HC Deb 03 April 1935 vol 300 cc377-471

3.48 p.m.


I beg to move, to leave out the word "That," to the end of the Question, and to add instead thereof: with a view to creating employment by increasing the consumption of British products at Home and abroad, it is essential that the fullest use should be made both of modern methods of production and distribution and of the present abundance of cheap money, and that it is desirable for a departmental committee to be set up forthwith to consider what measure of industrial reorganisation is necessary for these purposes and what steps should be taken to this end. The House has devoted a good deal of time lately to the discussion of what steps should be taken for the maintenance of the unemployed. I would, therefore, like to ask the House to consider the policy of His Majesty's Government which has been directed towards giving to industry in this country an opportunity of becoming more active and therefore of reabsorbing the unemployed. I hope, especially as this Parliament is drawing to an end—[Hon. MEMBERS: "Hear, hear."]—at any rate, this Parliament is no longer as young as it was some years ago—that there will be an opportunity of having a statement from the Government as to what is their long-term policy for dealing with the industrial position. I ask for a departmental committee in order that the question may not be dealt with only by the Chancellor of the Exchequer, the Minister of Agriculture and the President of the Board of Trade, each approaching it from his own departmental point of view and from the point of view of his own economic principles or prejudices, as the case may be, but that it may be dealt with are the policy of the Government as a whole. There is a precedent for setting up such a, committee. In 1924 the Balfour Committee was set up, with very wide terms of reference: To inquire into the present position of British overseas trade and the prospects of British participation in the markets of the world being such as to ensure sufficient and continuous employment and a satisfactory standard of living in this country. During the 11 years that have intervened since then, very great changes have taken place both in the organisation of industry and in the problems it has to face. I suppose most people would admit to-day that the outlook for industry in the future is less bright even than it was in 1924, and certainly the unemployment problem is of longer standing and of a greater gravity. The record of the Government since it has been in office is one of which it may well be proud. In dealing with the changed circumstances of the present time it was necessary that a number of different expedients should be adopted, and the changes since 1924 are so very great that I think it is necessary that there should be a fresh inquiry into the prospects for the future. In the first place, we have lost more export trade than, I suppose, the most gloomy prophet would have anticipated in 1924. In that year the value of our exports was £801,000,000, and in 1934 they were estimated at only £481,000,000. What is even more significant as showing how much more we are to-day dependent upon the horns market for our employment is that of the total production in this country in 1924 about 22 per cent. was exported and in 1934 only 15 per cent.

The development of oil and of electricity has resulted in this country losing to a very great extent the industrial advantages which it used to have over other countries, and that fact, together with the development of motor transport, has resulted in the new and expanding light industries which cater principally for the home market choosing to go to the south of England and to the London area. As a result of this we have the devastated areas of South Wales and the North-East Coast, and I think most of us would recognise that with our old staple industries, upon which our population was dependent for its employment in the past, depressed in the way they are, and with this new development taking place in a fresh part of the country, it is in the first place probable that we shall not in future be able to maintain in employment the whole of the population at present in these islands, and, secondly, that even if we are the present distribution of that population is wrong. The National Government since it has been in office has adopted a number of expedients for dealing with this problem, but I have an uneasy feeling that instead of there being one single policy, there are different expedients which are specially associated with individual members of the Government and Departments. There was, in the first place, the adoption of Protection for our industries, but in the case of our industries the same policy was not pursued as in the case of agriculture, that of giving Protection against the undercutter at home. In the second place, the policy for which the Conservative Party has stood for a quarter of a century past, that of Imperial Preference, was adopted at Ottawa. If the results of that policy have not been all that was hoped, that is in part due to the old difficulty that the Dominions insist upon protecting their secondary industries against our manufactures, and at any rate equally due to the fact that the present Minister of Agriculture is seeking to adopt a policy of high Protection for agriculture in this country; and there does appear to be, at any rate at first sight, some inconsistency between a policy of Imperial Preference and one of protecting British agriculture even against Dominions agriculture.

