate that these Irish Free State duties are not regarded, as apparently the hon. Member for Horncastle (Mr. Haslam) regards them, as part of our tariff system—


Might I make a small correction in the hon. Member's statement? I specifically said that they were not put on for the purpose of a tariff, but that they had done a certain amount of good to the livestock breeder.


If I understood the hon. Member rightly, he put it this way: They were put on for one purpose, but they must be kept on for another.


Hear, hear!


I am glad that I interpret the hon. Member aright. If it be true of the industry in respect of which he was speaking, I have no doubt it is true in respect of a large number of other industries, and so this door is not only closed, but is becoming hermetically sealed, because the worst thing that could happen to the hon. Member and those for whom he speaks, and no doubt for other industries as well, would be that circumstances should arise in which these duties were to be repealed. Then, I have no doubt, he or those to whom he was referring would go to the Chancellor of the Exchequer and say, "It is impossible to take these duties off, because, if you do, you will ruin this, that, or the other industry." That shows the vicious atmosphere in which you get when you try to deal with a problem of this kind by that sort of method.


I seem to be a very wicked and even a vicious person, but still I am not yet clear as to why it is a right and a statesmanlike thing for hon. Members opposite to speak of the injury which has been caused to cement, coal, textiles, and the particular things which they represent, and so very vicious and wrong in me to point out that these duties have done a certain amount of good to the unfortunate livestock raiser.


I did not suggest that it was vicious, but I think it was unwise. How is it going to be read in Ireland? We shall be described as "perfidious Albion" again. The hon. Member's speech will be quoted, and it will be said, "It would be no use our paying our debt if we could or would, because it is quite certain that the duties would not be taken off." That is what I regard as dangerous in the hon. Member's speech, and I sincerely hope that the Chancellor, in his reply, will indicate quite clearly that these duties are not to be so regarded, and that any trade interests who feel that they now have a shelter, in which they can hide in the event of their inefficiency, behind the bulwark of these special duties, will be told definitely that they must not so regard them, that this is not part of the mechanisation of subsidising private interests out of the pocket of the consumer, but that, as a matter of fact, these duties are put on for another purpose. I hope he will indicate that the Government are unhappy about it, and are not content merely to sit down and collect these duties, but that he will say they are being specially treated in the national accounts, that they are being held in part liquidation of the indebtedness and that a new endeavour will be found along some other lines to end this unhappy deadlock.

4.2 p.m.


I should like to implement the first part of the speech of my hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) where he pointed out the fallacies which had arisen on the other side of the House with regard to trade treaties. I would remind the House that the Free State were asked to attend the Ottawa Conference with the special purpose of making a trade treaty, and getting the relations between this country and that country on a sounder footing. If hon. Members opposite would care to remember that sort of thing instead of levelling unjust accusations against the Government, the peace between the two countries would be much more likely to be strengthened than weakened.

4.3 p.m.


The hon. Member for East Fulham (Mr. Wilmot) has made this discussion an excuse for an attack on the Government, and particularly the Dominions Secretary. He seemed to pride himself on his knowledge of the mentality of the Irish people. The annuities, which were paid without question for 10 years by Mr. Cosgrave and the Irish Free State, were withheld by Mr. de Valera, and the proof that Mr. de Valera considers that the annuities should be paid by the Irish farmers, for whose benefit they were originally levied, is the fact that he is levying them himself. Therefore, seeing that they are justly due to this country, and that these Customs Duties have been put on in order to meet the default, I sincerely hope that the Government will continue them.

4.4 p.m.


Of course, every Member of the House regrets the difficulty which has arisen between the Irish Free State and this country, but it does not get over the difficulty, when a person, after having made an arrangement and carried it out for many years to the apparent satisfaction of both parties, suddenly announces that he is not going to continue it, and it is suggested that one should sit down and say, "If you do not want to pay any more, and as we want to live in friendship and amity, we will not ask you to pay." The hon. Member said that the object of the settlement was to settle a difference of opinion, but when that settlement costs the taxpayers of this country £4,000,000 a year, I do think that the Government would be very lax indeed if, in view of the great gesture made by the taxpayers of this country in order to benefit the farmers of Southern Ireland when we were responsible for the government of that country, we were now deprived of the comparatively small sum which we were to receive from it.

