SUPPLY.

HC Deb 07 May 1934 vol 289 cc741-821

[4TH ALLOTTED DAY.]

Considered in Committee.

[Sir DENNIS HERBERT in the Chair.]

CIVIL ESTIMATES, 1934.

CLASS II.

DOMINIONS OFFICE.

Motion made, and Question proposed. That a sum, not exceeding £36,618, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1935, for the Salaries and Expenses of the Department of His Majesty's Secretary of State for Dominion Affairs."—[Note.—£17,000 has been voted on account.]

3.46 p.m.

Sir HERBERT SAMUEL

I beg to move, to reduce the Vote by £100.

I am moving a reduction in the Vote in order to draw attention to a special matter which, I am sure, the Committee will regard as one of wide importance. Some of my hon. Friends will raise other questions upon this Vote, but I propose to devote myself entirely to the questions which arise out of certain correspondence between the Government of New Zealand and His Majesty's Government in Great Britain. First, let me invite the Committee to consider what are clearly the facts of the case, and, in order that it may be established beyond the possibility of doubt or question, I will ask leave to read a telegram which opens the correspondence to which I refer which was sent by the Governor-General of New Zealand to the Dominions Office on 25th October last year. The telegram reads as follows : My Prime Minister has asked me to send you the following telegram : With reference to question of quantitative regulation of agricultural produce imported into United Kingdom, there is a widespread belief on the part of producers in New Zealand that if we undertook a drastic reduction or removal of New Zealand's protective tariff on United Kingdom goods His Majesty's Government in the United Kingdom would guarantee continuance of unrestricted entry of New Zealand primary products. His Majesty's Government in New Zealand would be grateful if His Majesty's Government in the United Kingdom would indicate their attitude towards this suggestion. This important communication was considered by the Government for a period of two months, and towards the end of December they sent a reply, which is included in the White Paper presented to the House which discouraged the suggestion. The New Zealand Government in February sent another telegram which, in effect, was an inquiry as to what the Government in fact intended to do with regard to the regulation of New Zealand imports into this country, to which the Dominions Secretary sent a reply in the following month, saying substantially that they were not in a position to make any statement as to the course which they proposed to take. How the first reply-was viewed in New Zealand is clearly-shown by the speech which was made by Mr. Coates, the Minister of Finance, who, in a speech at Wellington on 21st February, used these words : It was being widely contended here"— that is, in New Zealand— that if New Zealand would drastically reduce her protective tariff, the United Kingdom would guarantee the unrestricted entry of all New Zealand's primary products. Such an arrangement seemed impossible in the light of information gained by New Zealand Ministers"— it seemed impossible as from this end, the United Kingdom end— but inquiry had been made from the British Government, which had replied that the suggestion could not be considered. That is the view taken of the Government's reply by the Finance Minister of New Zealand. It is quite true that the communication which was received did not amount to an offer from New Zealand to remove or drastically reduce their duties. It was an inquiry, but any business man on, say, the Manchester Cotton Exchange or any commercial exchange who refused to consider an inquiry because it was not yet an offer, would very soon become bankrupt. The reply of the Government, giving an entirely negative response to the inquiry, may perhaps prove the turning point in the direction of British Imperial policy in relation to the Dominions. If Empire Free Trade means, as it apparently does mean in the mouths of many of those who use that phrase, Empire protection, and is, indeed, the exact opposite of what it purports ports to be, I do not favour it, but if Empire Free Trade means what its name would, on the face of it, imply, then I am wholeheartedly in favour of it. If it means that there shall be, at all events, a completely unimpeded exchange of goods between the mother country, the Dominions, India, the Colonies and all parts of the Empire, mutually, that is, to my mind, a very fine ideal, a noble ideal, tending certainly towards a great increase of intercourse between various parts of the Commonwealth and the promotion of Imperial unity, which is the object all of us desire. I should like to see no distinctions of any kind made between British subjects in all matters of trade, and in so far as Empire Free Trade is directed towards that object, it is a worthy object. It is true that in the early part of the nineteenth century, or the middle of that century, there were many people in all parties who were indifferent to what were then called Colonial questions. There was a school who were designated as "Little Englanders," and a section of the Liberal party in that distant period undoubtedly professed those doctrines. It was about that same time that Benjamin Disraeli, when Chancellor of the Exchequer, wrote a letter to Lord Malmesbury, the Foreign Secretary, in which he said : These wretched Colonies will all be independent in a few years, and are a millstone round our necks. That statement is recorded in Lord Malmesbury's "Memoirs of an ex-Minister." So that school of thought had an influence in many quarters perhaps unrecognised and unexpected at the present time. Liberals have long since entirely dissociated themselves from those ideas. I think that the whole nation now, irrespective of party, is agreed on desiring to maintain the union, and promoting in every possible way the prosperity of the Empire as a whole. If we who represent Liberal ideas in this House to-day opposed, as we did oppose and as we still oppose, the Ottawa Agreements, it was not for any lack of desire to promote and increase intercourse between the various parts of the Dominions, but because we felt convinced, and still feel convinced, that that was not the right way, or the effective way, to achieve the end in view. What my right hon. Friend the Member for Sparkbrook (Mr. Amery) called "hard bargaining at Ottawa," is more likely, in the long run, to cause discord, disagreement and disunion than serve the cause which, ostensibly, it seeks to promote.

The opposition to the Ottawa Agreements is not limited to this country. The Ottawa proposals were contested as hotly in Canada as here. The whole of the opposition in Canada, led by Mr. Mackenzie King, the late Prime Minister, opposed the Ottawa Agreements and divided against them on every occasion, and propounded a different policy. Mr. Mackenzie King publicly declared in the Canadian Parliament that if he were returned to power the policy that he would adopt would be, first of all, to repeal the enormous increases in the protective tariffs against British goods which had been imposed by Mr. Bennett's Government, and which had been diminished in only a comparatively trivial degree as a result of the Ottawa Agreements. He said that he would first repeal Mr. Bennett's tariff increases against us, which still remain to-day and are hampering British trade in Canada, and that at the same time he would give a preference to us on all the remaining Canadian duties. On that policy during the last year or so Mr. Mackenzie King's party has won every by-election in Canada as every seat vacated, indicating very clearly the views of the Canadian people. It is not our business in this House to intervene in any way in the domestic politics of any Dominion, but we are vitally concerned in this matter and it is right that the Committee should be informed, or be reminded—for, I am sure, the facts are well known to most hon. Members—as to the course of events in the Dominions.

The tendency which is now being adopted, the policy of restriction or contraction of trade which is now being so definitely adopted by His Majesty's Government in the United Kingdom, is causing the most profound concern throughout the Dominions. I visited Western Canada in the summer of last year, and already then it was evident that public men of all schools of thought were gravely concerned as to the possibility of the future development and expansion of the vast areas of Western Canada being checked, and the process being even reversed, by the restrictive policy adopted in the Mother Country and elsewhere. Western Canada has been equipped for a much larger population than she now has, and for a much more extensive area of cultivation. Her towns, her railways, her roads and the number of her farms can purvey a far greater amount of produce than is now produced.

It is the same in other parts of the Empire. In Western Australia, for example, so gravely concerned are the people at the present course of events that, as the Committee knows, there is a secession movement in the State of Western Australia seeking to get freedom to make its own commercial arrangements in order that its prosperity may no longer be hampered, as it is now in danger of being hampered. To-day I read that Mr. Lyons, the Prime Minister of Australia, has been telling the producers of Australia that, in view of present tendencies in the Mother Country, it may soon be necessary for Australia to take the most active steps to endeavour to open up markets in other parts of the world.

The SECRETARY of STATE, for DOMINION AFFAIRS (Mr. J. H. Thomas)

Does my right hon. Friend suggest that the secession movement in Western Australia is against anything done in this country, or against something in Australia?

Sir H. SAMUEL

To a great extent it is both. [HON. MEMBERS : "No!"] It is the fact that Western Australia is suffering and likely to suffer in a greater degree owing to the fact that she is part of the Australian Commonwealth, which has been adopting a policy of high protection, the effect of which is felt by the primary producers in Australia. It also hinders inter-Imperial trade. If Australia were to make the same inquiry as New Zealand has made and were to receive the same answer, as no doubt she would receive, that would be exceedingly detrimental to the interests of Western Australia, as to the other parts of that Commonwealth. In the Dominions in general, throughout the agricultural districts, every village and every town is affected by this matter. Every man in those territories who has devoted himself to the upbuilding of the new country in which he was born or to which he has migrated, whose whole life is bound up with its prosperity and who looks forward eagerly and hopefully to its development and expansion and to the growth of the population of the towns feels at this moment that that future is imperilled by the process of restrictive trade which is being adopted in this country and in other countries of the world. For that danger they will be inclined to put the blame, where? Here, on this House and on the Government Front Bench, for any Measure which restricts the future development and prosperity of those Dominions.

This is a clear example, a clear, vivid and conspicuous example of the policy of economic nationalism and self-sufficiency which His Majesty's Government vigorously condemn, but which they energetically pursue—a policy which has reduced our trade to one-half of what it has been. [HON. MEMBERS : "No."] I speak generally of the policy of economic nationalism throughout the world. I am sorry if I was misunderstood. I mean that the Government are parties to a policy which, taken as a whole, has had the effect of reducing not only our trade but everyone's trade to one-half of what it was a few years ago. In 1929 we were exporting almost exactly £2,000,000 worth of goods every day from the United Kingdom. Last year and in the first quarter of this year we have been exporting almost exactly £1,000,000 worth of goods every day. That is the main reason for the unemployment problem which dominates our economics.

When the Government replied to that, the Chancellor of the Exchequer and others replied with much self-satisfaction that now Great Britain has recovered her position as the premier exporting country in the world. I would rather be second or third among the well-fed and prosperous than first among the half-starved. The fact that others are even worse off than ourselves is little consolation to our 2,000,000 of unemployed, and little consolation to the Chancellor of the Exchequer when he has to take £70,000,000 a year from the taxpayers in order to find the State portion of the costs of the unemployed's maintenance.

That this spread of economic nationalism is the cause of the world troubles has now been declared by very many people and by very many authorities who previously were silent, indifferent or sceptical on the subject. There were, first of all, though not to be placed in that category it is true, the experts who prepared the agenda for the World Economic Conference, who declared it in the most emphatic terms. There were the Prime Minister and the President of the United States who, after the Prime Minister's visit to America a year ago, put in the forefront of the measures that were desirable for the recovery of world prosperity the restoration of greater freedom in the interchange of goods. There are now in the United States the Secretary of State, Mr. Hull, and the Minister of Agriculture, Mr. Wallace, who repeatedly and continuously declare that the only hope of a restoration of prosperity, either for the United States or other countries, is the relaxation of these restrictions. There has been a meeting of the International Chamber of Commerce, which stated that in the first of its proposals.

There was a meeting in Rome last month of the Inter-Parliamentary Commercial Conference, which came to the same conclusion. The annual report of the Director of the International Labour Office, published two or three days ago, was to the same effect. The British Chamber of Shipping has made representations to His Majesty's Government in the most emphatic terms, declaring that the prosperity of British shipping is absolutely dependent upon the restoration of greater freedom of trade. Within the last few days the President and 17 ex-Presidents of the Liverpool Cotton Association have published a most urgent appeal to the nation declaring that the extreme depression of the Liverpool Cotton trade cannot be relieved until the tendency to economic nationalism again is reversed.

The Corn Trade Association, the Cooperative Congress, and recently the chairmen of almost all the great banks, at their annual meetings, in nearly identical terms in their annual addresses summarising the state of finance and commerce in the past year and prognosticating its future, almost without exception included emphatic passages declaring that until the world returned to some degree of sanity and allowed greater freedom of interchange of goods full prosperity could not possibly be achieved. Quite recently from even more unexpected quarters the same message comes. The Federation of British Industries, which has been foremost in the movement towards economic nationalism, now sees the results that ensue, and Sir George Macdonogh, in his presidential address a few days ago, said : Great Britain had regained her position as the chief exporting country of the world. They had held their own and done better than their competitors, but they were not yet selling that volume of goods which alone would enable them to reduce the ranks of the unemployed. " Alone would enable them." Then he went on to say : The world still seemed wedded to economic nationalism, as evidenced by high tariffs, quotas, subsidies and exchange restrictions. No progress towards attaining a freer flow of trade had been made by general international action during 1933. If there was to be a real revival of international trade it was imperative that Great Britain should resume her role as leader in the offensive against the forces of contraction. In order to do so the Government must not flinch from using the powers it now possessed, or with which it could arm itself. Then Birmingham. Even the Birmingham Chamber of Commerce, one of the leaders in the movement for trade restriction, in its annual report published a few days ago, said : It would appear that if the ingenious devices which have been contrived in recent years to prevent the flow of trade through its natural channels can be adjusted so as to lessen their restrictive effect, the world should enjoy greatly increased prosperity in the ensuing year. Your Council ventures to express the hope that in pursuance of their economic objective Governments will come to recognise the essential inter-dependence of the nations, that in the long run there can be no isolated prosperity, that in a sick world the attainment by individual nations of full economic health is impossible. And we have the Chancellor of the Exchequer in his Budget speech using words which have frequently been quoted here and outside, and which bear repetition. He said : Our export trade.… is still far behind the figure at which it stood only a few years ago,. … because of the disastrous shrinkage in international trade itself. He went on : The channels through which that trade formerly flowed so freely are still blocked, and indeed the passage seems to become more difficult as the spirit of economic nationalism continues to spread. We see new obstacles to international trade continually raised."—[OFFICIAL REPORT, 17th April, 1934 col. 906, Vol. 288.] That is, after two or three years of tariffs here, with the big stick in his hand, the result, he said, is that all the prognostications made and the promises given have been falsified; and the position is worse now and new obstacles are continually being raised. What is the cause? I am afraid that the cause is absent from the House to-day, owing to indisposition. We all regret the absence of the Minister of Agriculture. He is the real reason; those who belong to the school of thought that he represents are the reason why the Government, which has itself condemned economic nationalism and regrets it, is one of the most active participators in the (movement. While we regret the absence of the Minister of Agriculture the Debate must continue; this great matter of public importance cannot be postponed on account of the absence of any individual, though I regret that he should not be here and that the criticisms which I feel bound to make must be delivered without his presence.