Again, the whole position of British industry has changed since 1924 because we have gone off the Gold Standard, and, as I understand it, the Chancellor of the Exchequer views with equanimity the decline in the external value of sterling because he feels that by stimulating exports and checking imports it will improve our balance of trade. But at the same time that he is pursuing that policy, it seems to me that both the President of the Board of Trade and the Minister of Agriculture are converts to what I may call international barter. The idea is to try to have a balance of trade which is more or less in equilibrium with almost every other country. The difference between their views on barter seem to me to be very wide. My right hon. Friend the President of the Board of Trade desires that that barter shall be on. as extensive a scale as possible. The Minister of Agriculture on some occasions has said he approves of economic nationalism, because he believes it is generally to the advantage of a country to produce everything which it can pro

duce for itself, and that international trade will ultimately consist only of the exchange of superfluities. How long there will be any superfluities if his policy of restriction is followed is a matter for conjecture. Another change since 1924. In the case of agriculture, self-government has been given to the various branches of that industry, and they have been used for the purpose of the organisation of restriction of output and of fixation of prices. The President of the Board of Trade, on the other hand, has been rather unwilling to encourage industry even to ask for similar powers, and has, on the whole, been reluctant to give them.

If I have ventured to some mild extent to suggest that the National Government has not an entirely united policy in these matters, it is surely necessary that we should consider what ought to be the long-term policy. It is undoubtedly the case at the present time that the depression in the world is largely due to the fact that there is a lack of harmony between costs of production and prices, and one has to make up one's mind how that difficulty is to be dealt with. I can well understand that as a temporary expedient it may be necessary, when you are face to face with an emergency, to restrict output and to try to maintain prices, but I cannot believe that that can be a sound long-term policy. Surely the sound policy must be to try to bring down the costs of production until they are in harmony with prices, and if my right hon. Friend the Minister of Agriculture has concentrated, as I think unduly, upon keeping up prices, I feel that the President of the Board of Trade has in some respects not been sufficiently active in trying to reduce costs of production.

So far as the old staple industries are concerned, my friends and I believe that the first and most urgent problem is that of eliminating redundant plant. I feel that industries like coal and cotton are rather in the position of a man who, in these more impoverished days, inherits some great country house which he neither has a large enough family to fill nor a large enough income to keep up. When he inherits he has to make up his mind whether he is going to live uncomfortably and expensively in this great house, or whether he is going to close down, or perhaps knock down, part of it, and live more comfortably and more economically in a small corner.

I will take, in the first place, the example of coal. I will not repeat at any length what I have said about that on at least two previous occasions, but in 1930 a Measure was introduced into this House for establishing quotas which were going to spread the limitable disposable production of coal over all the pits in operation during the period of the quota. That Bill was criticised at the time by the Conservative party. It was also criticised by the Liberal party, and it was only defended by the Socialist party as a temporary expedient. At the same time—and this was the better part of the Bill—there was a provision for a Reorganisation Commission which would try to concentrate production upon those pits which were able to produce most cheaply. Now, all these years afterwards, there is still a test case pending before the Railway and Canal Commission to ascertain exactly what are the powers of the Reorganisation Commission. In the meantime, the cost of producing coal is artificially increased by this spreading of production over an unnecessarily large number of units. The manager of a pit near my constituency has made some calculations, and he estimates it to be about is. for every ton of coal raised throughout the country. This uncertainty not only prevents the Gowers Commission from taking action, but we get the worst of both worlds, because the industry will not take measures to reorganise itself as long as the Gowers Commission at some time may do it compulsorily. In the last report there was again raised the question of royalties—a matter also referred to by the Civil Lord of the Admiralty in the very remarkable report he presented to the Government on the conditions on the North-East Coast. The Gowers Commission said that, whatever their powers may be, it would none the less be necessary, if they are effectively to carry out the task imposed upon them by Parliament, that the industry should be unified, and royalties put under their control. The time is slipping away, and no substantial advance has been made during the last three years.