If Mr. de Valera were to say, "Your terms are extortionate. You are grinding down these poor people when, in the present state of agriculture, it is impossible for them to pay," or if he had said, "Will you give us an extension of time in view of the present position of agriculture"—to all these things, I feel sure, the British Government and this House would have been prepared to listen; but he simply says, "I will take the money from the Irish farmers" and he pays the money into the Irish Free State Treasury and uses it for Free State purposes. There is no remission, so far as I am aware, to the Free State farmer, and I do ask the House to consider whether it is fair to the British taxpayers who, as I have said, have made this arrangement for the benefit of farmers in Southern Ireland. It is a very small sum compared with the rents which these men previously paid for their farms—in many cases little more than half the sum—and they are gradually getting the freehold of their farms. If any farmer in this country could have obtained terms like those, he would have jumped at it. British farmers have never had any such chance, so far as I am aware.

As hon. Members opposite know, we are only too desirous to come to an arrangement with the Free State. No one likes a row in their family, and in a case of two countries so closely joined together as the Irish Free State and this country, of course it is an unhappiness to members of either community, unless warped in their imagination, that there should be this estrangement. Both parties want a free circulation of goods and people between the countries, which we hoped would have been the case now that Southern Ireland is able, in every sense of the word, to manage her own affairs. I submit that there is no ground whatever for the proposed Clause, and that everything has been done by the British Government to show their desire for friendliness towards Southern Ireland. But we cannot ask the British taxpayers, having done so much for the farmers of Southern Ireland, to refrain from this reimbursement to the extent of these duties.

4.9 p.m.


The hon. Member who has just spoken has frequently spoken in this House about those who default, but I notice in recent debates he has not been so keen about defaulters, I suppose because default is now more in fashion than in years gone by.


This is no question of default; it is simply refusal to pay. We are not told that the farmers cannot afford to pay.


I thought that a person who refused to pay was a defaulter. I hope that when we get the Government's reply we shall be given some suitable explanation of the advantages which are being derived from these duties. I can see that they have been harmful to Irish trade. I am not sure that that is to be wished for. I do not think that in putting Irishmen against this country we are really achieving anything substantial. I do not know whether there have been any real advantages from our point of view. The hon. Member opposite has mentioned the stock-raising industry, as if indeed these Customs duties have been very beneficial to that particular industry. I think that within the last few days we have been told of the rather desperate position of the stock-raising trade, so that it seems that even the most favoured trade in this country has not had any real benefit from these duties.


I am 10th to rise again. No doubt the livestock industry is very badly off now, but it would certainly be very much worse off but for these duties.


It seems to me that the hon. Member is making confusion worse confounded. I think it is true to say that the stock-raising industry complain that they are in a much worse financial position than they were two years ago. I gather that from this morning's Press. So that the duties, even from the hon. Member's point of view, have not been very successful in helping British trade. I hope that in the reply from the Front Bench opposite we shall be given some reasons which will show the solid advantages, apart from punishment, of these Customs duties. I do not think that hon. Members will regard as a very substantial benefit the fact that we are harming the Irish or getting our own back. We ought to pursue a policy with higher ideals and motives than that. Further, it seems to me that our policy towards general defaulters, those who cannot pay, or only pay 2s. 6d. in the £, has been very generous in the past. I think that we have been extraordinarily generous to continental semi-defaulters. I urge, therefore, that the Government should adopt a policy of as kindly tolerance towards the Irish non-payers as they have in the past adopted towards the French and Italian semi-non-payers.