In this particular matter of New Zealand the right hon. Gentleman is the representative of a school of thought which has caused the rejection of the suggestion that was made by New Zealand. He has told us that above all else action is necessary, that the Government should act, that action is the one thing required. He has told the House on more than one occasion that Parliament and the country would forgive anything except inaction, that they would forgive mistakes but not forgive lethargy. He is rather like a man learning to ride a bicycle. He does not mind very much in what direction he is going. He lurches from side to side, to the dismay and terror of pedestrians, but he has to go on for fear of falling off. He goes on, and the faster he can go the more likelihood there is that he will be able to maintain the perpendicular. He reminds me of the saying of a little girl : How do I know what I think until I see what I say? Sometimes, but not very often, the Supplementary Questions of my noble Friend the Member for the Sutton Division of Plymouth (Viscountess Astor), bring to mind that saying. The Minister of Agriculture seems to me to be declaring "How do I know what I want until I see what I do?" That appears to be the rule on which he is proceeding; action and more action, and then after we have acted we shall discover what it is that we really believe. It recalls the well-known lines of Clough : Action will furnish belief, but will that belief be the true one? This is the point, you know. However, it does not much matter. But it does matter when the action of the right hon. Gentleman causes great disturbance, and indeed is giving rise to perils, within the Empire itself. This slap-dash happy-go-lucky policy we might be able to endure if its effects were limited to this Island, but when it affects the relations between ourselves and the Dominions we must take a more serious view of it. The Minister of Agriculture in a recent broadcast talk declared what was the principle that is now being carried out in the reply of the Government to New Zealand. He said : I would say that the stresses and strains of the new era are so terrific that an attempt to solve our problems within smaller areas of the world is more likely to succeed than within larger. If you say that this is economic nationalism, I reply that economic nationalism is denounced by many people who have not really applied their minds to the problems involved, and who speak of economic nationalism as though it were a disease instead of being, as it certainly is, a symptom of the coming of a Leisure State. There are already 2,200,000 citizens of the "Leisure State," and their number is likely to be largely increased by this policy. The right hon. Gentleman speaks again of the New State which is to be achieved through this economic nationalism, but the New State is simply a revival of the state of things of 100 years ago. Any defender of the old Corn Laws who sat in this House when it was first built, or in the old House which preceded it, anyone who lived before the rise of the Dominions, would understand and sympathise with the language of the present Minister of Agriculture. What he is proposing is simply tending to the same economic system, the same theory, as existed in those days, which would bring with it the same contraction of trade, the same lowering of the standard of living and the same agricultural depressions which existed in this country—more intense than anything than we have had in later years—at the very time when the doctrine of economic nationalism was at its highest and when the determination to exclude foreign imports was at its highest point. The Minister of Agriculture is not the radiant pioneer of a brave new world that he thinks he is; he is a political Rip Van Winkle who has awakened after a sleep of 100 years and is propounding in 1934 the ideas of 1834.

It is clearly obvious, in the particular instance we are now discussing, that the Government are adopting two policies in flat contradiction with one another. They are endeavouring to use tariffs for the purpose of developing trade, for forcing trade barriers which have been erected against our exports, and at the same time are adopting a policy of rigid economic nationalism, which makes this country more and more self-sufficient and which excludes goods coming even from our own Dominions. They are trying to ride two horses at once, but as the horses are headed in opposite directions they will certainly suffer a fall. It may be asked, "If you disapprove of the policy of the Government, what is the policy of which you do approve; what is the alternative policy you desire to be adopted?" It is often suggested that the duty of an Opposition is merely to oppose, and that an Opposition speaker who propounds a positive or constructive proposal merely exposes a wider ground for hostile criticism. I have received advice of that kind. I think it is bad advice. I do not think that democracy nowadays is in the least interested in party scores or cares at all about mere debating successes in the House of Commons. Democracy rightly asks that anyone who criticises should also be constructive, and that anyone who objects to a policy should inform the House and the nation of the alternative he would propose. That is a perfectly legitimate demand, and in the time at my disposal I will endeavour to answer it.

Our objective is different from that of the Government, and the road to it is also different. The Government are proceeding on the assumption that consumption is to be regarded as fixed, or almost fixed. In fact, the Minister of Agriculture a few months ago came down to the House on a Friday morning and astonished us by saying that the consumption of main foodstuffs in this country must be regarded as, in effect, stabilised, and that any increase of supplies from home must necessarily, logically and mathematically, result in a restriction of supplies from abroad. He says in all his speeches and addresses that since consumption is fixed and machinery produces more, either men will be thrown out of work or else they will have to work much shorter hours, and you will have what he calls the "Leisure State." Meantime, you must stop supplies and end what he calls the glut.

We consider that this is a perpetuation of poverty and in the end is an intensification of poverty. We do not admit that the amount of commodities consumed is fixed or is anywhere near the point which might be reached in this and other countries under more favourable social conditions. We do not believe that prices in the market are simply fixed by the supplies which come in. Prices are fixed by the supplies which come in and the demand which takes them out, and the right course in the long run is not to stop things coming into the market, but to concentrate on trying to get things sold out of the market. If you have a paradox of poverty in the midst of plenty the right policy is to lessen the poverty and make use of the plenty, not to lessen the plenty and accept the poverty as though it was inevitable. That is where the main clash occurs; that is where there is a clear distinction in regard to policy.

The idea of restriction of supply, which is the policy of the Government, is wrong. The right policy is an expansion of demand. And the way to achieve that is not by one single method but by a combination of many methods in our domestic and foreign policy. In the recent statement we have published, we state quite clearly the lines, to a great extent in detail, which we would follow in regard to an improvement in the organisation of our industries at home, a large policy of national development and measures for raising the standard of living in various ways. With regard to overseas trade we have again clearly declared the policy we would pursue. In winding up the Debate on the Budget the Chancellor of the Exchequer referred to me and said that the policy I would adopt would at a blow remove every duty, quota, and restriction around this country, trusting to foreign nations to respond to the gesture and to allow greater freedom for the sale of our goods. I interrupted the right hon. Gentleman and said that it was not a correct rendering of the policy which I had been advocating. Some hon. Members thought that I had said something new and startling, and engaged in derisive cheers. They suggested that I should resume my place on the benches opposite.

For a long time past we have admitted that in the present state of the world a heroic policy of that sort is not immediately practicable. We have said that over and over again in this House and outside, and in our published statement of policy, and if it is new to some hon. Members I am afraid that it is because they have not been good enough to take the trouble to observe what has been said, not because of any fault on our part. The policy we have urged for the last two years is that, in the first place, a beginning should be made to form a group of the nations of the world who are willing to adopt low tariffs, or no tariffs, and exchange their goods on that basis. In order to secure that it is essential to modify the most-favoured-nation Clause which now obtains, so as to enable such a group to be formed without conflicting with general international law. There are exceptions already to the most-favoured-nation Clause, and a further definite exception should be made in order to enable such groups to be formed.

In our view the Ottawa Agreements should not be allowed to stand in the way of an arrangement of that sort. Until recently our voice was the only one raised in favour of that policy. The Liberal party alone for the last two years has been advocating that course, but in various quarters this idea has now been accepted as indicating the right line of approach. For example, at the annual meeting of the Chambers of Commerce of Great Britain, a very important body, which met in London last month, the President, Sir Alan Anderson, said—this is the last quotation with which I will trouble the House, but it is so important and so clearly put that I feel sure hon. Members will forgive me for reading it : Figures published by the League of Nations showed that the gold value of world imports in 1933 was 65.2 per cent. below that of 1929 and of exports 64.9 below. In other words, intense nationalist efforts had reduced our common trade, measured in gold, to about one-third of what it was four years earlier. He went on to say : In the world were tens of millions of potential consumers underfed and unemployed, with markets glutted, bankrupt prices, and the world's trade shrinking as they struggled for it. Seeing all this, we have said to His Majesty's Government that principles on which the world's market flourished have been forgotten and must be restored, that axioms of commercial mathematics are peremtory rules, and that the British Empire and those nations which agree to those axioms or principles should bind themselves together by the mutual grant of most-favoured-nation privilege— That is the policy we advocate. and pending the happy day when the world market once more includes the whole world, should show in a smaller circle that commerce can to-day, as in the past, sustain both buyer and seller, and spread employment and demand and happiness throughout the circle. The larger the circle the better, but let us at all events agree to the principles and join the circle and make a start towards recovery. That is precisely the policy which we commend to the House. The Government have had three opportunities, this is the third, of propounding that doctrine and pressing it forward and inducing others to agree. The initiative was taken more than two years ago at Lausanne by two of the smaller Powers, Belgium and Holland, which have large possessions in the Indian Ocean and Africa, who signed a Convention, exactly on these lines, agreeing to freedom of trade between themselves and opening the door to every other nation which would come within their circle. The British Government, instead of welcoming and encouraging the proposal, killed it. This Government declared to the Belgians and the Dutch that in no circumstances would the British Government agree to any such proposal or to any such free interchange of goods. They killed at the outset a most promising initiative. The second opportunity was at the World Economic Conference, where not only these two countries, Belgium and Holland, but the Scandinavian countries and some others, were willing to come into a mutual arrangement of that character. The Government gave no countenance to any such proposal, and by this lack of encouragement they contributed largely to the ignominious failure of the World Economic Conference. The two main causes for the failure were the United States not being able to agree at that time to any stabilisation of currency, and the British Government refusing to join in any effective measures for a diminution of international restrictions on trade.

Now we have the third opportunity. It is one of our own Dominions, New Zealand, which comes to us and says, "If we are willing to give you free admission into our markets will you do the same in yours?" And the Government have said "No." That is in effect what the Government's reply amounts to. If we are asked what alternative policy we would have adopted, the answer is that we should have received such an inquiry with the utmost cordiality. We should have said : "At last here is one of our own Dominions, recognising the growing and grave evil of this continuous restriction of trade, raising the question whether their own tariff walls might not be levelled if they could secure the free admission to the British market that they have hitherto enjoyed." We should have welcomed and endorsed that and taken the opportunity to press forward two important considerations which I think the British Government ought to press forward on every possible occasion. One is to secure the abolition of subsidies. Subsidies are a most evil feature of international commercial life. We condemn them in principle and would like to see them abolished, and, so far as subsidies are given by Australia or New Zealand, whether by the Government itself or by trading associations, they are bad and should be stopped : though I am not sure we shall be able to do it with a very easy conscience so long as we give subsidies ourselves and injure the interests of our West Indian colonies and other countries by manuring the sugar-beet fields with the taxpayers' gold in order to secure the production of unwanted sugar in this country.

The second proposition that ought to have been advanced is that we should have urged the stabilisation of currencies. The deliberate depreciation of currency is another illegitimate form of trade competition. We, who believe in the greatest possible freedom of trade, have never suggested that it is right that any efficient industry in normal geographical conditions should be expected to produce any of its products at a loss. No one believes in the doctrine of cheapness to the extent of believing that efficient industries should be expected to go on for any length of time losing, and producing at prices below the legitimate cost of production. When that is brought about by subsidies or depreciation of currency, any step which is proper should be taken to prevent that eventuality. [An HON. MEMBER : "Or cheap labour!"] The question of cheap labour is not quite as simple as it appears. Cheap labour does not always mean cheap production; it seldom does. For instance, the competition we suffer from motor cars from the United States is not the result of cheap labour, and, while cheap labour is one factor, it is seldom or never the only factor. As far as the Government is concerned, whether it is by subsidies from the taxpayers' money or by deliberate depreciation of currency, it is wrong, and in any negotiations the Government may enter into these two points should be borne in mind.

As to the position of British agriculture, if there were free admission of products from the Dominions—and here I shall probably part company with some of my recent unexpected and unaccustomed allies—in my view if British agriculture were working under right conditions, that is to say, if the producer were not unduly burdened by heavy rent charges or tithe charges; if the farmer were not burdened by taxes, as he now is, and many of the articles he needs to buy for the sake of his business did not cost a price much above what they would otherwise cost—maize, linseed meal and other matters of that kind—while he has to compete with farmers in Denmark and elsewhere who get these products free as a matter of course; if he were relieved of these burdens and British agriculture were organised efficiently and supplies were all of good uniform quality well marketed, I can see no reason why English and Scottish farmers should not compete on equal terms with a country like New Zealand, which has to send its goods from the other end of the world, where wages are certainly not lower than in this country.

That is the course of policy I would suggest, and I believe that by such a policy we should be rendering the greatest possible service to the British Commonwealth, and by permitting the greatest freedom throughout the world it would help them also. The latest report of the Imperial Economic Committee shows that three-quarters of the trade of the Empire in the year to which it refers is with foreign countries and only one-quarter within the Empire. Therefore, to impose restrictions on that trade and diminish it is not in the interests of the Empire as a whole. This country can help the Empire, as it has in the past, by supplies of capital, improved communications, scientific research, common action within the industries which ramify throughout the Empire and by renewed migration as their prosperity increases.

Progress along these lines has been opened up by the suggestion from New Zealand which His Majesty's Government has rejected. We should have said as a country to our New Zealand fellow subjects : "At last there is a movement in the right direction, and this economic nationalism, which we all agree to condemn but in which we acquiesce so readily, finds here a counter movement and a suggestion of greater freedom in the exchange of goods." In return His Majesty's Government should have made New Zealand a definite offer. They should have met their inquiry with a definite proposal in order to see what response would be achieved, in the hope not only that it might be adopted there but that the example might be adopted elsewhere and a larger and larger area of free interchange of goods might gradually have been created. Particularly we should have welcomed the fact that the initiative should have come from the Dominion of New Zealand, that beautiful land whose development this country has always regarded with the greatest pride and for whose people we have a deep affection. They on their side are deeply and sincerely attached to the British connection. Furthest from us in distance, they are perhaps, of all parts of the Empire, the closest to us in sentiment.

4.40 p.m.