I would like to refer briefly to the cotton industry, about which I spoke in November, when last I ventured to speak

on this subject. On that occasion my right hon. Friend the President of the Board of Trade, in replying, said that he would keep his mind open to any scheme of this character connected with the cotton industry, and I should like, if I may, respectfully to congratulate him upon the welcome which he gave to the scheme for the elimination of redundant spindles in Lancashire. I understand that he has promised to introduce legislation in order to make that scheme effective, and that he is also prepared to give such financial assistance as may be necessary in order to carry it into effect. But I would ask him, is it necessary for him to stop there? There are other sections of the cotton industry. I understand that the problem of redundant plant in the weaving section is just as great as it is in the spinning section. He has already taken a most useful step in giving statutory validity to the wages agreed upon by the two sides, but I would ask him whether, really, it is necessary for progress in this way to be made slowly—here a step and there a step—whether it is necessary on every occasion for a special ad hoc Bill to be introduced into this House, and whether it would not be possible to give to the cotton industry powers to carry through these schemes of reorganisation of their own?

In addition to the spinning and weaving sections, there is also the finishing section, and I understand that a short time ago the Bradford dyers prepared a comprehensive scheme for reorganisation which they took to the Board of Trade, but, unfortunately, they did not there receive a, very warm welcome. I wonder whether the right hon. Gentleman could tell us something about that when he replies. I would ask him whether it is not a fact that there is in the finishing section, as well as in the weaving section and in the spinning section, which he has already dealt with, much redundant and obsolete plant? There is no prospect of the industry becoming really profitable until that redundant machinery and plant has been eliminated. I would also ask him whether there is not at the present time a great deal of undercutting and selling below cost; whether there is not uneconomic competition among merchants, and whether many of them are riot as much concerned to sell foreign cloth as they are to sell British cloth; whether there would not be a far better hope for the cotton industry if something were done to encourage vertical combines, or a single selling agency which would enable Lancashire in the export markets of the world to have, at any rate, as effective machinery as that which the Japanese industry possesses? I refer to these great staple industries as the old ones where, I think, this problem of redundant plant is an acute one.

I would ask my right hon. Friend whether it is not possible for something more to be done to reduce the costs of production even in those industries which to-day are comparatively prosperous and expanding? One of the most courageous and imaginative actions of the late Conservative Government was in setting up the great electrical grid system, upon which no less than £46,000,000 has already been spent; but I understand that the benefit of that great scheme has, to a large extent, been lost, because there is no co-ordination and very little regulation of the distributing companies. There is the most extraordinary variation in the prices at which the current is sold in different parts of the country and it has been suggested to me that it would be possible for there to be a very substantial reduction in the price at which that current is sold. Again, take the question of transport. The Salter Committee made certain recommendations which this Government carried out, but they went on to say that for the future they hoped there would be something much more than putting road transport and railways upon a fair basis of competition, and that the future of transport in this country, in the interests of industry, depended upon there being really cordial co-operation between the two. I want to know whether anything has been done since the Road Transport Act in order to encourage that co-operation and co-ordination.

A committee such as I have suggested, obviously, would not overlook the extraordinary capitation tax upon employment which is impsed by our various insurance schemes. If ever an industry wishes to expand and take on more labour, it has to pay a capitation tax upon every man that it takes out of the army of unemployed. It may be said that we have had commissions upon unemployment insurance, but they were looking at this matter from a different point of view.

Their task was to put unemployment insurance on a sound acturial basis. I am asking that this new committee should look at it from an entirely different point of view, and whether, in view of the different standard of living in this country, and our difficulty in competing with other countries with lower standards of living and without the social services we have, something might not be done in this respect, following the example of the Chancellor of the Exchequer in derating. I remember he used the very striking phrase, that although this did not result in any reduction of taxation, it meant taking the weight off a man's heels and putting it on his shoulders. Again, there is the curious anomaly that the same Income Tax is levied if profits in an industry are put back into the industry in order to re-equip it or extend it, or whether they are distributed in dividends.

If and when everything has been done that can be done to make production in this country as cheap as possible, it will still be desirable to consider the question of cheap distribution. The Balfour Committee gave very great attention to the cost of distribution. I recognise that it is impossible for retail prices to fall in anything like proportion to the fall in the prices of primary articles, but I should be sorry if the Government did not pay special attention to reducing the cost of distribution, and for this very obvious reason. If only there could be a substantial fall in the cost of distribution, and so a reduction of prices to the consumer, that would result in a tremendous increase in purchasing power. We attach a great deal of importance to the increased purchasing power which comes from the restoration of cuts, or putting people back into employment, but it has been calculated by my hon. Friend the Member for Huddersfield (Mr. Mabane) that a reduction of 10 per cent. in the retail prices of this country would result in an increased consuming power to the people of this country of something like £180,000,000 a year.