4.13 p.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

After the arguments, such as they were, which were addressed to the House by the Mover and Seconder of this proposed new Clause and the flamboyant and rather vacuous declamations of the hon. Member below the Gangway, which my hon. and gallant Friend the Member for Gainsborough (Captain Crookshank) so effectively dealt with, I do not think that I need spend any more time on those speeches; but I would like to make some response to the question put to me by the last speaker, namely: Would the Chancellor of the Exchequer give some reasons for the continuous imposition of these duties which the Clause seeks to remove? His speech and that of the hon. Member for Westhoughton (Mr. Rhys Davies) were illustrations of what I call the deplorable inability of the party opposite to go underneath the very superficial meaning of phrases. To them there is no difference in meaning between one kind of land tax and another kind of land tax, or between one kind of duty and another kind of duty, or between one kind of default or another kind of default: it is all covered by one word, and therefore, to their mind, there is no distinction.


This is what the right hon. Gentleman says in every Debate.


I am taking it from the speeches of the intellectual party opposite.


And in a snobbish manner.


I expect that I shall do it again. The hon. Member for East Fulham (Mr. Wilmot) spoke of these duties as a means of settlement of the dispute between the Irish Free State and this country. If he thinks that that was the purpose of the duties, he must have forgotten the statements that were made at the time that they were proposed. I say that he makes no distinction between one kind of duty and another, because he seemed to think that the default of the Irish Free State is exactly the same thing as the default of Germany, or as the technical default on War Debts of this country to America or of other countries to one another. There is all the difference in the world between them. The British Government in this matter is merely a channel between the Irish farmer, who bought his land and agreed to pay annuities on it, and the owner who sold the land to the farmer. The British Government agreed to pay the owner, the Irish Government agreed to collect the annuities from the farmer and hand them over to the British Government for the purpose of meeting the obligation which the British Government had undertaken towards the owner. The Irish Free State is still collecting the annuities from the farmer but is withholding them from this country. There is a great difference between a default of that kind and the default of a country which says, "I do not repudiate my obligations and I should like to pay if I could, but my financial position is such that I cannot pay"; or the position of this country with regard to war debts, which is that these debts are entirely different from other debts; and that there are difficulties of transfer and a great number of other considerations as set forth in Notes addressed by us to America. You cannot lump all these things together as if they were exactly the same thing.

This dispute between the Irish Free State and ourselves, although it originated in its present form with the withholding of the payment of annuities and certain other payments by the Irish Free State, is really a political dispute. This is an incident in a political dispute, and it is not therefore to be supposed that that dispute will be settled if we do what we are bidden to do by hon. Members opposite and turn the other cheek and say, "Do what you like to us and withhold any money due to us, and we will always give way to you." It is not to be supposed that that will settle the political dispute unless we were prepared to concede to the Irish Free State Very large and much more far-reaching and fundamental weakenings in the British Empire than anything that the hon. Baronet has been contemplating. If we were prepared to concede that the Irish Free State should become a Republic and that certain other breaches of the treaties between us shall take place, we might perhaps settle this dispute. These duties were not put on to punish the Irish Free State for having withheld the annuities or in order to protect any British in- dustry. They were put on in order that we might recoup, as far as we could, the British taxpayers for the loss which has been unjustly and unfairly imposed by the action of the Irish Free State. We have not been entirely successful, but we have gone some way to attain our object. In 1932–33 the deficiency owing to the failure of the Irish Free State to pay the annuities was £4,774,000, and we have recouped £2,384,000 out of that. In the last year, 1933–34, the deficiency was £4,900,000, and we have recouped £4,107,000.


What is the net balance owing, the arrears up to date?


We expect the default on the 31st March, 1935, to be £14,512,000, out of which we expect to have recovered by means of the duties something over £10,000,000, so that the deficiency will be about £4,500,000. This is not the occasion, in fact Mr. Speaker has ruled that it is not the occasion, to discuss how to settle the Irish question. All I can say is that if anyone thinks the Irish question is going to be settled by the repeal of this Act, he must have a different idea of the Irish mentality than that which I have gained from my experience.

4.20 p.m.