Mr. AMERY

The speech to which we have just listened is bound to prove a deep disappointment to Lord Beaver-brook, and I am afraid the halo of the last few days will fade away long before to-morrow morning's "Daily Express" reaches the public breakfast table. I am afraid, however, it has also been a disappointment to many of us in this House who had hoped that on the very serious issues which have been raised by the Government correspondence with New Zealand we should discover what constructive alternative policy the Liberal party had to put before us. There was a moment in my right hon. Friend's speech, when he began to talk about the ideal of Imperial unity and referred to the policy of the Leader of the Liberal party in Canada, when I thought we might see the first beginnings of a Liberal Imperial policy, based on preference but advocating the very widest measure of internal Free Trade in the Empire. Even that faded away almost at once, and for the rest of the hour that we have been listening to the right hon. Member he has given us a dissertation, with many quotations, on economic nationalism, the policy of restrictions, the most-favoured-nation Clause, and on any and every subject except what is strictly relevant to the Dominions Office with which we are concerned.

I do not think it is necessary to attempt to follow him on these lines. I would only say that to attribute all the world's troubles in recent years to economic nationalism is entirely to ignore the effect of the great monetary causes which have brought about the great depression, monetary causes which the nations have attempted to avert by methods of economic nationalism. To say that economic nationalism is responsible is like saying that the umbrellas in the street are the cause of the rain. It may be true that these measures have contributed to the restriction of international trade. But they have also contributed to the revival of internal trade in every country that has adopted them. There has been a great revival in the world in the last 12 months, largely due to the policy of the different countries in concentrating on internal development which is beginning to take effect.

As the Chancellor of the Exchequer pointed out in his Budget Speech, the only item in which we showed prosperity in the past year has been that item of our production which concerns the home market. Again my right hon. Friend deplores the policy of quantitative restriction. I know the anxiety that is felt in the Dominions. I confess I regard this policy of restriction with some anxiety myself. But the right hon. Gentleman might remember that it was largely out of consideration for the feelings of himself and of like-minded members of the Cabinet that the Government committed the fatal mistake of rejecting the policy of tariffs in connection with agricultural products at Ottawa, and drifted into the policy of quotas.

At any rate we are faced to-day, in connection with this inquiry from New Zealand, with a very difficult and real problem and it is to that problem that I prefer to address myself for the few minutes that I want to detain the Committee. There is no doubt that the New Zealand Government made an offer to discuss this matter with the Imperial Government. It was couched in the form of an inquiry, but it was clearly and obviously an offer to discuss the matter. It is quite true that the opening sentence of the telegram referred to a widespread impression among New Zealand producers, but that does not diminish the fact that New Zealand made this a definite inquiry of its own, and the New Zealand Government would not have dreamt of associating itself with such an inquiry or passing it on if it were not prepared to take it up seriously. From that point of view I frankly regret the answer given by His Majesty's Government. It was disingenuous and evasive to treat this in the language of the Government's reply, as a question put forward by a particular trade interest. It was put forward by the Government of New Zealand and should have received the answer which the New Zealand Government expected it would get.

In any case, that offer, for I call it an offer, to discuss a very important departure in Empire trade matters was put forward by the New Zealand Government. I am not sure that it would have been put forward had it not been for the fear of restrictive measures by this country. To that extent it does not in the least support the line of argument advanced by the right hon. Gentleman opposite. It was however put forward, and it deserved the most serious and the most prompt consideration. I fully recognise that it opens up considerable difficulties. They are difficulties which, to my mind, need not prove insuperable if we knew definitely what our policy was and if our hands were not tied by other commitments.

One of the difficulties undoubtedly is the possible effect of a mutual free trade agreement with New Zealand upon our relationships with the other Dominions. To that difficulty the Government make allusion in a sentence of their reply. I would however remind the Committee that there is nothing, either in the principle or the practice of inter-Imperial preference, to compel this Government, or any government of the Empire, to make the same mutual tariff agreements with all the other governments of the Empire. That attitude, if I may say so, is a survival from the old Mother country idea, the idea that the mother hen must treat all her chicks with equal consideration. It is not a necessary consequence of the present idea of equal negotiations between equal partners. Although they were all made at the same time our agreements at Ottawa were made separately. Even if we gave generally the same treatment to all the Dominions, the Government of Canada made agreements with us, with Australia, with New Zealand, with South Africa which are all different and in different terms. There is no reason why we must make an agreement in the same terms with New Zealand and with Australia.

Take a parallel nearer home. In the event of a change of temper and attitude on the part of the Government of the Irish Free State, in the event of an approach to us for a common tariff and mutual free trade between Great Britain and the Irish Free State, should we be compelled to reject such a proposition on the ground that we could not extend the same terms to all the other Dominions? To my mind it was at any rate a perfectly conceivable and legitimate policy that we should say to New Zealand, "We are prepared to go a long way with you in the direction of discussing Anglo-New Zealand free trade on the basis of a new trade agreement and to make it workable, first by imposing a low tariff on the produce of other Dominions which would not be imposed on New Zealand produce, and secondly, imposing a substantially higher tariff against foreign produce, thus preserving to the other Dominions, fully, all the preferences they enjoy to-day and if necessary even more." Further, if free trade with New Zealand injured any part of British agricultural production, we might have used some of the revenue derived from the duties on foreign produce to help British agriculture on the lines on which it is helped by the Wheat Act.

Mr. J. H. THOMAS

Does my right hon. Friend suggest that we could make a deal with New Zealand, say on butter and meat, which would be more favourable to New Zealand than to Australia and which would be at the expense of Australia?

Mr. AMERY

I thought I was perfectly clear. I said that, if our hands were free, we could quite well give more favourable treatment to New Zealand than to Australia in return for more favourable treatment by New Zealand of us, while at the same time, at the expense of the foreigner, preserving to Australia, Canada and other Dominions, the preferences enjoyed by them at this moment and even more. More than that, even if we were compelled to resort to the method of quantitative restriction and control we could still say to New Zealand "Come inside our own fold and you shall not be subject to any control to which our own farmers are not subject." As I was saying when I was interrupted the revenue derived from duties upon foreign produce could be used as a subvention for any branch of British agriculture which was threatened unduly by New Zealand competition, on the lines of the assistance given under the Wheat Act.

Unfortunately—and this is the matter to which I wish to draw the serious attention of the Committee—we are unable to go further with the New Zealand inquiry or offer, without injury to the other Dominions, because our hands are tied in other directions. They are tied first of all in the matter of dairy produce. To give New Zealand some preference against other Dominions and yet retain a reasonable preference for them as against the foreigner is impossible because we are prohibited by the Danish Agreement from imposing more than 15s. per cwt. on imported dairy produce. Our hands are also tied from the quantitative point of view. Denmark and certain other countries have a right under the agreements to send into this country at least 2,700,000 cwts. of butter a year, or 34 per cent. of our imports, whichever is the larger. If, as a result of an Anglo-New Zealand agreement there was a large expansion of English and New Zealand butter production, it would be impossible to fulfil that pledge without endangering the market in this country for butter from other Dominions.

If the situation is unsatisfactory as regards dairy produce, it is far more unsatisfactory as regards meat. In the supplement to the Argentine Agreement we are prohibited from punting any duties on any form of meat including bacon. Our hands are therefore tied as against any Imperial arrangement of the kind which I suggested as at any rate possible, in that respect. But there is an even more serious aspect of the question which affects all the Dominions irrespective of any negotiations opened up by the New Zealand Government. Under Article 1 of the Argentine Treaty we are obliged not to reduce the supply of chilled beef from the Argentine to below 90 per cent. of the quantity imported in the year ended 30th June, 1932, without reducing the import of chilled beef from the British Empire by a similar quantity. What does that mean? It means that the infant chilled beef industry in the British Empire is not to be allowed to develop at all. So long as the Argentine exports to us are less than 90 per cent. of the figures of 1932—something like 8,000,000 cwts.—and we are committed to that reduction to help our own farmers, there can be no development whatever of the chilled beef industry in the British Empire.

Let me give the Committee a practical instance of what this means. For years past the people of Southern Rhodesia have been making efforts, by the importation of stock from this country and in other ways, to develop a breed of cattle which would enable them to export chilled meat suitable for the British market. They actually made a beginning last year. They sent a trifle last year and this year the figure shows an increase. They are sending about 2,000 quarters a week—not half of 1 per cent. of our imports of chilled beef, but something of great importance and value to Southern Rhodesia; which makes all the difference to them; and now they have been told that they must cut down that figure and get back, I think it is to the figure of last year. When I think of what the people of Southern Rhodesia did in the War, and the efforts which they have been making to establish British civilisation and British traditions in South Africa, it makes my blood boil to think that a British Government should have put its hand to a Treaty which prevents the development of this industry for which they are naturally suited. Take another case. Every day science is providing information which makes it more possible to bring chilled beef here from Australia. But as it has not been imported heretofore, under the terms of the Argentine Treaty Australia is not allowed to create a chilled meat industry.

The position under the Argentine Treaty, in fact, is that not only are we obliged not to give any preferences to our own Dominions in the matter of chilled beef, but we are obliged to veto the development of the chilled beef industry in the British Dominions. We are forbidden to develop a British chilled beef industry in our Dominions because the Argentine blocks the way. No wonder the Dominions are being forced to look elsewhere for trade. No wonder that South Africa makes a shipping arrangement with a foreign country that will take her meat. I regard that Treaty made by the President of the Board of Trade last year as one of the most disastrous things that has happened in my lifetime. In spirit if not in the letter it is a direct contradiction of all that we went to Ottawa to achieve. I hope we shall get an assurance from the Dominions Secretary that that Treaty will be denounced at the earliest possible moment, and also an assurance that the negotiations now going on with Uruguay are not going to prolong its effect against the Dominions for a further year.

I admit that the situation is a difficult one and the conclusion which I would draw is, not so much that there is malice or incompetence on the part of individual Ministers, though frankly I doubt if any Conservative could have very great confidence in any negotiations conducted by the present President of the Board of Trade—[HON. MEMBERS : "Oh!"]—from the Empire point of view. The experience of the Argentine Treaty is, at any rate, enough for me. But I feel that we have landed into the present position because we have been pursuing several contradictory policies at the same time. The Minister of Agriculture has one policy; the President of the Board of Trade has an entirely different policy; and the rest of the Cabinet are in the clouds en route for Geneva or wherever it may be, and pay little attention to these matters. It is only one example of the problem with which we are confronted all the time. The present Cabinet system does not give us a machine which can frame policy or can see a policy carried out consistently. It is merely a conference or a clearing house where different departmental policies slip past or are sometimes held up and modified. But we have no clear consistent national policy on any subject, and I repeat that that is for lack of a proper co-ordinating machine.

I do not believe that a body of 20 busy departmental chiefs in a time of crisis such as we are living through, is any more capable of framing policy than it was in the time of the War. We need a more effective instrument of government, and one free from departmental ties, just as we needed one in the Great War. That is the main point to which I would direct the attention of the Committee. I hope, in spite of all the difficulties which have been created by the unfortunate commitments to which we have been tied, it may yet be possible to find some reasonable adjustment of this issue between Empire producers and British agriculturists that will satisfy both sides. But I doubt whether there will be any real satisfaction for both sides until we have freed our hands once more with regard to competition from foreign countries.

5.0 p.m.

Mr. J. H. THOMAS

I rise at this stage because I feel there must be some misunderstanding about this Vote. A reduction of £100 in my salary is moved. So far we have had two speeches, and the complaint, and indeed the justification for reducing my salary, is the sins of the Minister of Agriculture and the President of the Board of Trade and the present method of running our Cabinet. In fact, my right hon. Friend the Member for Darwen (Sir H. Samuel) will forgive me if I say that, having listened to him for 55 minutes, I concluded that instead of moving a Vote of Censure or justifying a reduction in salary, he merely treated the Committee to an essay on the world as it ought to be, but not as it is; and I would put it to him that in that connection it does not help us in the least to overstate the case and, in dealing with the Dominions, give an impression that however it may be understood in this House, is represented in an entirely different way in the Dominions themselves. For instance, nothing is more mischievous at this time than the implied suggestion, which was afterwards withdrawn when I asked what it meant, about the Western Australian Secessionist Movement, whch may ultimately come before this House and which therefore I am precluded from judging in any way at this moment—nothing is calculated to do more harm than that a movement such as that Secessionist Movement should be connected in any sort of way with anything that is happening in this country.

Sir H. SAMUEL

I made it clear that that was not my intention. I had no intention whatever of implying anything of the kind. What I meant was that the Secessionist Movement was due to the people of Western Australia feeling the effects of the economic nationalism which I denounced, and that in so far as the policy of His Majesty's Government was maintaining that nationalism, it affected it, but I quite absolve the Government from doing anything directly that in any way touches at all the Western Australian position.

Mr. THOMAS

That is very important and shows that it has no connection with this Vote. That is my only point in making it clear. In the same way I would draw my right hon. Friend's attention to the fact that on an issue which is introduced as this is, mainly in connection with New Zealand, it is not sufficient merely to condemn the Government and connect all the Dominions with that policy by reading a statement of what Mr. Hull said about tariffs and quotas. I heard Mr. Hull say everything that my right hon. Friend said about tariffs and quotas, but I also heard other responsible foreign statesmen. I have heard them talk about disarmament, but it does not prevent any of them going on both with tariffs and with armaments. Therefore, I am much more concerned in facing the practical situation as we find it to-day. I would remind my right hon. Friend the Member for Sparkbrook (Mr. Amery) that I thought, to say the least, his attack on the President of the Board of Trade, coming from him, was in bad taste. It may be true that he does not trust the President of the Board of Trade, but he knows better than anybody that there was a large number of people who thought the same about him when he was in office. It is sufficient for me to say that whatever his views of the President of the Board of Trade may be, there is no Member of the Cabinet who can or would desire to dissociate himself in any way from anything that he has done, and it is important at least, if we are dealing with the responsibility, that we should all bear our fair share.

I want to say right away that I welcome the Debate because it gives an opportunity of clearing away not only some of the misapprehensions but the wicked and calculated misstatements of the facts that have been made in connection with this New Zealand business. What is the implication? It is that the Dominions at this moment are indignant, are complaining, and are, in short, in revolt against the treatment that they are receiving from the Government. One of the Sunday papers last Sunday week brought to its support the High Commissioners of New Zealand himself. The position of the High Commissioner is that of being the representative of his Government responsible for direct contact with this Government. Sir James Parr was reported as stating in a speech that New Zealand were being treated merely as a football. Yesterday Sir James Parr found it necessary himself to write to the same paper and say that not only was that statement not true, but that he objected to New Zealand being made a football in party politics, and that, so far as New Zealand were concerned, they had no grumble or complaint with anything that we did in this country.