If I appear to commend to the President of the Board of Trade in some respects the policy of the Minister of Agriculture, I will not ask him to follow the Minister of Agriculture in all respects. I do feel that it is unfortunate that the Minister of Agriculture, in trying with so much courage to improve the position of the farmers of this country, has concentrated rather upon raising the price of imported foodstuffs than upon reducing the price of home-produced foodstuffs to the consumer. There is a world of difference between the scheme of the Minister of Agriculture of restricting the importation of Danish bacon, which, I understand, has already resulted in a reduction in the consumption of bacon in this country, and his entirely different policy of subsidising the sale of milk for school children, which has resulted in a greatly increased consumption. What is, to me, a little alarming is that the Consumers' Council has presented two reports which have been published upon the working of the milk marketing scheme. In the first, they drew attention to the large, and, in their view unjustifiable margin which the distributor was obtaining. In the second report which was signed on 15th April, and only published on 15th September, the Consumers' Council added a note that in the new contract which had been entered into for the six winter months of 1934–35, the margin allowed to the distributors was even larger than the previous margin they had criticised. Therefore, I am very glad that at last a reorganisation commission has been set up.

It is not only in the matter of foodstuffs that it is of vital importance to make certain that the costs of distribution are not more than they need be. I was reading again the other day a passage in the Report of the Royal Commission on the Coal Industry, published in 1926, in which figures were brought out showing that in some respects the profits on the distribution of coal in the years following the War were larger than in the years before the War. I made inquiries from the Department as to what action had been taken on the recommendations of the Samuel Commission, and what further information was obtainable as to what has happened during the intervening years. I understand that nothing has been done, and that no further information is obtainable. It is remarkable that, although we have had a census of production, there has been no census of distribution. It is useless to reduce costs of production if costs of distribution are at the same time increased, and there is a very clear case for a committee which would inquire into the whole question of whether costs of distribution in this country are not higher than they need be.

I understand that the Chancellor of the Exchequer relies for the re-absorption of the unemployed into industry very largely upon the existence of cheap money which, he says, is entirely due to the action taken by the Government. I respectfully agree with everything that the Chancellor said on that matter. I happen to know two cases where great, undertakings were riot considered to be worth while when money was dearer, but which have both been undertaken during the last few months. I believe that, if the Chancellor of the Exchequer is able still further to reduce the price of money, the improvement which we have already seen will continue, but I am not satisfied that everything is being done that might be done to take the fullest and most complete advantage of the cheapness of money.

Some very interesting proposals have recently been made by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), and, though at first sight it appeared that there was some conflict between the outlook of the right hon. Gentleman and the outlook of the Government, 1 cannot help feeling that, underlying, there is a very considerable measure of agreement. The Chancellor of the Exchequer has always made it plain that he is most anxious that the plentiful credit now available should be used for productive purposes, but he does not believe, and 1 respectfully agree with him, that it is ever worth while to spend money upon relief works, the sole or primary purpose of which is to give employment during the time that the money is being spent.. The right hon. Gentleman the Member for Carnarvon Boroughs has also agreed that relief works are undesirable, and he continues to emphasise the importance of encouraging the flow of capital into many works which will be to the advantage of the country as a whole.

There may be a difference of opinion as to what are relief works and what are works which are for the national advantage, but I believe that both the right hon. Gentleman and the Government would agree that the re-equipment of our staple industries in order to enable them to produce more efficiently and therefore more cheaply would be an extremely desirable employment of that at present partly unemployed capital. The immediate effect would be to give employment to the manufacturers of machinery, and the outward effect would be to increase markets both at home and abroad. I understand, although I have no official figures, that something like £10,000,000 might well be spent in re-equipping the spinning section of the cotton industry and £20,000,000 in re-equipping the iron and steel industry. If something like the 1929 scheme could be revived, the railways would be able to provide employment for £55,000,000, part of which would be upon electrification of suburban lines.