The right hon. Gentleman adopts the attitude of the hon. and gallant Member for Gainsborough (Captain Crookshank) as regards this problem, and he made perhaps one of the most striking statements we have had from the Government Front Bench in the present Parliament, that is to say, that the Irish Free State is to be treated as a naughty child by this Government. That is a complete reversal of the whole policy with regard to the Empire since 1926, when the attitude of mother and child was finally abandoned and, instead of the old conception of the Empire built up on that basis, the Commonwealth of Nations was substituted; it was an equal brotherhood with equal rights for all the individual Dominions within the Commonwealth of Nations.


Will the hon. and learned Gentleman remind me of any phrase which I used which justifies his assertion that I said the policy of the Government was to treat Ireland like a naughty child?


The right hon. Gentleman started by saying that it was unnecessary to answer the arguments that had been put forward because they had been dealt with fully by his hon. and gallant Friend the Member for Gainsborough, that he approved of the way in which they had been dealt with, and that therefore it was unnecessary for him to say anything more. I presumed he meant that he adopted the arguments that had been put forward by the hon. and gallant Gentleman. If the right hon. Gentleman now says that he is wrong and that he is only too anxious to get the matter right, perhaps he will tell me whether I am right or wrong, and whether he does approve of the arguments of his hon. and gallant Friend.


I do not approve of the hon. and learned Gentleman's own version of those arguments.


We are to understand then that the right hon. Gentleman pays a compliment to the hon. and gallant Gentleman with his lips but not with his heart, that he likes the way in which the hon. and gallant Gentleman spoke but that he does not believe what he said. As long as I manage to prevent the impression getting abroad that the Government consider the Irish Free State a naughty child, perhaps it will be some assistance in this discussion. The right hon. Gentleman says that we on this side seem to be unable to distinguish between different kinds of debt and default. The right hon. Gentleman or someone else on the Government Benches made that remark on a former occasion when this matter was being discussed. I think I then expressed the view that the only really vital difference was whether you happen to be the debtor or the creditor. That was the vital difference in the -outlook upon debts or default. If you are the creditor, you always think that there is every good reason why the other man should pay, and you are perfectly satisfied you are right and that he is wrong if he does not pay. Anybody who has recently been in America, especially after the announcement of the Budget surplus, must have come up against that atmosphere very strongly, as I did when I was in Washington.

If, on the other hand, you happen to be the debtor, you think you are perfectly right in defaulting. There is an absolutely unarguable case why you should not pay up. It is contrary to international interests, and it would be bad for the man to receive the money. It always strikes me as a comic argument when the debtor tries to persuade the creditor that it is dangerous for him to be paid the money. The debtor also says that he is not able to pay or that circumstances are such that he does not think he ought to pay. The debtor always has a good argument, and the great difficulty which arises in this and all other questions is as to who should decide who is right. That is the reality of the problem. The hon. and gallant Member for Gainsborough said that we did not look at the realities of the situation. That is the reality of this problem. You have to accept the proposition that, whether stupidly or foolishly or mistakenly, the present powers that be in Ireland take a different view from that which we take, and that we can never settle this matter by each of us continuing to affirm that we must be right unless there are some means by which the question can be settled between us as to who is right. I have very little doubt, if the legal case were examined, that this country would be found to be right. I have always taken that view, but that does not mean that it is unnecessary for the matter to be settled somehow. The mere assertion of one side of their belief that they are right does not help the matter forward.


Is it not a fact that in the 1926 Conference the members of the Empire agreed that if differences arose between them the settlement should be made by a tribunal composed of representatives of the Empire, and that it should not be settled by any outside interference? It was because Ireland refused the tribunal composed of members of the British Empire that this issue has arisen.


The hon. and gallant Gentleman is wrong. It was at the Empire Conference in 1930 that the matter was discussed, and neither South Africa nor Ireland would agree to compulsory arbitration by an Empire tribunal. As a result, there was incorporated in the report a recommendation that it should be done and that some form of panel should be set up from which arbitrators could be drawn. Unfortunately, such a panel was never set up, and, if the hon. and gallant Gentleman will look at the Debates on the Statute of Westminster, he will see that I ventured to suggest then that, unless we, at the same time as passing that Statute, set up an arbitral tribunal which could decide matters between equal partners, as the Dominions were then, we should inevitably have some such difficulty as this, and we should find it insoluble. That is exactly what has happened. We have found ourselves without any means laid down beforehand to settle this dispute. The result is that we cannot agree on who is to settle it. That is really where the difficulty lies at the present moment. I am afraid I have been drawn off into a. matter which is not in order according to the Ruling which Mr. Speaker has given.