I put it to the Committee that it is important for us at least to be in a position to say, as I now say, that notwithstanding all the statements appearing in connection with this matter, up to the moment when I am addressing the Committee no complaint of any sort or kind from any Dominion has reached our Office directly or indirectly. On the contrary, we are receiving abundant evidence every day of the strong feeling of appreciation, on the part of the Dominions, of the manner in which we are conducting our side of the Ottawa Agreements. It is very curious that this Debate should be opened by my right hon. Friend the Member for Darwen, because he would be the last that Lord Beaverbrook would desire to open this case, and I am sure that he would be the first to admit that Lord Beaverbrook would be more that justified in his suspicions, having read the speech that my right hon. Friend has now delivered; but I cannot help reminding my right hon. Friend, seeing that he has raised the whole issue of Ottawa, that when he found it necessary to address the Women's Lancashire and Cheshire Liberal Council in Darwen in 1932, he dealt with these Agreements, and he said : We now come to the preposterous Agreements signed at Ottawa—in our view most damaging to the interests of the whole Empire and especially to this country. I put it to the Committees that we can only test that statement by judging the trade with the Dominions, to the Dominions and from the Dominions, in the pre-Ottawa period of 1931 and the first full year since, namely, 1933.

Sir H. SAMUEL

The whole of our foreign trade is in question.

Mr. THOMAS

I will deal with it in its relationship with foreign trade as well, but I put to the Committee this interpretation of my right hon. Friend's statement, that if a bad bargain was made at Ottawa, one of two things should follow : either the Dominions themselves took less from us, in which case he would say, "That is bad for us," or we took less from the Dominions, when the Dominions would say that it was bad for them. I am going to show that, in spite of the world economic depression of the past few years, in the case of every Dominion affected by the Ottawa Agreements, their trade to us, our trade to them, and the relationship of the trade within the Dominions to the rest of the world have all increased as the direct result of the Ottawa Agreements. It is not sufficient to say that the world trade has gone down. That is true, but if I can show that in spite of the world trade going down the trade within the Empire has improved, that is the justification for Ottawa, and that, I submit, is the only point. In that connection the percentage of United Kingdom imports derived from the Dominions in 1931 was 15.15 per cent., and in 1933, 21.84 per cent. That is the balance one way. The percentage of United Kingdom exports to the Dominions in 1931 was 17.82, and in 1933, 19.92.

Sir H. SAMUEL

Percentages are of no interest. What are the figures?

Mr. THOMAS

I will deal with the figures as well. I am afraid to bore the Committee with details, but it is necessary really to understand what has resulted from these agreements, and I propose to give the Committee the actual figures. The United Kingdom imports from the Dominions in 1933 compared with 1931 increased 13 per cent., but they decreased from foreign countries 30 per cent. I stop to ask the Committee this question : If the policy of the Liberal party, and if the policy propounded even this afternoon by my right hon. Friend, of a desire to see these Dominions grow and prosper and develop is the right policy, how significant it is that we have increased our imports from them 13 per cent. at a time when there is a decrease of 30 per cent. from foreign countries. No one would argue that that is not to the advantage of our Dominions at least. I put it no higher than that. United Kingdom exports in 1933, compared with 1931, were down to foreign countries by 7.3 per cent., but were up to the Dominions by 5.1 per cent.

I ask the Committee to draw this conclusion from these figures. The result of those agreements is that the change, such as it is, although there was a depression, shows a marked advantage so far as inter-Imperial trade is concerned. No one who defended the Ottawa Agreements ever did other than say that they hoped these benefits would accrue. Let us examine it from the standpoint of each Dominion, because there has been some criticism about it and my right hon. Friend the Member for Sparkbrook (Mr. Amery) mentioned Southern Rhodesia. We took 16 per cent. of Canada's total exports in 1931 and 23 per cent. in 1933.

Earl WINTERTON

Can the right hon. Gentleman give the volumes?

Mr. THOMAS

I am coming to the volumes. There are two complaints—first, that we are treating the Dominions unfairly; and second, that we refused a fair offer from a Dominion that would have helped this country and the rest of the Dominions; and I am going to show that neither of those complaints is true. We took 39 per cent. of Australia's exports in 1931, and 44 per cent. in 1933. From New Zealand we took 50 per cent. in 1931 and 51 per cent. in 1933. From the Union of South Africa 44 per cent. in 1931, and 49 per cent. in 1933. From Southern Rhodesia 42 per cent. in 1931, and 47 per cent. in 1933. I want the Committee to keep in mind that it is not my intention to shirk the connection between British agriculture and the Dominions. We will not arrive at a right decision on this matter unless we keep both interests in our minds. We are accused of neglecting the Dominions and running away from them, but let me give the figures for the actual products. Frozen beef from Australia increased 2 per cent., and from New Zealand 84 per cent. as between 1931 and 1933.

Sir H. SAMUEL

What are the figures?

Mr. THOMAS

I am not going to be diverted. I will come to the figures. I know how uncomfortable it is for the right hon. Gentleman to have the true relationship of the Ottawa Agreements brought out, but I am going to do it.

Sir H. SAMUEL

The percentages are quite valueless.

Mr. THOMAS

They may be for the right hon. Gentleman's purpose. Butter from Australia increased 8 per cent., and from New Zealand 30 per cent. Cheese from Australia increased 35 per cent., and from New Zealand 18 per cent. Eggs from Australia increased 106 per cent. Apples from Canada increased 90 per cent., and from Australia 90 per cent. Wheat from Canada increased from 27,000,000 cwts. in 1931 to 45,000,000 cwts. in 1933. Wheat from Australia increased from 23,000,000 cwts. in 1931 to 29,000,000 cwts. in 1933. Unmanufactured timber from Canada increased 100 per cent.

I ask the Committee to keep two points in mind in considering these figures. They are the best evidence of our desire to deal fairly with the Dominions and of our anxiety to see them develop and prosper. They also show that no Minister should be unmindful of British agriculture. Do not let it be assumed that our Dominions themselves are unmindful of it. When we discussed with Australia their position, the first thing Australia said was, "You cannot take all our wool, and therefore we do not want to be prejudiced with Japan, and we will do nothing that prejudices our position in conducting negotiations with Japan." We did not condemn them for it. We could not take all her wool and she knew perfectly well that she could not take all our manufactured articles. Canada wanted to be free and was free to enter into trade negotiations with America. We could not interfere. South Africa wanted to enter and did enter into negotiations and made arrangements with Italy. We did not complain. The moral of it is that if the Ottawa policy was home production first, Empire next and foreign third, no one can show that these figures do not conclusively prove that we have given effect to it.

I want to say a word about the particular reference to New Zealand. I was amazed to hear my right hon. Friend the Member for Sparkbrook develop his argument. I am not going to argue whether it was an offer. No one ought to know better than my right hon. Friend—and I venture to say that he does know—that the New Zealand Government found themselves in this difficulty : A number of their own people urged upon them a policy and said : "Take off all your tariffs, let us have Empire Free Trade, and then the old country will allow us to send anything we like to her." That was the position of the New Zealand Government. They did not say to us : "We believe this"; they did not say to me : "Will you consider this on our behalf." They said : "There is a section of our people who believe this." Let the Committee observe that from that day to this there has never been another word from the New Zealand Government of complaint or anything else, and they have never even renewed the subject.

No one knows better than my right hon. Friend as an ex-Secretary of State that, if the New Zealand Government had asked us the specific question : "Will you give an absolutely free unrestricted entry of everything from New Zealand in return for the removal on our part of tariffs?" that would have been impossible. No one who has given two minutes consideration to it would defend it, least of all my right hon Friend. Suppose that we had acceded to the request of New Zealand, as my right hon. Friend suggests. The first thing to observe is that 25 per cent. of the revenue of New Zealand is from tariffs. Who knows better than my right hon. Friend that New Zealand dare not do it. Why play with it, therefore?

Mr. AMERY

Does my right hon. Friend suggest that this inquiry was not seriously made by the New Zealand Government? At any rate, I should have thought it would have been treated as an inquiry seriously made, and would have been further explored. I am not prepared to say it would have been granted in its entirety, but it might have been further explored.

Mr. THOMAS

There are some hon. Members present who did not hear my right hon. Friend's speech, and I will leave them to read the OFFICIAL REPORT to-morrow as to what he said. This thing has to be faced, and I am not going to run away from it. I repeat that no one knows better than my right hon. Friend that 25 per cent. of the revenue of New Zealand is derived from tariffs. He knows perfectly well that they could not think for one moment of adopting this suggestion. For my own purposes, however, I will take it that they were prepared to make the offer. We would then have to allow New Zealand to send goods into this country. Observe that we already take 86 per cent. of her total exports. There is, therefore, a balance of only 14 per cent.

Earl WINTERTON

That means it would be all the better bargain for us.

Mr. THOMAS

For the balance of 14 per cent. Australia competes with precisely the same commodities as New Zealand. Is there not Australian butter and New Zealand butter? Is there not Australian meat—

Earl WINTERTON

And Argentine meat.

Mr. THOMAS

You cannot run away with that. I am dealing with New Zealand and Australia. If the New Zealand offer were accepted, what would be the position of the British Government? They would have to say to Australia, "You must do the same as New Zealand, or your treatment, so far as we are concerned, must be on a different basis." If we do not do that, then New Zealand would be penalised, because Australia would be getting precisely the same advantages for doing nothing as New Zealand would get for giving us free entry. Develop that to apply to Canada and to apply to South Africa, and who is there out of Bedlam who could assume that that could be agreed to? We do not help our own case, and we do not help the case of the Dominions, by refusing to face the facts of the situation. I repeat that the New Zealand "offer" was not taken by us as an offer, because we knew perfectly well than no New Zealand Government could entertain the proposition for two minutes.

Vice-Admiral TAYLOR

Does the right hon. Gentleman intend the Committee to understand that the telegram from the Prime Minister of New Zealand has not got the authority and the sanction of the Prime Minister and the Cabinet of New Zealand behind it?

Mr. THOMAS

I am afraid that my hon. and gallant Friend does not sufficiently follow Parliamentary Papers, or he would know perfectly well that I could not suggest anything of the kind. The telegrams I have dealt with have been issued as a White Paper, and if he has read that White Paper he will know perfectly well that what I am now saying is borne out by the White Paper.

Vice-Admiral TAYLOR

I disagree.

Mr. THOMAS

That may be so, but that does not alter the facts. Boiled down, it really means that the hon. and gallant Member places a different interpretation upon it from mine.

Vice-Admiral TAYLOR

Yes.

Mr. THOMAS

No doubt we shall hear later from the hon. and gallant Member what his interpretation is, and I hope we shall also hear from him whether he advocates any one Dominion being given a particular preference over another Dominion in respect of the same commodity. My right hon. Friend has said, "Oh, but you could make separate agreements." But we cannot run away from the fact that we are dealing with the same commodity. To offer to Australia terms which are different from those which we give to New Zealand, or vice versa, would be taking the first step to disrupt the whole situation.

Major PROCTER

Has New Zealand asked to be given a preferential position? Is it not her fear that in 18 months' time we shall be putting on another quota and reducing her exports?

Mr. THOMAS

I have dealt, I hope, with what I assumed was the difference between a Dominion Government and the British Government, or, rather, the interpretation of a difference, which is more imaginary than real, placed upon certain correspondence by hon. Members in this House and the Press outside. That is an entirely different thing. I still go back to this point, that I have endeavoured to show that, judged from the inter-Imperial plane, the Ottawa Agreement has been more than justified.

Vice-Admiral TAYLOR

Hear, hear!

Mr. THOMAS

Judged from the standpoint of the promise of the Dominions themselves to our industries, whilst there are still a number of matters outstanding, whether we take Australia or Canada, the overwhelming reduction in tariffs by them in favour of British industry proves conclusively that they are endeavouring to fulfil their part of the bargain. The third point I make is that there is no complaint from the New Zealand Government to us. There is no justification for the statement that we have either ignored or insulted them. I go beyond that, and say that no advocate of Empire Free Trade who knows the Dominions themselves and knows the point of view of the Dominions could quote in support of it any responsible statesman in any Dominion. Equally, no one can complain of the broad general outline of the case put by my right hon. Friend the Member for Darwen that, so far as restrictions and quotas are concerned, anything that hampers trade must be bad. But I ask him to keep this in mind, that neither at Ottawa nor in any of its trade agreements has the British Government done other than protect itself after others had imposed restrictions. In other words, there was no other course open.

A reduction of £100 in my salary has been moved. I am sure that the general feeling of the House will be to increase my salary. This afternoon I have been called upon, not to defend my Department, because the censure has been directed against the Board of Trade, the Ministry of Agriculture and the Cabinet in general. I say that we have endeavoured to give effect to the Ottawa Agreements, and that it is unfair to attack the President of the Board of Trade, who throughout these delicate and difficult negotiations has never been unmindful of our own trading interests and has never been unmindful of the Dominions' interests, and has also kept in mind that there is a great export trade from this country which cannot be ignored. Whatever may be said about the Minister of Agriculture, it is equally fair to say that no one has applied more energy and vigour to this problem than he has. Equally, he has not been unmindful of the Dominions. Therefore, in defending any salary, I feel that I can also put in a word for my two colleagues.

5.38 p.m.

Major LLOYD GEORGE

The right hon. Gentleman complained at the outset that every Department except his own had been attacked, but I do not think he need worry about that, because in the first place it must be admitted that every one of those Departments must be involved in the Ottawa Agreements, and, in the second place, he said that he was capable of defending the whole lot of them. If by any misfortune this Vote to reduce his salary by £100 were carried to-night, I am perfectly certain that he would get a very good reception when he asked his colleagues to make it up to him, because he certainly has done his best for them. He referred to certain misstatements of fact concerning this White Paper, and went on to say there had been no complaint from any of the Dominions. Quite frankly, I should be surprised if there had been such complaints, because they have done rather well out of the Ottawa Agreements, and ought to be the last people to complain. He gave us figures respecting inter-Empire trade on which I would ask one question. I think he said that as the result of the Ottawa Agreements, or since the Ottawa Agreements, there had been a drop of 7.3 per cent. in our exports to foreign countries but an increase of 5.1 in our exports to the Dominions. I ask" is that 5.1 per cent. of the previous exports to the Dominions, or of the total for the year, or of the total trade"? In any case, I ask the House to observe that the loss of export trade to this country is greater than the gain in our trade with the Dominions, and as the Dominion exports to this country show a very much greater increase I am not surprised to hear that there has been no complaint from them about the Ottawa Agreements. The only thing they are worried about is what is going to happen in the future, and I am not surprised that they want to know.