I would conclude by asking that the Government should give sympathetic consideration to our proposals and that a committee on the lines of the Balfour Committee should be set up to make a full and comprehensive survey of industry, of the potentialities of industry, and of the outlook in regard to markets at home and abroad. Improvement has been shown during the last few years, and most of us who are supporters of the Government would agree that individual Ministers have achieved great things since they have been in office. Conditions are changing, however, and I believe that there is now need not merely for those brilliant expedients of which the Minister of Agriculture is so remarkable an exponent, but for a long term policy which will aim at seeing that British agriculture and that British industry are given the greatest measure of protection in the home market that can be given without sacrificing the export market. Conditions have so far changed and there is so great a danger of individual Ministers approaching things from the departmental point of view, that I hope they will be prepared to set up a committee which will investigate the subject in an impartial and scientific way.

4.23 p.m.


I beg to second the Amendment.

I do so not only as a Member of this House, but as a professional man who, in the whole of his business life, has been closely associated with the evolution of industry. I have seen the formation of price associations and have seen those associations developed until they have brought about, as in the case of the iron and steel industry, an almost complete reconstruction of an industry on the most efficient lines. I welcome the Amendment because industry, whether we like it or not, is the source from which we get all our material benefits. It provides the widow with her pension and the unemployed man who has run out of insurance with his relief. Iris the source whence all things come, and, if that great source be left in its present chaotic condition, I cannot see how the Government or the people of this country can hope to rectify the present economic position which, in its turn, leads to the social position, which is more conspicuous than the economic position.

I am convinced—I am going to say a number of elementary things with which hon. Members are familiar, but which I think should be said, even though they constitute repetition—that the organisation of our industries on a national basis is essential. Such organisation, coupled with self-government, cannot be called Socialism, because it is the only alternative by which individual enterprise and the great stimulus of individual effort can be kept alive. It forms a bulwark against what I have always described as the cold and clammy hand of State control of industry. This new philosophy—I may call it that, or new technique—of the organisation of industry is not the conception of a few hot-headed Members of this House who may be described as planners. It is in the minds and in the mouths of many members of our industrial community. In my professional life I have met men from all industries, and I am astonished at the volume of support for this suggestion. Two days ago, the chairman of one of the biggest iron and steel companies gave it as his opinion at a directors' meeting that self-government of industry was essential, and would have to come much sooner than later. Producers have come to me and have said: "We cannot go on like this. There are 14 of us putting in tenders for one job, and the available trade is only enough for two of us. We can see no daylight, and no hope of overcoming that difficulty unless we have help in the nature of an enabling Bill to give self-government to our industry." Large sections of the cotton industry are in favour of that, and, as I have just said, large sections of the iron and steel industry also. So are many of the subsidiary industries, like book-binding and printing.

Where reconstruction has already commenced and has been partially successful, results are beginning to show themselves. It is estimated in the iron and steel trade that, owing to some of the recent amalgamations, a reduction of between 10s. and 12s. 6d. per ton in cost of production may be realised. Increasing co-ordination takes place in an industry which has self-government. In the iron and steel industry, negotiations with our international opposite numbers are now more satisfactory, because we are able to meet them as a united industry, and that is the secret of the cure for many of the present troubles of the world. We find that one of our great achievements is that we are seeking for efficiency through central research and through what is probably a novel feature to some Members of this House, and that is central costing for the formation of a national cost, which shall be a yardstick of efficiency for the industry as a whole. I have the privilege of being chairman of the iron and steel costing committee and we are about to produce a book on the subject which I hope will tend to greater efficiency in that industry. I am trying to point out that in the rudimentary stages of reconstruction these useful results begin to appear.

I turn for one moment to the subject of the new industries and how they require self government. My hon. Friend who proposed this Resolution in such a lucid and interesting manner said that perhaps the new industries did not require this reconstruction as much as the older and basic industries. I differ from him in that respect. The canning industry is an industry which was brought into very great prominence by the Government's policy of protecting horticultural products. It had a flourishing year or two and is now faced with a definite redundancy problem. If that industry had had proper self government, I do not believe the present position would have arisen. If you are tackling either old or young industries, organised self government is essential.