The Chancellor of the Exchequer also said that in this case we were really only acting as a channel to pass the money to the people who were entitled to it as interest or repayment on the land bonds. That is exactly the argument which the United States put up with regard to our default, namely, that they have simply to pass the money to the Liberty bondholders, and that, if we do not pay, the United States Government will have to pay; they will have to raise the money in the United States to pay the people who have the Liberty Bonds, upon which we should otherwise be paying the interest. The fact that you are passing the money on to some third party really does not make any destruction in quality or nature.


In following that argument the hon. and learned Gentleman is leaving out one important point. Mr. de Valera is able to collect the money, whereas we are not able to collect the money.


I appreciate that fact, but it does not make the slightest difference if this is the liability of the Irish Government any more than it makes a difference if we happen to collect the money we send to America from the taxpayers or anyone else from whom we choose to collect it. If Mr. de Valera likes to tax the farmer by collecting the land annuities, it does not make any difference to his liability so far as this country is concerned. I was pointing out the similarity between the two cases to show that neither of those things meant any difference when it is a question of payment from one country to another.

Then the right hon. Gentleman said that these duties were not put on to punish the Irish Free State. Surely the position is that, unless we had held that the Irish Free State had done something wrong, she would have been treated like every other Dominion. She was entitled to be treated like every other Dominion and this exceptional treatment was imposed for the specific reason that we held she had done something wrong; and we judged the case and then put in an execution in order to levy the money. It is no good saying that we did not do this because the Free State had to be punished. It is the express purpose for which we did it.

The danger of leaving these duties on indefinitely has been expressed in the speech of an hon. Member who has now left the House, who said they must not be taken off because of the position of the fat stock industry in this country. I should venture to doubt very much whether our fat stock industry has really benefited on the whole, because in certain parts of the country the young beasts imported from Ireland were the raw material for that industry. Young beasts were brought over here at the beginning of the year and fed on grass throughout the year. The profits of the fat stock industry, at any rate in certain parts of the West and South West, were very largely made by getting these cheap young cattle, fattening them on our pastures, and finishing them off in the yards. Even if this policy were an advantage that had come by the way to the fat stock industry there is an added danger if we are now going to argue, "This policy is very favourable to the agricultural policy of the Ministry of Agriculture," because the longer the duties are left on the more difficult it will be to remove them. If we create vested interests, then at any moment when there is a proposal for a settlement with Ireland they will say, "It will ruin our industry; you cannot do it now; the duties have been on too long." We have brought forward this Clause, because we are anxious that that difficulty should not grow up, and that the Government should face up to the realities of the situation. As the right on. Gentleman said, we are dealing with a political question; it is a question of the independence of Ireland, and that is not going to be solved, as the hon. Member for Windsor (Mr. A. Somerville) believes, by keeping on these duties in order to protect any interests.


If, as an Irishman, I know anything about the mentality of the Irish, they thoroughly understand these duties and the worst way of trying to settle the matter would be to take them off now.


In other words, if we continue to beat them long enough they will give in. I should not have thought that was the mentality of the Irish, but, if the hon. Member says so, it must be so. We shall certainly go into the Lobby in support of this Clause, as a protest against the continued levying of these duties and against the failure of the Government to face up to the reality of the Irish situation and to get down to a solution of this difficult problem, which they are allowing to drift from bad to worse.

4.34 p.m.