Mr. THOMAS

In answer to the question which the hon. and gallant Gentleman put to me a moment ago, the United Kingdom exports to the Dominions in 1933 compared with 1931 show an increase of 5 per cent. and the exports to foreign countries show a decrease of 7.3 per cent. That means that the Dominions were taking from us an increase of 5 per cent. while the foreigners were taking 7 per cent. less.

Major LLOYD GEORGE

The net result, as far as I can see, is that we have lost a little more trade than we had before. If that is a reason for satisfaction on the part of the Government, I am not surprised that the Dominions are very satisfied indeed. We have lost on that deal, as we have lost on a good many others since this Government came into office. The Lord President of the Council, when he went to Ottawa with the delegation which brought us this great result, made a speech in which he advocated greater inter-Imperial trade by decreasing inter-Imperial duties, not by increasing foreign duties. At that time the Dominions did not take that view, and as soon as they stood up to it our delegation caved in. Now, apparently, as one of the Dominions has come round to that point of view, our Government have changed their view, because if this offer means anything it means that the people of New Zealand would be quite prepared to consider a considerable reduction in duties on our goods if there were some hope of us allowing free entry of their goods to this country. The Dominion of New Zealand is to-day taking the attitude which our Government at first urged the Imperial Conference to adopt at Ottawa, but now we find that our Government have followed the bad example eventually set by Ottawa.

The situation in which the Government find themselves, which is not a very comfortable one, from what I can make out, is inevitable because of their complete lack of policy. When the Government embarked on these remarkable duties they had no defined objective, and the mess they are getting into now with the various Dominions is the inevitable result of the way in which they started. The Minister of Agriculture is going one way quite cheerfully and the Government are going the other way, and it is difficult to get the two to come together. If any proof were needed that the Government did not have a fixed policy in their Ottawa Agreements this would be a sufficient proof. When the first Import Duties Bill was brought into the House I do not think the Government realised its consequences, because whatever the arguments to the contrary, it remains a fact that any decrease in imports coming to this country is bound to have an effect, sooner or later, on the exports from this country. I do not think that is a matter for argument. If you are going in for a permanent policy of restricting imports you are bound to lose a certain proportion of your exports, and you alter the basis upon which the economic life of this country was built up. We maintained a great population by our export trade. Whether we like it or not, a large part of our population owed its employment to that export trade. If you now operate proposals which permanently diminish that export trade, you are bound permanently to diminish the chances of employment of those people.

That is one of the things which the Government ought to have looked into before they started on these schemes, which leave a part of the population to be found work somewhere. What direction was there in this country in which those people deprived of employment by lack of exports could find it? There was only one direction in which there was a large hope of extension; that was the land. That the Ottawa Agreements were come to showed that the Government had no conception of that fact when they set out. If they had come to the conclusion that the land was the only direction in which this country could expand, they would not have agreed to the Ottawa Agreements; that they did, proves that they did not realise it. The one industry which has not been helped by the Ottawa Agreements is agriculture. Some of us pointed to the dangers. I remember saying here two years ago that the agriculturists of this country would still be open to the blast of Dominion competition, and that that competition would be encouraged by the very agreements which we were then discussing. I also said that if we were to have Protection, and if it was to be utilised for the agriculture of the country, agriculture had to be protected from everybody, or otherwise there was no point in the policy. I said, "Why not make good use of that Protection and apply it to the industry which needs it most and is capable of the greatest expansion of any in this country?" I do not disguise the fact that I am a Free Trader; I have never disguised that fact. Neither have a disguised my opinion, which I have stated from this Box, that if Protection were to be extended to any industry, the one that would profit most in this country is the agricultural industry. I said also that if Protection were to be tried, it should be tried intelligently; that is the one thing that has not been done by the present Government.

We are now faced with the result of the policy which so many of us—or rather so few of us—declared would happen when the agreements were being discussed. We had a feeling the whole time that the policy that the Government were following at Ottawa would lead to the very serious results which we see before our eyes to-day. One would have thought that dairy farming was one of the branches of agriculture for which this country was pre-eminently suited. I do not suppose that there is a country better suited for dairy farming in the world than Great Britain. What do we find? At the Ottawa Conference the Dominions were given free imports for a period of years in the very products that this country was best suited to produce, and not only that, but were encouraged to increase those imports. The result of that would be obvious to anybody who had thought the thing out, and in these days it is apparently at last becoming obvious even to the Government. The difficulty in which the Government are at the moment is shown by the figures given by the right hon. Gentleman this afternoon of the enormous increase in the imports from the Dominions of the products which this country is best suited to produce. Those figures show an alarming increase.

The difficulty in which the Government are placed is that if they leave the position alone, the British farmer is still open to the blast of competition from the Dominions. If they restrict those imports, what happens? We were told at the time of the Ottawa Agreements that the ties of Empire were wearing very thin, and that if it had not been for Agreements like those reached at Ottawa the ties might have snapped, but if the Government further restrict Dominion imports I do not know whether that is going to strengthen the ties about which so much was said at that time. In 1932 we said that the result of the Agreements might be exactly the reverse of what the Government said they would be, because we had a feeling that the Empire could not be knit closer together by haggling over percentages. It is not a very long time ago, only two years, and we find sooner than we expected that the results that we predicted are coming to pass.

The funny thing is that this Government does not understand the policy of Protection. I say that as a Free Trader. The statesman who first advocated the policy said that he wanted a tariff all round with a preference for the Dominions. That is a policy of which I do not approve, but I can understand it, and it is one of which the Dominions could not complain because you would be treating them in exactly the same way as they are treating you. That is the policy which the father of Protection advocated, but those who have followed him have not done half as well. The Dominions put the Dominion farmer first, the British farmer second and the foreign farmer third. The farmers of this country realise to-day that some of their most serious competitors are the Dominion farmers, and they are beginning to realise that more and more. If you are to have Protection, for goodness sake use it intelligently. I say that as a Free Trader who has stood for Free Trade at a time when it was necessary to do so. If you are to have Protection, surely it is essential to use it to protect. At the present time we are simply exasperating foreigners and losing their trade, while not doing anything to strengthen the ties of Empire. Sooner or later our own people are going to be exasperated at the competition which comes from the Empire. Quotas at the present time exasperate the Dominions and also other people, who do not know where they stand. The trouble to-day is due to the fact that the Government have no policy. The Minister of Agriculture is trying to reorganise the agriculture of this country, but every attempt he makes is bound to fail unless the Agreements which were greeted with such joy and such extravagant praise two years ago are altered.

I do not know what effects the alteration of those agreements would have on the relations of the various countries of the Empire. I cannot help smiling when I look back at some of the remarks after the Ottawa Conference. One gentleman who went there on behalf of British agriculture said that the Conference was the greatest step forward ever taken by any Government on behalf of the home producers. A few of us thought at the time that that was nonsense; all farmers to-day know that it is nonsense. I appeal to the Government : Let them admit that it was nonsense and that something has to be done in the matter of those agreements. Let them face the situation as it really is in this country and let them produce a policy to meet it.

5.55 p.m.

Sir PERCY HARRIS

Everybody now realises, as a result of this Debate, that we were right to ask the Government to state their position. I agree with the right hon. Gentleman that the Dominions are very sensitive about anything said in this House. Our ordinary domestic Debates only affect us and our constituents, but discussions affecting the Dominions have repercussions which make it most desirable that nothing should be said that might give offence. I am not going to criticise the explanation of the right hon. Gentleman about his reply to the approach of the New Zealand Government. That approach did take the form of an inquiry, and not of a definite offer, but surely that was the right way to open negotiations. Naturally the New Zealand Government did not want to lay themselves open to a snub from this country. To say the least of it, it is unfortunate that the Minister makes the suggestion that the approach was not genuine but was merely to quieten some of the New Zealand Government's agricultural critics in their own country. I do not want to say anything to stir up trouble, but if I wanted to be hard and unkind I would say that the right hon. Gentleman's attitude reminds me of that which he took up on a famous occasion—I think it was in 1930—when he was a Minister in the Labour Government and when in reference to an approach from a Canadian Government he used the expression that it was humbug.

The last impression that the Dominions Minister would like to convey is that the approach of the New Zealand Government was humbug. I am satisfied that that approach was sincere, although, if you like, a result of pressure from their own people in order to see whether our present policy, which they consider injurious to their interests, could be modified. I know that there have been wrong interpretations in the past of our attitude towards Imperial Preference. It is part of Liberal policy, and always has been, to encourage the unity and good fellowship of the component parts of the British Empire, but we have always held that there was a real danger of the differentiation favouring Dominion agriculture because that might very well, in the end, divert the hostility of the British farmer from his foreign competitor to his Dominion competitor. That is the very thing that has happened. Throughout the length and breadth of the country, farmers are inclining to some form of Protection, not so much against the foreign competitor as against New Zealand butter and Canadian cheese. That is the inevitable result of endeavouring to found the Empire mainly upon an uneconomic basis.

One of my hon. Friends has made it clear to the House and to the country that we have no objection to Empire Free Trade, if that is interpreted in the literal sense. On the contrary, the trouble has always been in the last 30 or 40 years that the Dominions have been wedded to Protection, not only for agriculture but for every industry. We, being realists, and having to face facts, doubted whether the Dominions would fundamentally alter their long established policy. I take the suggestion from New Zealand as a change of heart in the light of experience in the new world that has grown up since the War. They realise more and more what we have been conscious of, namely, that the industries alluded to are thoroughly artificial and built up behind a tariff wall. They have no export trade, and if they were exposed to the withering blast of free competition, they would obviously languish, and many of them would go out of being. They have no exports of manufactured goods; the whole of their export trade, or, anyhow, 92 per cent. of it, is in agricultural produce. Manufacturers in the Dominions, and in New Zealand in particular, depend almost entirely on their own market.

Undoubtedly the Dominions, and especially New Zealand, have a real devotion to the Mother Country, and nothing that they would do if they could possibly help it would be injurious to the well-being of our industries or our trade. But, as the right hon. Gentleman quite rightly pointed out, if they find that the British market, which hitherto has been open to them without restriction, is now to be limited by quotas, they will inevitably have to look further afield; and, with the new spirit in the United States of America, with the United States so much nearer to them geographically than the old country, if there were a restricted market here they might very well look to making trade agreements and opening up markets with reciprocal arrangements there. There is also, of course, even the possibility of closer relations between New Zealand and the Par East. We cannot get over the fact that New Zealand is a country situated on the Pacific Ocean. It is on the other side of the globe from us, and its natural economic markets are on the borders of the Pacific. The day may come when, as a result of our policy of unwillingness to give New Zealand that free entry which she had before Ottawa, before this new Empire policy, might encourage her to enter into closer trade relations with the United States of America, and even with countries like Japan in the Far East.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin)

Would the hon. Baronet pardon my interrupting him? He is asking about free entry as before Ottawa——

Sir P. HARRIS

Unrestricted.

Dr. BURGIN

Unrestricted entry—not merely no tariff, but absolutely unrestricted. Is that what the hon. Baronet means?

Sir P. HARRIS

That is what I suggested. New Zealand in the past used to look almost completely to this country for her market for a great part of her produce—not, of course, for commodities like wool and hides, but for butter and cheese. It is true that she had a very satisfactory trade with Canada up to a few years ago, but unfortunately, owing to the restrictive policy of Canada, that market has been largely closed. I am satisfied that the approach—I will not call it an offer, because that might be liable to misunderstanding—I am satisfied that the approach of the New Zealand Government with a view to discussing an open door of free entry or a lower tariff for our manufactured goods is a genuine one. There has been during the last few years a growing sentiment among the bulk of the population in New Zealand that something on those lines should be discussed. I admit that the New Zealand market is a comparatively small one; the Dominion has a population of only 1,500,000. Of these, 54,000 are classified as occupied or engaged in factories, mills and works, coming within the category of being engaged in the industrial life of the Dominions. But, of these 54,000, over 15,000 are engaged in animal food or vegetable production, that is to say, in secondary industries connected or associated with agriculture—especially, for instance, freezing works, which employ a great many men in converting the meat after slaughter into a condition to be exported to this country.

It is not unreasonable to realise what a critical time this is in the history of that small Dominion. Are they going to pursue a policy of still further developing their industries, of still further drawing men into their towns, as has been done in Australia and Canada; or are they going to take the line, which I think is in their interest and in our interest, that their primary duty is to encourage agriculture and find markets for their agricultural produce? As against the number of people employed in industry in New Zealand, there are no fewer than 83,000 holdings—a very large number; and, of those 83,000 holdings, no less than 68 per cent. are over 1,000 acres, while 38,000 of these holdings are purely dairy farms. The Committee will understand how seriously affected are these 38,000 occupiers of dairy farms by the new policy of the Government. Their very livelihood is threatened. They have to look ahead, and they see that the policy which we are pursuing will have serious reactions on their future. It is interesting to note that, almost to a man, these 38,000 dairy farmers are Free Traders, a fact which will not surprise the Committee when it is realised that they depend for their living on finding outside their own country a market for their produce.

They have suffered materially from the industrial policy of previous New Zealand Governments, and the right hon. Gentleman is no doubt correct in saying that this approach of the New Zealand Government was due to pressure from the electors. That is not surprising to us, for we know what it is to go through the machinery of being elected to Parliament. The agracultural interest in New Zealand, which is very powerful, find that their livelihood is at stake and their interests are likely to suffer from the new policy of the Government, and it is not surprising that that Government, which is largely a Government of farmers—the Prime Minister is a farmer and the Financial Treasurer is a farmer—it is not surprising that, as a result of pressure from these occupiers of holdings, that famous telegram was sent asking if the Government were prepared to discuss this new alignment, this new policy for New Zealand. I happen to have very intimate personal contact with the Dominion. I am constantly in touch with people there, and as perhaps does not happen to most Members of the House, I see copies of the New Zealand papers; and as a politician and a Parliamentarian I watch the reports of their doings with great interest. I happened to come across a report in a paper—I have a copy of it here, which I shall be very pleased to give to the right hon. Gentleman—of a great meeting at the beginning of last year at a place called Hamilton, in the Waikato district, which is the principal centre of the dairy industry. It is described in the paper as a record meeting. The reports says : Hundreds were unable to gain admission to the mass rally organised by farmers. Long before eight o'clock the entire seating accommodation was taken up, and an overflow meeting was held in the street "—

Mr. J. H. THOMAS

That sounds very familiar.