I said I was approaching this subject from the point of view of a man who has had considerable experience in the re- organisation of industry. The only alternative I see to the form of organisation which we are suggesting is that ancient method of attrition whereby people hoped that in a comparatively short time weaker members of an industry under free competition would fall by the wayside and that the survivors would carry on a prosperous business over their dead bodies. Well, that is a fallacy. It is a complete fallacy, because on the bodies of these weaker brethren who fall by the wayside new companies are resurrected. They rise from the ashes, and you have a worse condition of competition than you had before; and this bloodletting, this bleeding to death which seems to be a fair simile of the process of attrition continues in a worse state. I do not think the cure for unemployment is the creation of new competition on those lines. I do not believe that the steel trade, if I may take an example, would benefit by the expenditure of £500,000 on the creation of new steel works at Jarrow which would put out of employment a corresponding number of men in Middlesbrough.

I will turn to some of the defects as I see them in what I should describe as a unanimous or rather non-statutory form of organisation or reorganisation in industries. I have watched the process for many years, and I have three complaints about it. First of all, it takes a very long time to prepare and negotiate and to agree upon anything which is worth having at all, because as at present constituted representatives of all the different firms who come together and sit round a table must think of their own people first and try to get the best bargain they possibly can. In other words, they must make sacrifices to the present in order to gain prosperity in the future, and they are not always long sighted enough to accept this point of view. When you finally get the scheme going you find on many occasions that agreement has been reached through compromise. Some essential feature like redundancy or problems relating to labour has had to be modified or even scrapped in order that some form of general agreement may be arrived at. At the same time during the operation of a scheme of that sort without statutory authority it is my experience that there is a lot of back sliding. One would hesitate to call it dishonest work, but you sometimes find people who have signed an agreement and who are prepared to take advantage of the fact that they could not be punished for not carrying it into effect and seize the immediate advantage of breaking the terms of the agreement.

The final complaint is that it is not a permanent thing. Many of the schemes of reconstruction which have been carried through are subject to three months' notice. What is the value of a reconstructed industry whose reconstruction is subject to three months' notice? What we want is a permanency in these schemes, and we must have it. Otherwise, consumers, employers and employed have not that sense of security which they should have. At the present moment we are asking, under this self government proposal, that a majority of an industry should have the opportunity of putting a case before an independent tribunal, and, if that independent tribunal is satisfied that the reorganisation is in the interests of the consumers, producers, and wage earners and their allied industries, we feel statutory authority should be given to such a scheme without delay, and that the industries should be organised on the most efficient basis which the industry itself can conceive and suggest. Time is the essence of our industrial position to-day. We cannot wait for years. We have got to make this movement effective and quickly. Another strong argument in my mind for hastening this movement is that within a protected market we must have efficiency. We cannot stop short of a price association. We must have a price association developed into an effectively organised industry from the point of view of costs and distribution.

At the same time as we are discussing this matter, self government for industry and organisation on a national basis, the House should bear in mind that at this moment some of the great Powers of the world have taken action. The American position, the Italian position, the German position, the position in France, Belgium and Japan should be borne in mind. I am not suggesting that this country should follow in their footsteps. I do not think in many cases that what they have done has been sufficiently proved in the first place or that it has been demonstrated to be satisfactory so far as we are concerned. Each country should have its own inherent method of reorganising its industry, and I do not think we should accept these models of reorganisation in other countries for our own. We should watch out that, when we do have a chance to come back to the export markets, we are not faced with a position of national competition from other nations, and centralised competition against sporadic efforts on our own part. We find that particularly in the case of Japan. We find it in the international steel cartel which is a collection of national units to share the export markets of the world. Unless selling organisation is centralised nationally, we shall find ourselves out of the picture in the export market, and that is the most important thing from the point of view of employment in this country.

I should like to deal with one or two of the criticisms which are directed against our suggestions for statutory self government of industry. I am told that the small man will be forced out of production. I have seen the small man wrestling and struggling against the inevitable for many years, and I have seen him absorbed, and I have seen him liquidated and wound-up and forgotten, and I know the small man is very nervous of his position. Combinations are the fashion and the most efficient methods of standardised trade to-day, and standardised trade will be the basis of our trade in the future. The small man is anxious for this self government. In many cases he is vocal on that point. There are some of them who fear it, but I believe if he has an opportunity of putting his case effectively before an independent tribunal when the whole reconstruction is under reconsideration, he will stand a much better chance of having justice done than if he is left alone to face the inevitable trend of industrial reorganisation, which will leave him not only out of business but out of compensation.