There was one small point of importance to which the Chancellor has not replied and which may give rise to some misunderstanding. An hon. Member for one of the Divisions of Lincolnshire suggested that, though these duties were imposed solely for the sake of securing revenue which we considered to be due to us, it would be necessary to keep them on as protective measures. If that impression gets abroad in Ireland, it will add enormously to the difficulty of a settlement—if it is thought that there are no means of coming to an agreement by which these duties can be withdrawn. Therefore, I think we might ask the Choncellor of the Exchequer, without committing himself too far, to give an assurance that these duties are considered solely from the point of view of the purpose he had in mind when they were enacted, and that there is no intention of keeping them in existence after the dispute is settled merely for the benefit of certain industries in this country.


I must decline to give any such assurance. I have stated perfectly definitely what was the purpose for which these duties were imposed, namely, to recoup the British taxpayer for the losses imposed upon him unjustly by the Irish Free State. In the course of warfare of this kind, all sorts of things do occur which after a time may be very difficult to remove, and I am not prepared to say at this moment on what terms I shall be able to settle with the Irish Free State. I should like to know, and perhaps the hon. Gentleman will tell me, whether it would be a term of the settlement that the Irish Free State would pay up the arrears of the annuities and would be willing to pay in full in future. Those are matters to be taken in account, and I cannot at this stage commit myself to any particular conditions.

4.35 p.m.


An effort has been made to draw an analogy between our debt to America and the debt which Ireland owes this country. I would like to point out that this country has not used the debt as a means of trying to attain some other object. The object of withholding the annuities is to twist the lion's tail. It is part of a deliberate policy of using every opportunity to advance another step on the road to what they call their republic. Whatever concession were made by this country it would not be appreciated. Every concession in the past has simply been used as a stepping stone in another demand. In the past they made a claim that rents were too high and this country set up a Land Court, but as soon as new rents were fixed, though they were not on an equitable basis from the point of view of the landlords, the Irish people still said, "We want something more." The next step was to provide them with houses to be let at a rent of half-a-crown a week.


It appears to me that the hon. Member is going far beyond the terms of this Clause.


I was trying to show that, historically, every offer we have made to Ireland has been made the basis for asking for something more. After the last trouble with Ireland we made a Treaty with them, and these annuities were part of the bargain, and now that has been abrogated. They have refused to pay not because they cannot pay but simply because they wish to secure a republic, and to cut themselves away from the Empire. The right hon. Gentleman must remember that the Irish people have a peculiar mentality. They would rather have the harp that hangs on Tara's walls than any grand piano. They want to go back to the ancient times. If they wish, they can do exactly as they want to do in their own sphere, but for us at this stage to throw in our hands and say, "Very well, do not pay us, but stay in the Empire" would be a very foolish thing indeed. We shall have to face up to the situation at some time, and I, for one, hope that we shall not allow this condition of affairs to go on. [HON. MEMBERS: "What condition?"] Allowing the lion's tail to be twisted all the time—their using these annuities as a means of gaining a republic. If they want to go out of the Empire I should not be one to keep them in. The time has come when they ought to be thrown out of the Empire as being unworthy of it. Therefore, I hope the Government will stand firm. The hon. and learned Gentleman opposite has spoken of coercing Ireland and beating the Irish. Members of the Labour party have acted on that principle. If an agreement made between a trade union and employers has been broken by the employers the unions have threatened a strike.


I do not see how that question can arise on this Clause.


I was trying to show the analogy between the sanctions the unions apply and the sanctions that we are applying in this dispute, because it is a dispute. We have availed ourselves of the only means at our disposal. We have tried to conciliate the Irish, we have tried to arbitrate the question within the Empire, but they simply say, "We won't pay, we won't pay, we won't pay!" Again I say I hope the Government will stand firm. I, for one, thank God that we have a Government which has some backbone in it and will not whittle away our rights in the weak manner which some - hon. Members opposite desire.

4.42 p.m.