Sir P. HARRIS

Yes, it sounds very familiar. I will give the purport of some of the speeches. The first speaker was the chairman of the Cambridge Cooperative Dairy Company, one of the big co-operative dairies that take all the produce of the farms and turn it into butter. He said this : Basement will come to the farmer in two directions—a higher price level "— and there they have a common interest with our farmers, and the farmers of the world— and in a reduction of his costs by a drastic revision of tariffs. A very significant speech was made by Mr. Parlane, who is no doubt well known to the right hon. Gentleman; at any rate, he will be well known to the Minister of Agriculture. This gentleman is the general manager of the New Zealand Co-operative Dairy Company, through whom a great part of the Dominion's-exports of dairy produce comes to this country. He said : New Zealand is almost entirely an agricultural country. Over 90 per cent. of our income is won from the soil; and in consequence, to impose tariffs for the purpose of assisting the few industries which we are pleased to have, but which are not in any way essential to our well-being, and which cannot hope to compete with manufacturers who can adopt mass production methods, is extremely foolish……. Obviously costs of production cannot be reduced sufficiently to meet the position while we have duties on goods made in Great Britain such as 27½ per cent. on shirts, suits and hosiery, 25 per cent. on boots, millinery, furniture, ironmongery, rope and twine, £2 per ton on nails and £1 per ton on cement. In addition to these duties, the local manufacturers have not to meet the heavy transport charges that have to be met by the British manufacturers, and in consequence, even if the duties were entirely abolished, the transport charges alone should be sufficient protection for our local industries. He also pointed out that during the last few months no fewer than five ships had left England in ballast. Therefore, there is a real genuine agitation in New Zealand for a freer exchange of goods between their country and ours. Obviously, the gain to us would be large if there could be a change of spirit and a change of policy. If the policy of Protection could be dropped in favour of a policy of low tariffs, it would be a great advantage to almost every industry in this country. The right hon. Gentleman said, and said with force, that the Dominions depend a good deal for their revenue on duties. That is quite true, but a great many of those duties are essentially of a protective character—they are almost prohibitive, not only as against foreign goods, but against our goods. They are so high that, adding on to them the cost of freight, the cost of insurance, and on the top of it all the effect of depreciated exchanges, the effect is to stop goods coming in, and not to bring in revenue. If, in return for negotiations, the right hon. Gentleman would be prepared to discuss round a table with the Dominion representatives a change of policy, we might endeavour to persuade them to substitute for a Protective tariff a revenue tariff of 10 or 12 per cent., on the Dutch or Danish lines, bringing in revenue instead of keeping out our goods.

Mr. J. H. THOMAS

I understand that the hon. Baronet is dealing with the New Zealand offer—

Sir P. HARRIS

No. I was careful not to use the word "offer."

Mr. THOMAS

The New Zealand suggestion. How does that square with what he has just said?

Sir P. HARRIS

The right hon. Gentleman said that it was no use preparing to discuss this problem because of the difficulties in connection with their revenue. I quite agree that that is a real difficulty, but I think I can show that a lowering of their tariff so that our manufacturers could jump over it, instead of finding it a complete barrier and obstacle, would on the one hand increase our trade, and on the other hand would enable them to get in the revenue necessary, in addition to their system of direct taxation, for carrying on the government of their country.

The Parliamentary Secretary to the Board of Trade in answer to a question by my hon. Friend the Member for Orkney and Shetland (Sir R. Hamilton) the other day rather seemed to suggest that we were exaggerating the importance of the New Zealand market. I agree that at the present moment it is a small market. So is Australia comparatively. But they have been going through a great world depression. Their purchases have been enormously decreased because of their decreased purchasing power, because of the heavy fall in prices and the heavy burden of their debts, which has made it necessary to carry on a policy of restriction of imports and the maintenance of a high exchange rate against this country, which has actually brought imports down. We ought to go back to a normal year. In 1932 imports were only £24,500,000, but four years before they were something very near £50,000,000, or £33 per head. It has been pointed out, correctly, by some Empire Free Traders, with whose narrow policy I profoundly disagree in many respects, that these Dominions have a very large purchasing power per head of the population. The question really is whether we are going to encourage their looking to Great Britain for their manufactured goods and discourage their old narrow Protectionist policy and take advantage of the tremendous possibilities of the future for agricultural development.

I should like to say a word in reference to the English farmers. Of course the Government must necessarily make their interests their first charge and their first responsibility, but is not the best method to help the British farmer to increase the purchasing power in his own market by bringing about prosperity to our industries? The real cause of the serious depression in the market for home-killed meat is the tremendous amount of unemployment and short time, which has decreased the purchasing power of the industrial population. Among the principal buyers of British home meat have been the miner, the unskilled worker, the man who has been accustomed not only to eat beef but to require the best quality of home-killed beef. If, as the result of this new approach, we could stimulate and help our manufacturers, surely that means more employment in the factories and works, increasing the purchasing power automatically in our own markets for English home-killed beef, vegetables, and, not least, liquid milk. I am satisfied that among the main contributory causes of the general depression in this country has been the depression in our foreign trade, which has had its reflections in our agriculture. If there were a general, all-round rise in the prices of all commodities, which no doubt could be brought about by a policy of international co-operation dealing with currency and War debts, that would be a far better way to help agriculture than trying artificially to limit the supplies of essential produce like butter. There is this other very serious fact that, if you want to have discontent, if you want to play into the hands of the worst and most revolutionary forces, you are going to make food dear to our wage earners, not through the action of natural causes but by the intervention of the Government and the imposition of tariffs. New Zealand farmers are just as much interested in higher prices for their commodities as British farmers.

I might have given other extracts about the meeting that I was describing in which there are the same complaints about the higher cost of production and low prices, but no one can say the competition has been unfair. The general farm labourers in New Zealand—I take this from the Government Official Year Book—get wages of 41s. 3d., against the recognised rate in this country of something like 30s. On top of that he has to pay the freight to send his produce right across the globe, and to wait a couple of months before he gets paid, because it takes that time for his goods to reach this country. No one can say that that is unfair competition or dumping. There is no justification whatever for a policy of restriction as against New Zealand on pure economic grounds. It can only be justified on a very narrow policy of economic nationalism and trying to make our country self-sufficient even independent of the other component parts of the British Empire. I do not believe in economic nationalism whether in foreign countries or in the Dominions. After all, New Zealand belongs to the same people, recognising the same King, belonging to the same race, speaking the same language, having the same interests, and financially bound by the closest economic ties owing to our investments in that country. They have, somehow or other, every year to find £10,000,000 to pay the interest on debts incurred in the Mother country. Does it not seem unwise and short-sighted, at the first approach from one part of the Commonwealth of Nations to adopt a new policy breaking down restrictions on the free exchange of goods, to meet it by a mere negative? Our reduction of the right hon. Gentleman's salary is not personal. We assure him of our affectionate friendship for his cheerful and attractive personality, but he is the representative of the Government in this matter. He was the channel through which this unfortunate message was sent. That being so, I have no hesitation in supporting a reduction of his salary.

6.25 p.m.

Earl WINTERTON

I feel very favoured at having the right hon. Gentleman the Member for Darwen (Sir H. Samuel) present in the Committee. I feared he might have gone out to get some very natural refreshment after the long Debate. There are one or two remarks that I (had hoped to address to him, and I hope he will see his way to answer them. In the first instance, while I have a great admiration for him, both as a statesman and as a figure in the House, I have never attributed to him qualities of satire and sarcasm until to-day. The role in which he has appeared to-day, at one and the same time the leader of the Liberal party and also in favour of an extension of inter-Imperial trade, the one man plus royaliste que le roi, who is anxious to see this extended, shows a sense on his part of high qualities of very rare humour. His history is slightly at fault. He very ingeniously tried to lead us to believe that there had never been any little Englanders in the Liberal party since the days, somewhere in the sixties or seventies when they made remarks about the Colonies. There were certain people in the Tory party at the time who did this as well. I do not care who they were, even if Disraeli was among them. The right hon. Gentleman really forgets the 1906 Parliament. I was the first Member who was elected to this House as a whole-hog supporter of Imperial Preference. When we raised the question, we were greeted with mocking laughter. The right hon. Gentleman forgets the remark of his former colleague the right hon. Gentleman the Member for Epping (Mr. Churchill) about the Imperial Conference. He said the door to preferential trading between this country and the Dominions was barred and bolted. [HON. MEMBERS : "Banged!"] Damned! I had forgotten that my right hon. Friend was ever capable of using such strong language. [HON. MEMBERS : "Banged!"]

Sir H. SAMUEL

It was Disraeli who said that Protection was damned.

Earl WINTERTON

May be it was. So that really it is not true that it is a matter of long ago since the Liberal party gave up these ideas. They have held them until very recently. The right hon. Gentleman himself left the Government because they carried out, by the Ottawa Agreements, a system of inter-Imperial trade with which he could not agree. He made a very astonishing remark which, I hope, the country will note. The Dominions Secretary reminded him that we have now, after this terrible period of the Ottawa Agreements, in which everything is so calamitous, in his opinion, returned to the position of being the greatest exporting country in the world. An American Senator remarked the other day that it was a thing that American industry would do well to note that for the first time for 20 years Great Britain had once again taken the foremost place. Reminded of that, the right hon. Gentleman said in a specious manner that he would rather that we were second or third than that the general volume of world trade should decrease. Does he suggest that we are responsible for the general decrease of world trade? What else did he mean?

Sir H. SAMUEL

I said, in effect, that I would rather be second in a prosperous world than first in a world of poverty.

Earl WINTERTON

That answer is hardly worthy of the right hon. Gentleman. He was saying that the result of these calamitous Agreements was that our trade had gone back, but the exact reverse is true. It is a most astonishing thing that, through the period of these Ottawa Agreements, so far from our foreign trade relatively to that of other countries having decreased, it has actually improved. [HON. MEMBERS : "Relatively."] Surely that is the only test that matters in the world to-day. He and his little band of supporters, who seem to have been in some sort of agreement at their recent Conference, have been going up and down the country telling everyone that as the result of the Ottawa Agreements everything is worse, whereas the exact reverse is the case, as he must gather from the facts and figures.

The right hon. Gentleman is claimed in some quarters as an advocate of Empire Free Trade, but it appears from his speech this afternoon that he is nothing of the sort, and that he is in favour of using this particular incident—and I am not by any means sure that it has altogether been wisely handled by the Government—like the Leader of an Opposition, as a stick with which the beat the Government. But so far as those of us are concerned who express our views frankly, the essence of the policy of Empire Free Trade—that is, the free movement of goods between Empire countries—is that there should be, outside of the Empire, a barrier against foreign goods. The right hon. Gentleman is not in the least prepared to accept that. It is very curious that he should not be prepared to accept it, because he made a very interesting admission. Gradually, slowly, surely the Liberal party are coming round to realise that, in the most improbable event of their party ever having a majority in this House, they will be compelled to make a compact with the Devil and agree that in a world such as the world is to-day there will have to be tariffs. Their way of meeting the dilemma in which they are placed is that they would endeavour to do business with those countries which would do business with us, never mind about the rest of the world. That is the essence of the policy of Free Trade within the Empire, but the right hon. Gentleman is not prepared to carry it out so far as the Empire is concerned, though he would welcome any arrangement by which New Zealand goods could come into this country free of all duty and they receive our goods without any duty being paid. He is not prepared to do the only thing to make that effective, and that is to have duties put upon goods from other countries.

I come to the right hon. Gentleman the Dominions Secretary. I find myself in agreement with much but not all that he said. I do not think that he made an answer to my right hon. Friend the Member for Sparkbrook (Mr. Amery). The right hon. Gentleman the Dominions Secretary is one of the most adroit Parliamentarians I have ever seen in the House during my 30 years' experience. First of all, he is extremely popular with everybody. He has good humour, and his invariable method of dealing with a question in debate is to attack a case which has never been put by anybody. Amid the resounding cheers of his supporters he says, "How absurd, foolish and wicked to say this" when nobody has ever dreamed of saying it. So far as the reference of the right hon. Gentleman to the President of the Board of Trade is concerned, I do not wish to intervene in a squabble between my two right hon. Friends. I might have occasion to vote or work with them in the future again and I see no reason to intervene in their quarrel, except to say that my right hon. Friend said that he had no confidence in the President of the Board of Trade as a negotiator in Empire matters. I think that we are getting rather mealy-mouthed in this House when a Cabinet Minister thinks that it is necessary to characterise a comment of this sort as in very bad taste. I will not pursue the matter, because I shall perhaps be told by the Under-Secretary that I am speaking in very bad taste. I should have thought, for instance, that it was a most mild way of putting it compared with what all of us in all parts of the House used to say in the 1906 Parliament. On the right hon. Gentleman's basis there were no speeches in those days not in bad taste.

What my right hon. Friend meant, and I believe that is the view held not only by my right hon. Friend but by a great many other people, was that there seemed to be two trends of opinion in the Government on these matters. There is the trend of opinion represented so brilliantly and boldly by my right hon. Friend the Minister of Agriculture, and there is the opinion expressed by the President of the Board of Trade in connection with the Argentine and other Pacts. I am not saying that they should not have these two trends of opinion. One of the great advantages of a National Government is that they can agree to differ among themselves, and that different Ministers can say different things on different occasions about each other's policy. It is a great thing for a National Government, but if it goes too far the main body of supporters of the Government get rather tired of it and something unpleasant happens, as it may do in the next two years unless the present Government mind their p's and q's in this matter. There is no reason why there should be this conflict of aim. Part of the case which my right hon. Friend and I have tried to put forward in various Debates in this House is that there is no reason why there should be this divergence. We have always had one principle and have never deviated from it, that the first duty of the Government in the matter of trade agreements with the Dominions, Colonies or anybody else is to look after the interests of the British producers, and, of course, the British consumers. The second duty, equally clear, is that there should be trade with the Dominions and with the Colonies. Believe me, I speak with the utmost seriousness when I say that a great many of us who feel compelled to comment upon the policy of the Government on this matter from time to time are not the sort of people who want to attack the Government for the sake of attacking them. The difficulty has been that things have been done by the Government, certain pacts have been made to which it would be out of order to refer in full, which cut across both those primary interests.