Then we have the complaint that self government of industry will mean monopoly, that you will have industries organised on a national basis putting up prices to the consumer. I believe it is a truism that a monopoly which seeks to exploit the consumer is committing suicide. We have seen wherever we go and wherever we look that the monopolies which at present exist—the chemical industry for one—have not exploited the consumer. They have made it their purpose to keep prices as low as they can in order to encourage the sale of their product. If you take the case of the iron and steel industry, you have a great industry where arrangements have been made with the primary consumers, the re-rollers, the structural engineers and the shipbuilders. The industry is helping them in the export market and trying to co-ordinate prices with them. In any reorganisation of a great industry, you will find within the ambit of that organisation the machinery to correlate prices between the producer and his immediate consumer, and the cases in which the ultimate consumer may have to come before some tribunal for justice will be few and far between.

We are also told that the impulse towards efficient production may be stultified in a nationally organised industry. I believe that any scheme which resulted in deterioration of efficiency would be fundamentally bad. My own conception of a nationally organised industry is that it should sell centrally, because I cannot for a moment believe it is right that 20 salesmen should try to sell the same product to one consumer, and that their only hope of getting the better of one another should be either in some social advantage that they may have or in their power to cut prices, directly or indirectly. I believe, and I am very glad to know that my hon. Friends above the Gangway agree with me, that one should sell through a centralised channel. But I do not consider that one should produce under the same conditions. I think the producer should be left free so to develop his ingenuity and his technique and to reduce his costs as to take every advantage he can possibly get against the ruling price, whatever it may be; and the more money he makes by his efficiency the better pleased I should be. I have not the anti-profit complex. I think that a man has a right to make a profit, and that a reasonable profit is, or should be, a gauge of his efficiency. Therefore I believe that we should endeavour to keep alive that essential desire to be efficient, at the same time centralising our selling efforts.

May I draw the attention of the House to one or two of the more obvious results which will flow from reconstruction on this basis? I believe that at the present moment one of the methods of dealing with unemployment is to increase the spending capacity of all those concerned in industry and shorten working hours. But some of my hon. Friends above the Gangway are trying to plant this responsibility upon industry without giving it the opportunity to fit itself to comply with their demand. What is the use of going to an industry which is struggling and fighting to keep its head above water in chaotic conditions, without sufficient centralisation or organisation, and saying to it, "You must take on snore men; you must pay them higher wages; you must shorten the hours of work" The answer obviously is, "We cannot afford to do it." But I maintain that an industry organised on a national basis would have this efficiency, would have this reduction of costs, and would be able to co-operate more readily in such matters.

Another advantage, as I see it, would be a cheapening of distribution. At the present moment some producers in the Midlands are selling their products in Scotland, and some producers in Scotland are selling their products in the Midlands —the same product in both cases. In my opinion that should be curbed. A central selling agency would see to it that the sales were made from the nearest producer to the consumer, with a considerable saving to the consumer. I believe we should get rid of trade cycles and, as they say in America, iron them out, because, with regulated production, we should get away from the inflated stocks which are the key to these recurring periods of bad trade. I think, also, that finance should be facilitated. I should like to see the Trade Facilities Act renewed, but I should like to see it made available to industries and not to individuals. I think that, if it were available to industries, expenditure being authorised by an industry as an industry, money would be obtained more readily and it would be better spent.

I believe that through the organisation of industries on a national basis we should get international peace, because, while political instability reacts unfavourably on economic stability, if economic stability can be obtained it may bring political stability in its train. In conclusion, I should like to support what my hon. Friend said about the Government. They have done their work well; they have laid good foundations. The next stage is in uncharted land. Most people in the country, including, I think, all industrialists, are anxious at this moment as to the future. They can see no definite trends of policy along which their salvation can come. They are faced with the position that the Opposition have indicated that, when they get their chance of reorganising industry, the first stage will be a financial crisis. In these circumstances I believe that the uncertainty, the sense of insecurity in the minds of the population of this country, industrial and otherwise, will reach a point almost of crisis unless the Government in the near future give us a programme covering the necessary industrial reconstruction.

4.54 p.m.