There is one aspect of this question which I would like to put to the Chancellor of the Exchequer. He was very severe on the hon. Member for Dewsbury (Mr. Rea), the hon. Baronet the Member for South-West Bethnal Green (Sir P. Harris) and the hon. and learned Gentleman who led the Opposition. If I heard him aright, he said the annuities amounted to some £14,500,000 and that we had recovered something like £10,000,000, leaving a deficiency of £4,500,000. Surely he does not suggest that we have been getting this money from the Irish Free State? Who pays the duties, after all? It is the British consumer who pays the duties. He has to pay more for what he imports. The idea that the Chancellor of the Exchequer is recovering this money from the Irish Free State is a pure delusion, a pure fallacy. By his duties he has brought about a rise in the cost of living. That is borne out by what was said by the hon. Member for Horncastle (Mr. Haslam).


On a point of Order. Is this any more in order than the observations of my hon. and gallant Friend the Member for Accrington (Major Procter)?


The Speaker is quite capable of keeping me in order. The hon. Member for Horncastle is alive to the true inwardness of the situation. He wants the duties kept on in order to help the livestock industry in this country, to increase the prices of cattle, and thereby benefit the industry, in which he is interested. It is a fallacy for the Chancellor of the Exchequer to suggest that he is recovering some of this loss by these duties. On the contrary, he is increasing the cost of living. It is doing no good to anyone except to the vested interests of the livestock industry.

4.43 p.m.


I wish to oppose this new Clause and to protest against the effort made on this and other occasions to bring agriculture into this question. It is not an agricultural question at all. We are trying to obtain justice for British bondholders. What has been done has not been done in the agricultural interest; whatever the effect of it may have been on agriculture is of secondary importance. British bondholders have not received payment in the ordinary way from the Irish people, and, in justice to those bondholders, we are entitled to obtain payment in whatever way we can.

4.44 p.m.


I am rather surprised that the Chancellor of the Exchequer, in discussing a question of this importance, should have raised the question of warfare. If there be anything untactful in dealing with these Special Import Duties it is to talk of warfare to the Irish people. I am not going into that aspect of the affair. This nation should strive for friendly relations with Ireland. An hon. Friend speaking from these benches made a useful suggestion. I know something of the Irish movement, and that suggestion, if carried out, would be a wonderful gesture. I am very discreet in my statements on this subject in this House, because I do not want to embitter the situation. A short time ago when £4,500,000 was advanced by this House to the Austrian Government, I asked the Chancellor a question about it, and he intimated that the deficiency was about £4,500,000. He said that it was not possible for the British people to come to an understanding when there was no machinery by which to get rid of the deficiency. If this House can be generous with the taxpayers' money in regard to the Austrian people, I should imagine that no more successful gesture could be made at the present moment than to find £4,500,000 as a solution of the Irish situation. Such a gesture would lead to a settlement and to a better understanding between the peoples. If the gesture were made now, it would be most beneficial.

I am not saying one hard word about the Chancellor's remarks, but this is a matter of great importance to the welfare of the nation, and I say to him that in those circumstances you cannot afford to be too flippant in your treatment. The matter should be treated seriously as it is being treated from these benches by our proposal for a repeal. I have tried as much as possible all my life to reconcile the English and Irish peoples, between whom I am anxious to see a better understanding. The Irish are our people, and have shed their blood in the wars of the Empire equally with any other race, and they should be given equal treatment upon equitable terms. They are a population of not more than 2,500,000. I am convinced that a great gesture can be made, and that the National Government can, in this regard, rise very high in the estimation of many races of people. If that gesture were made by way of repeal, the National Government would have done something worth doing.

4.50 p.m.


All my political life I have taken the greatest interest in Irish affairs, and I have been an Irish Home Ruler from the time that Gladstone introduced his Bill in 1886. I listened with great care to the Chancellor of the Exchequer, who made a clear and most convincing statement, which, so far as I could see, was not in the least exaggerated. I was surprised at the speech of the hon. and learned Member for East Bristol (Sir S. Cripps). It was unfortunate that he should try to draw a parallel between the Irish debt and the debt which we owe to America. The hon. and learned Gentleman occupies a position of importance in this House and in his party, and he knows as well as most of us that anything that he says here is repeated abroad, where it carries a weight which some of us might not attach to it in this House. I say that with all respect. In attempting to establish that parallel, he has been a victim of some form of mental obliquity which we do not usually associate with his utterances here, or with those of the learned profession of which he is a member. He knows the position between this country and America to-day, and he knows that there is not the slightest—


I said it because I knew what was being said in Washington about the English debt. It is almost exactly the sort of argument which is being put up in regard to the Irish debt in this country.