The right hon. Gentleman has referred to the subject of butter imports, and one would suppose from his speech, and from speeches by other hon. Members, that all butter which was imported into this country came from the Dominions. A statement has been put about in certain quarters, and I do not blame them for it. It is no doubt necessary for propaganda. They say, "Oh, yes, you British farmers want to look to the people who are really your competitors, the producers of the Dominions." Is it true that the principal competitors of the British farmer, for example, in butter, have been the New Zealand producers, who sent us in 1932, according to the Board of Trade returns, 2,518,000 cwts. of butter? Apologists for the Government policy, or those speaking on behalf of the Government, fail to tell us that in that same period Denmark sent 2,519,000 cwts., the Soviet Union 562,000 cwts., and the Argentine 202,000 cwts. If you add these together you will see that they very largely exceed the amount that came from the Dominion of New Zealand. The Government have to make up their minds on this matter, and, in this House and in the country, they have to make the matter clearer than they have done up to now. The Minister of Agriculture, in a very remarkable speech, practically came out bald-headed for a policy of Empire development, first and foremost, without any other consideration. We heard that speech with great delight, and, sooner or later, and perhaps sooner than later, during the present summer, they may be faced with a dilemma, that of having to decide which road to take.

What my right hon. Friend the Member for Sparkbrook and I said at the time of the Argentine and Danish Trade Agreements has been proved, by what has happened since, to be true. We deplored those agreements being made so soon after the Ottawa Agreement was made. They have cut across that agreement. We were told by speakers on behalf of the Government that we had to think of the tremendous trade we do with the Argentine. But look at the trade we do with the Argentine! Look at the restrictions! You cannot get money out of the country for one thing. If a British business makes any money it is almost impossible to get it out of that country. What is the great benefit we have got? It has cut across the general policy and no amount of good-natured chaff on the part of the Dominions Secretary or anyone else will get over that fact. The Government will have to deal with it during the present summer. In the first three months of 1934 the average price of butter imported into the British market was, in the case of the Soviet Union as low as 41s.; in the case of the Argentine, 50s.; Finland, 51s.; Estonia, 55s.; and New Zealand, 60s. The matter of which my right hon. Friend the Member for Sparkbrook spoke concerning Rhodesia's meat is really serious. There is no doubt that the industry in Rhodesia has been greatly hit by these arrangements to which I have referred.

Those of us who are supporters of the Government view with apprehension what appears to be two schools of thought in the Cabinet. I express great regret at the right hon. Gentleman having, I am sure inadvertently, said a thing which really might have had calamitous results. He said, if I understood him aright, that no one for a moment suggested that Empire Free Trade was possible. If 28 years ago anybody had got up in this House and said that the policy put into operation as a result of the Ottawa Agreements was possible they would have been laughed to scorn. When we used to make speeches in those days urging a policy of Imperial Preference and inter-Imperial trade we could hardly make ourselves heard above the jeers of the Liberal party. It may be possible to have so great an extension of free exchange of goods between Empire countries as to have Empire Free Trade. Whether it is so or not, why attack those of us who work in conjunction with the National Government for holding the views we do? It is a great ideal that we should have Free Trade within the Empire and a tariff wall outside. Many of us have worked very hard for this ideal. Some Members of the Government are making the position in the country and that of their supporters very difficult. They know that the great majority of their party are in favour of the policy in question. I suggest that Members of the Government should be careful of attacking what, after all, is the cherished ideal of many of us in this House.

6.44 p.m.

Sir STAFFORD CRIPPS

I rather hesitate to invade the political picnic which is proceeding at the present time, with this friendly interchange of greetings from one Member of the party opposite to another, but I feel that the arguments which have been advanced this afternoon have shown pretty clearly that there is not very much possibility of getting any real, planned economy either in this country or in the Empire by the methods which have been adopted by this Government or which are suggested by the Liberal party, both of which seem to us to be utterly futile. This afternoon we have seen the clash of interests—agricultural interests, industrial interests, merchant interests, and if the President of the Board of Trade had been here we should have had the monetary interest, which has not been quite so much in evidence as it is sometimes in this House. As in every other country in the world to-day, all these interests have to be, somehow or other, sought to be regulated by the Government. Agriculture on the one side always wants one policy and industry on the other side always wants another policy, and generally the monetary interest desire a third policy. This afternoon it has been illustrated by the people who want free admission for goods from New Zealand in order to benefit merchants and industry. But we are told that that is impossible because of the agriculturists. Then it is said : "Look what has been done as regards the Argentine?" That was done in order to assist the rentier population in this country to get their dividend from the Argentine. I think the Noble Lord looks at this matter not from the point of view of the rentier population but from the point of view of the agriculturist.

Earl WINTERTON

I raised an important point, namely, that people cannot get money out of the Argentine. I know of one firm which is almost bankrupt because the Argentine refuses to allow profits made in that country to be brought here.

Sir S. CRIPPS

The Noble Lord will appreciate that you do not send money out of a country. You send goods out of a country. Money is only a token.

Sir ARTHUR MICHAEL SAMUEL

We cannot get paid.

Sir S. CRIPPS

Now the monetary interests are speaking, as I thought they would.

Sir A. M. SAMUEL

We export manufactured goods made in our factories and made by our labour, but we cannot get paid for the goods we send.

Sir S. CRIPPS

Because the rentier population are already insisting on taking all the goods that Argentina can send to pay their debts. Consequently, you cannot get your debts paid. It is a very distressing thing for the hon. Member, but it is merely a question whether he prefers the rentier to get the money or the manufacturer.

Sir A. M. SAMUEL

Nonsense.

Sir S. CRIPPS

The hon. Member says "Nonsense." A certain volume of goods can come here in payment from the Argentine, but there are two lots of people who want to be paid. They cannot both have it. Either the manufacturer can have it in exchange for his commodities or the rentier for his debts. Unless you can expand the volume of goods that can be exported to this country from the Argentine they cannot both be paid. An arrangement was made with the Argentine in order that the rentier might get paid as much as possible. When that is done the Noble Lord complains that the arrangement made with the Argentine is embarrassing new Zealand and Australia. Of course it is. That is an absolutely necessary consequence, and you cannot help it. In the same way, New Zealand is sending vast quantities of butter here, and some of our agriculturists complain. The New Zealander has to send £17,000,000 of commodities here in order to pay his debt, wholly irrespective of the agriculturist or the industrialist. It is idle to look at this problem as if you could plan your trade without any reference to this great one-sided import of commodities which has to take place unless your rentiers are going to say, "We do not require to be paid interest any longer."

One of the things the Government might consider in this respect is the wiping out of all international indebtedness. We have been driven to that point with America in order to ease the situation. Many other countries have been driven to that point. Germany is being driven to it at the moment. But we are insisting upon the maintenance of these one-sided payments from countries like Argentina, New Zealand, Australia and Canada. If you are going to plan your trade you have either to acknowledge the necessity for that one-sided import in order to satisfy the rentier payment, or else you must wipe it out and say "We are going to plan our industry in order to meet the demands of our industrialists and our agriculturists." Then, if you have wiped out your debt payments and the commodities you are going to get in are going to be in exchange for some commodities you are going to send out, instead of having £12,000,000 worth of butter coming from New Zealand merely to pay a debt, with no contra export of commodities to benefit your industrialist, you will be able to export £12,000,000 worth of goods to New Zealand in exchange for £12,000,000 worth of butter.

The problem that capitalist society has to consider is that you get to the stage of having piled up international indebtedness to a certain point and you can only get relief by bankruptcy, just as is the case in domestic society. There comes a time when individuals pile up so much indebtedness that they cannot meet their creditors and they have to wipe it out by bankruptcy. There is not any system by which you can do that internationally execpt that some country ceases to pay, and then the debt is wiped out. It is no use saying to a country like New Zealand : "You can import anything you like into this country, by Empire Free trade" or whatever it may be called. Obviously, it cannot be done. You cannot do such a thing if you are contemplating your internal economy with regard to your agricultural situation. If you are to get control you must say : "We propose to produce so much in this country. As regards the rest we have to obtain it by exchange, either by barter of actual commodities or invisible exports." Then there immediately comes in the one-sided trade for which the rentier class is responsible.

We think the time is coming, or has already come, when, if you are going to attempt to plan your trade, you must do something with that one-sided trade in order to get rid of these one-sided payments which are very seriously embarrassing, and have been very seriously embarrassing the whole of our industrial system. But it is no good doing that if you immediately begin to pile them up again by going on with exactly the same system of finance. It is a complete mistake, in our view, to consider that all export trade is good for a country. It is not necessarily good for a country. You send out commodities which would be quite useful for our own people to consume, you reduce the standard of life in our own country by exporting them, and you exchange them for bits of paper which may return you commodities but in a great many cases they have not returned commodities, with the result that the exports have really been in a number of cases free gifts to other countries at the expense of the standard of life in this country. Therefore, to look upon export trade as necessarily being profitable to a country is a complete fallacy, in our view. That position, of course, would not arise if you could plan your trade rather than just allow any profit owner to export goods wherever he thinks, on paper, he can make a profit. That is seriously interfering with the whole conception——

Lieut.-Colonel SANDEMAN ALLEN

When those goods are exported have not the wage-earners here received their wages, and is it not the rentier or the so-called profit makers who stand to lose? The wage earner has had his wages, but in regard to the exporter it is a case of heads you win tails I lose every time.

Sir S. CRIPPS

The hon. and gallant Member is confusing money with commodities. People do not eat money, neither do they wear it. If you send commodities out of the country it follows that the net amount of commodities available for the community in that given period of time must obviously be less. However you may arrange it, the net wealth of the country in commodities has diminished. Of course, if you consider that that wealth consists of money, then I am afraid that you cannot get a true picture of the position of the country as regards the available commodities which there are for distribution. The theory of the exporter is that he will get back commodities in return, more commodities than he exported, and that they will in future be available for consumption by the community, but what so often happens, as is happening in regard to the Argentine, capital goods have been exported but nothing comes back, because when the time comes there is no possibility of importing sufficient goods back into this country owing to various incidents of international trade. In the result, the commodity volume for home consumption is reduced and you never get back that which you had hoped to get. That is what is happening all over the world to-day. It is that which necessitates the wiping out of international indebtedness.

The only way to embark upon a consideration of such problems as trade with New Zealand is by a real planning of the system where you have yourselves control over your trade. At the present time the right hon. Gentleman cannot be blamed, because he has no control. Neither have the Government any control of the trade of this country as regards what is exported or imported. In a very loose and general way they try to do it by putting a tax on here, a restriction there or a quota there, but they cannot take the whole trade of the country as a unit and plan it. That is only possible under a profit-earning system, because each unit of production or each unit of business has itself to make a profit, or else it goes out of business and ceases to be productive. That is what lies at the root of the difficulty with regard to making arrangements with New Zealand as to trade, because this country and the present Government have not a monopoly of the foreign trade of this country and until it has such a monopoly it will never be able to solve the problem of Imperial or international trade.

6.57 p.m.

Sir JOHN SANDEMAN ALLEN

I have returned recently from New Zealand and Australia, and my first impression on coming back is to wonder on which side of the House to sit. There has been a distinct change since I left. I came here to-day particularly interested in the question of New Zealand. I was anxious to hear what the right hon. Member for Darwen (Sir H. Samuel) had to say on the subject, having just spent seven or eight weeks in New Zealand and two months in Australia. During that time I discussed this problem with everybody I met. In New Zealand it was certainly a very live subject. Whether I spoke to the producers, the chairman of the the Farmers' Union, the Chambers of Commerce, Members of Parliament, Ministers of the Crown or the man in the street, every one of them was interested in the subject. Let me say at once that until I came here to-day I never heard that there was a real grievance against His Majesty's Government in this country for the way they had handled the question. No one has had a better opportunity than I have of hearing any complaint, in one way or another.

What I did find was a great grievance against economic facts. The trouble was to know what was going to happen. That is the crux of the whole difficulty. We have listened to-day to a very interesting discourse on Free Trade and economic nationalism. The right hon. Member for Darwen interested me particularly because he referred to three bodies with which I am concerned, the Associated Chambers of Commerce of Great Britain, of which I am a vice-president, the International Chamber of Commerce, of which I am one of the British members, and the Inter-Parliamentary Commercial Conference, of which I am chairman and president of the council. All these three bodies would, I am perfectly convinced, fail to recognise in the least the description given by the right hon. Member for Darwen of what they have really been doing and discussing during the last five or 10 years. It is quite a different subject altogether, and we should, therefore, put it aside at the present moment.

As regards the general issue, a very able answer was given by the right hon. Gentleman the Member for Horsham (Earl Winterton), and I do not feel it to be my duty, nor would the Committee consider it suitable for me, to enter into a discussion now on these points, when there are present many hon. Members who are much more able than I am to discuss this matter. The hon. and learned Member for East Bristol (Sir S. Cripps) delivered what was, from his point of view, a very interesting discussion on his pet subject, and some of his speech, as everybody will admit, especially his arguments about money and goods, showed him to possess a distinct grasp of the present situation, which is more than I—or, indeed, most hon. Members, could have achieved. Nevertheless, for practical purposes it was beside the question that we are discussing this afternoon. We are here to discuss whether the right hon. Gentleman the Secretary of State for Dominion Affairs should have his salary reduced by £100 for improper conduct in handling those affairs in relation to the Government of New Zealand. Let us, therefore, come back to the real subject which we are supposed to be discussing. However interesting these other subjects are, there are many days and years in which they will be discussed, and no real agreement can ever be reached on them. On the present subject, however, we have to deal with facts.