I have not been in America so recently as the hon. and learned Gentleman, but on a comparatively recent visit I met men of considerable standing in the banking and commercial world, and they took an entirely different view from that which has been represented as the view of America in the speech of the hon. and learned Gentleman. I found in America many thinking and responsible men who appreciate the position in this country towards America, and they know from the long historical association of the two countries that the last thing that this country would want under any conditions, except those that are unavoidable, is repudiation of the American debt. The thinking men of America are aware of the implications and modifications regarding the debt which are in the minds of the thinking people of this country.

The hon. and learned Member has stated his belief that, from a purely legal point of view, the dispute between Ireland and ourselves would be settled in our favour. If that be the case, it makes the position of the Government all the stronger in taking up their present attitude. In no sense has that attitude been vindictive. The representations which were made by the Dominions Secretary were of the most friendly character, but they were received unfortunately in a very different spirit by the other side. I am not going to enter into the fiscal question, but I appreciate the issue raised by the hon. Member for Dewsbury (Mr. Rea), that the duties will not ultimately be regarded as an integral part of our fiscal system, and that if this dispute is settled the duties will disappear. I hope that both the duties and the dispute will disappear ere long.

4.55 p.m.


On this question of the removal of the duties when the dispute is settled, I was very much surprised that the Chancellor of the Exchequer could give no assurance. It was certainly my recollection that when these duties were put before the House there was an expressed assurance that they were only for that purpose. Lest I might be at fault in my recollection I have been to the Library and have looked up the passage in the speech of the right hon. Gentleman the Secretary of State for Dominion Affairs. In that passage the right hon. Gentleman seems to have made the position very clear. This is what he said: The Government ask with confidence for power from the Committee to impose in their own way, at their own time, but immediately—to impose it in such a way as they feel the circumstances warrant, but only to obtain the amount due and not one copper more. When the amount is obtained, we shall cease."—[OFFICIAL REPORT, 4th July, 1932; col. 56, Vol. 268.] I ask the Chancellor of the Exchequer very seriously whether the Government have now retreated from that position. If they have, I suggest that they are not going to gain by it.

4.57 p.m.


The hon. Member for North Bristol (Mr. Bernays) has read a passage, but apparently he does not fully appreciate the meaning of the passage. The particular sentence on which he laid special emphasis was one in which the Dominions Secretary said that those duties were imposed for the purpose of recouping the Exchequer for the loss laid upon them by the default of the Irish Free State, and that when that amount had been acquired or made up, the duties should cease. That was not the question I was asked. [HON. MEMBERS: "Yes, it was."] Hon. Members might allow me to put my case. I was asked whether, if a settlement with the Irish Free State were attained, one of the terms of the settlement would be the total abolition of these duties. I declined to give any such assurance. I do not know what the terms of the settlement with the Irish Free State might be. The terms might, for example, include and allow for the forgiving of part of the money, which would therefore never have been handed to us or recouped by the duties, and in that case the conditions laid down by the Secretary of State for Dominion Affairs would not have been

fulfilled, although not through any fault of the negotiation of the Secretary of State for Dominion Affairs. It would be monstrous to ask that I should tie the hands of one side or party, when the other side is not so tied.

4.59 p.m.


I was not asking the right hon. Gentleman to tie his hands, but to refrain from tying them. An hon. Member suggested, with considerable acceptance on the Government side, that once these duties had been imposed they were there in perpetuity. I asked the right hon. Gentleman not to give any such definite pledge, but to make it clear that the situation was open to negotiation, and was not such that, if settlement were negotiated, the duties had to remain. If that were so, there would be no hope of the Irish people beginning to negotiate. I merely asked the Chancellor of the Exchequer to keep the door open.

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

The House divided: Ayes, 32; Noes, 245.