I should like, if the Committee will allow me, to talk for a short time about the subject from the point of view of one who has been studying it on the spot. First of all, let me say that as regards progress, something has been said about Ottawa. I am only speaking about New Zealand. In New Zealand there is no difficulty about the quota on meat. I will read what Mr. Gordon Coates has said on the subject : The opinion of those who can judge is that it is a success, and that to New Zealand producers and to the whole industry it has given results which could not have been given by any tariff on foreign meat unaccompanied by the regulation of supply. And these favourable opinions have been formed by men who were extremely doubtful and critical of the quota on meat. Thus we see that in one of the primary industries of New Zealand the New Zealanders are satisfied; the whole people are more or less satisfied as far as that Dominion is concerned.

Now we come to dairy produce. The next point, let me remind the Committee, seems to have been forgotten by some hon. Members when talking about Ottawa : that this question of quota of dairy produce was very carefully and fully discussed at Ottawa, and the British Government finally gave a promise that for a certain given period—three years—which expires next year, they would not without the consent of the Dominions impose any restrictive legislation on dairy produce. That in itself was giving notice to the Dominions of what was in the mind of His Majesty's Government as an essential step to take for the proper care of those who follow that type of industry in this country. I do not call it Protection in the ordinary sense of the word. We are living in times when things have changed enormously, and it seems to me that people have entirely forgotten the big changes that have taken place in the world conditions in the past two years—changes wide enough completely to stultify the old arguments. The fact is that notice was given. Let me quote Mr. Coates again : The Ottawa Agreement really represents partial surrender by the British Government of their undoubted right to control imports, and those words about dairy products are of very great though inadequately appreciated importance at the moment. The Committee should see that the New Zealand authorities, at any rate, are alive to all these points. At the needs of the Home Government they may not have thoroughly arrived. The people of New Zealand need education. Nevertheless, a great effort has been made to educate them on that subject.

I should like to say a few words on the subject of butter. Let us go back to 1930, when we found that, roughly speaking, foreign imports of butter into this country and Dominion imports were more or less equal. What is the state of affairs to-day? Foreign imports of butter have gone down in quantity and Dominion imports have increased, so that to-day the last figures represent approximately 60,000 tons increase in Australian and New Zealand imports, and a decrease of foreign imports. Therefore, although we had got practically to saturation point on our markets, a year or two ago Australia and New Zealand made a tremendous effort to increase production. Australia is responsible for two-thirds of that increase of 60,000 tons. Why? Because prices had fallen and Australian producers have been under the impression—perhaps a very natural impression, but I am afraid that it has to be corrected —that for a fall in prices it is necessary to increase one's output in order to keep the same income. The result was that butter became a drug on the market.

The British Government, whether wisely or otherwise, came to a conclusion which, although many of us here hate these restrictions on trade, we must approve that under the extraordinarily difficult conditions it was necessary to take steps so that the whole of the producers of the Empire, and of this country in particular, should not be ruined. They therefore decided that a certain amount of restriction of imports was essential for these producers for the sole purpose of raising prices. That fact has at last got well into the minds of the New Zealanders themselves, but unfortunately it is at the present moment too late, because since then an agreement has been made which will leave the price more or less the same but will benefit the British farmers alone. If they had only recognised in time, what many of us had tried to make known to them, they would have realised that it was in their interest in common with ours that prices should be raised and people saved from ruin. The Committee ought to look this fact in the face and apply themselves to the question which is the subject of Debate this afternoon, and not go off on to side issues.

The next point concerns the New Zealand dairymen. There is a tendency to talk about agriculture in New Zealand as if it consisted entirely of dairymen but there are also a large number of sheep people interested in wool and mutton all of whom are satisfied and have no complaints to make. It is the dairy people who are in trouble. They promptly began—very naturally, from their point of view, and most people would have done the same, in their position—propaganda in order to hold their market in this country. In the old days there was an unrestricted market in this country, because we never had enough. They began to wonder how they could get the better of somebody else by taking steps to show the advantage of obtaining a free entry of New Zealand products into Great Britain and of British products into New Zealand. That is as far as the propaganda went, and the New Zealand Government, who had to watch and make every inquiry and be prepared to answer inquiries, very properly put the matter up to the Home Government to ask what to do. They might, of course—like some Governments—have acted on their own entirely, but the relations between New Zealand and this country have always been very close, and the Government of New Zealand has always loyally and wisely kept in the closest touch with authorities in this country. Their first point was, therefore, while not committing themselves in any way—for it was not a Government inquiry and it is ridiculous to suggest that it was : the wording of it-is perfectly clear—that a certain number of producers were anxious and they wanted some guidance as to the future from His Majesty's Government here.

They were quite right, they did want guidance as to the future; some of us would want a little guidance as to the future in their place. But they wanted a reply and they got it, a temperate, well-balanced statement, that the producers of this country must look after themselves. When I was over in New Zealand I found that it had staggered the New Zealanders to be told that the total number of inhabitants of this country, men, women and children, who are dependent on the land is certainly five times the whole population of New Zealand. That information took them aback; it was prominently displayed in every newspaper in the country and gave rise to considerable discussion. So it is important to realise that New Zealanders have been weighing up these considerations. For a long time they have had to face their own troubles, and terrible and most distressing troubles they have been. The dairy farmers to-day are much more numerous than they were, because many of them switched over from sheep when wool and meat went down in the slump, and have not yet come back. It is a distressing thing to see how many of them are hardly able to make a living or cannot make a living at all. Nevertheless, the Government has adequately answered this question.

Another thing that they had not realised was the absolute necessity to this Government of protecting our foreign trade. It is not for me to discuss trade, as the right hon. Member for Horsham has ably surveyed what has taken place lately, and it would be out of place for me to attempt to do so. Nevertheless, I know, and I am quite satisfied, that His Majesty's Government has proclaimed, and have practised what they have proclaimed, their determination to protect all the interests of this country, of every kind, and not merely those of one particular section of the community. Away in the far distance, looking at this country and seeing the wood without the trees, being able to see what really has occurred and to see it with our friends and fellow citizens of the Empire, I can say that they and I look upon this country and this National Government as having done great things in the last two or three years. Instead of these petty complaints and arguments they see, as some of us are glad to see, the great recovery and the high position and lead that this country has taken. That has greatly impressed the people of New Zealand, and they are fully prepared to follow as far as they can, but they are very anxious at the present moment. I feel that any censure of the Government is unmerited, and that what they deserve is praise for what they have done. In conclusion, I should like to point out on this subject, as far as the New Zealand dairy producers are concerned, that they have over-produced in regard to the markets of this country.

Earl WINTERTON

How can that be? How can the hon. Member say that the New Zealanders have over-produced as far as the markets of this country are concerned when they sent us 2,512,000 tons of butter in 1933 while Denmark sent us 2,519,000 tons?

Vice-Admiral TAYLOR

Is it not a fact that we imported from the foreigner 3,500,000 tons of butter last year?

Sir J. SANDEMAN ALLEN

I repeat what I said before, that foreign imports are less by 60,000 tons than they were in 1930. If I am wrong, and if any hon. Member is not satisfied, I am prepared to get my information confirmed and to argue the subject further. In any case, whatever the fact is, there is a great supply of butter coming to this country. What New Zealand really wants is a reasonable tariff, with entry into this country as free as possible. The difficulty is that Australia will have nothing to do with any such suggestion and insists upon Protection. I will not point out any of the difficulties, I will only say that it is a total mistake to imagine that New Zealand has any grievance on this subject, or that the Government of New Zealand was prepared, or that the inhabitants of New Zealand are prepared to-day, to give up what they have been having for years and accept in its entirety what is popularly known as Empire Free Trade. I think that such a policy is a myth and at present impossible, though I agree that it is a high ideal. We have, however, to deal with human nature, which is the same in most parts of the world, and to alter it, before we shall find that the ideal can be attained. In the meanwhile we have to accept the position as it is. His Majesty's Government have worked on safe lines. I submit that it has acted wisely and well, and that the Government of New Zealand appreciate it and have worked hand in hand with His Majesty's Government. I also believe that the loyal people of New Zealand are prepared, in spite of various things which have been said, to stand by their Government, which saved Great Britain and the Empire in a time of crisis.

7.16 p.m.

Sir ROBERT HAMILTON

The hon. Member for West Derby (Sir J. Sandeman Allen) has come to the conclusion that His Majesty's Government have acted wisely and well, but the Secretary of State will know that we on this side have come to a different opinion, otherwise we should not have put down a Motion to reduce his salary. That, of course, is not a personal matter, it is put down in order to raise questions of policy. The hon. Member has brought the Debate back from the rather doctrinaire essay we had from the Front Opposition Bench to the correspondence which has taken place between the Government of this country and the Government of New Zealand. I do not intend to say very much on the question of New Zealand, because there is another matter to which I desire to refer, but it is a great pity, after the Debate has gone to its present extent, that any one should pretend that the message which came from New Zealand was not an offer. To say that it was an inquiry or something else is mere juggling with words.

The New Zealand Government wanted to know what this country was going to do when they were in difficulties next year when their market in this country for butter and cheese was to be cut down. They wanted to know what we were going to do about it; and they sent the telegram. The answer was that the policy of the United Kingdom was such that it really did not permit of the matter raised by the New Zealand Government being carried any further. New Zealand were not content with that, and asked for further enlightenment. I would refer hon. Members to the White Paper, where the New Zealand Government asked : How far it may be within contemplation of His Majesty's Government in the United Kingdom that in administration of such a plan of quantitative regulation there should be an opportunity for continuous representation of views of the Dominion as any such plan would vitally affect the major industry of the country. The answer that was sent was that no plan would be complete which did not provide for proper consultation between the Dominion Government concerned and the Government of the United Kingdom. But no consultation was offered, and the whole matter dropped. The telegram which was sent ended : We hope that the above information may be of assistance to you in dealing with a problem which is not only very difficult and complicated, but is also as we fully realise, one of primary importance to New Zealand. It is also of primary importance to us and to the whole of the British Commonwealth of Nations. All the Dominions are watching what is happening in the case of New Zealand. To my mind no event of comparable importance has happened during this century. A few years ago it would have been thought incredible that one of our Dominions should come forward with a proposal such as this, but they have been forced to do so by circumstances which they can see coming. Their whole future is at stake, and they ask this country what we propose to do. We say that we cannot deal with you alone, there are other people concerned and that consultation is necessary. But no consultation is offered, the matter is left, and New Zealand is forced to look for other markets. The result is that exporters in this country find their overseas markets reduced, our shipping has less chance of carrying goods and our migrants have less chance of going to the Dominion. How can the Dominions prosper and expand unless there are opportunities and facilities for expansion? Three vital interests are affected—our trade, our shipping and our migrants. The very safety, stability and cohesion of the Empire are at stake, and there is no consultation; the matter is left open. It is a matter of great astonishment to me that a proposal of this importance has not received more consideration by His Majesty's Government. The hon. Member for East Wolverhampton (Mr. Mander) put a question to the Prime Minister the other day in the following terms, to find out what the intentions of the Government were with regard to this proposal. He asked the Prime Minister : whether he will consider the advisability of a general consultation with, the Dominions to consider the issues raised by the inquiry of the New Zealand Government as to whether an agreement could be come to providing for a free market for British goods in New Zealand in return for a similar free market for New Zealand goods in this country? The PRIME MINISTER (Mr. Ramsay MacDonald : His Majesty's Government in the United Kingdom have received no indication from any of His Majesty's Governments in the Dominions that an arrangement of the kind referred to is desired or would be acceptable to them. In the circumstances, I see no reason to think that any general consultation such as is suggested by the hon. Member would be of advantage."—[OFFICIAL REPORT, 2nd May, 1934; col. 310, Vol. 289.] Is that the full and sympathetic consideration which was promised by the Secretary of State in his telegram? It seems to be a curt dismissal of the advance made by New Zealand. Although the New Zealand market is not a large one and the amount of the imports which she has taken during 1933 is comparatively small, yet if you will look back three or four years, prior to the world crisis, you will find that the imports of New Zealand were about double what they are to-day, and there is no reason why we should not look forward to an increase in these imports. If New Zealand reduced the duties on her imports not only would she be able to take a larger quantity but she would not lose revenue, as the Secretary of State seemed inclined to suggest, because many of her duties now have the effect of excluding goods. If she lowered her duties sufficiently to allow the goods to come in she would still retain her revenue, and exporters from this country would get the advantage of an increasing market in New Zealand. The opportunity that has been offered may not occur again. The Secretary of State knows how difficult it is to regain a market once it is lost, and to my mind it is regrettable that New Zealand, without consultation on the part of His Majesty's Government, should be forced to look for markets elsewhere when by such consultation arrangements could have been made.

Let me for one moment refer to some of the criticisms directed against the marketing scheme for milk. The great market in this country for milk is the market for liquid milk, and no one can compete with us in that market. Our object should be to extend the market for liquid milk. But at the present moment a big levy is being taken from the producers of liquid milk in order to subsidise milk going to the manufacturers of cheese and butter. It is an open question as to whether that is a sound method of proceeding, and whether we should not be on much sounder and safer lines if we were to devote all our energies to the liquid milk market, giving advantage to our farmers, and leave countries like New Zealand, with climatic advantages, which must turn their liquid milk into products such as butter and cheese to supply us with these products. That is the sort of question which might have been discussed with New Zealand had the matter been taken up, as it ought to have been, by His Majesty's Government.

There is one other matter to which I want to refer, although the time is not yet ripe when it can be discussed fully and with advantage. I refer to the announcement made in South Africa to the effect that notice will be sent to His Majesty's Government raising the question of the transfer of Protectorates, for which the British Government is responsible, to the Union Government. The question of the transfer of these Protectorates is delicate and difficult and will need handling with extreme care. I trust that nothing will be said on either side, if discussions go forward, which will make the question more difficult than it is bound to be. No doubt hon. Members have had their attention drawn to a letter which appeared in the "Morning Post" recently from Professor Berridale Keith, which raised certain legal constitutional points of importance to which I should like to draw the attention of the Secretary of State, because they are points which must be dealt with if the discussions go forward. It is as well for them to be cleared up, and that we should know exactly where we stand.

It being Half-past Seven of the Clock, and there being Private Business set down by direction of the Chairman of Ways and Means under Standing Order No. 6, further Proceeding was postponed, without Question put.