I am certain that none of us on these benches will have any cause to regret that the hon. Member for Doncaster (Mr. Molson) has brought this Amendment before the House to-day, for seldom have I heard a more telling indictment of the capitalist system by persons who, presumably, are its defenders, than I have heard this afternoon. Both hon. Members who have addressed the House seemed to be laboriously endeavouring to build a sort of half-way house towards the complete socialisation of industry, but neither of them dare say so. They have cloaked what they were really doing in phrases which they thought would not offend unnecessarily supporters of the Government who do not share their particular views. It is impossible to conceive of a more telling indictment than that to which we. have just listened from hon. Members who support the existing economic system. The hon. Member for Darlington (Mr. Peat) told us in the early part of his speech that the present chaotic conditions must grow worse if something more is not done, and the hon. Member for Doncaster even referred us to the fact that the outlook now is worse than it was in 1924. One can hardly imagine a more telling indictment than that, coming from people who apparently rose in the House this afternoon to defend the existing economic system.

I can easily understand the hon. Members' anxiety about our present industrial organisation. They realise, as we all do, that our present industrial organisation cannot get its goods consumed either at home or abroad, and I have no difficulty in understanding how that occasions distress of mind to those who run industry and direct the labour of others. Undoubtedly, it is calculated to occasion very great distress of mind, and it is not difficult to understand the position of both hon. Members in view of the fact that, in the main, they have been loyal supporters of the Government, which, they have told us, has been trying to do something for more than three years. They recognise, however, that all the efforts of the Government have made very little real impression on the problem which has to be dealt with. The hon. Member for Doncaster reminded us that a protectionist system has been established in this country; and, although he did not say so, I am convinced that he realises that the tariff system has been disappointing to a considerable degree, or, at any rate, that it has not realised the promises which were held out on its behalf before it was instituted. I am rather surprised at some of the arguments which have been advanced this afternoon in regard to making industry more efficient when I recall the fact that the advocacy of tariffs was frequently accompanied by the contention that, once tariffs had been established in this country, industry would be able, behind those tariff walls, to reorganise itself, because it would not be so much exposed as it formerly was to the impact of foreign competition.

I admit that the Amendment recognises that the major problem of our time is the problem of unemployment, and faces up to the fact that in the view of both the Mover and the Seconder, the Government are not doing enough. They realise that we are faced with a situation which cannot be left alone, and in that I think most of us on these benches would agree with them. I should like to say something, first, about industry as it is organised to-day; secondly, about industry as the hon. Members who have moved and seconded this Motion would like it to be; and, thirdly, about what some of us on these benches think industrial organisa- tion ought to be in the day in which we are living.

The hon. Member for Darlington reminded us that the industrial organisation of to-day, such as it is, is the result of a long process of growth and development, and he indicated that in the process of its growth it has been governed more or less by the self-regulating mechanism of prices and profits. Of course, at one stage in the process of its evolution, that was all very well, so long as there were in existence ever-expanding markets for its goods. But we all recognise that modern industrial organisation is made up of a complex and complicated mass of competing units. Once it was thought—I am glad to say that neither the hon. Member for Doncaster nor the hon. Member for Darlington agreed with this proposition—that, the more of those competing units there were, the better it would be for everybody concerned. That point of view has been dropped, at any rate by the two hon. Members who have already addressed the House, both of whom now contend that, the smaller the number of competing units, the better, probably, it will be for industry. Apparently, we have now passed into a phase in which the two hon. Members and those who agree with them in the ranks of the Conservative party realise the evils which are involved in a system of innumerable competing units, and consequently they agree, I take it, with the attempts which have been made, by unification and combination, to reduce the number of competing units.

The tendency of some economic theorists and critics of our industrial system—and I noticed it in both the hon. Members' speeches this afternoon—is to talk about the inefficiency and technical backwardness of British industry. I think, however, that that point is often over-emphasised and much exaggerated, and my own view is that, if some of those who deliver speeches of that kind were more familiar with British industry, they would not make them. The fact that I happen to be a member of a Departmental Committee which is investigating a specific problem about which I need not talk at the moment has furnished me with opportunities of going into many industrial undertakings in this country, and I am quite certain that, as regards their standards of efficiency and technical up-to-dateness, there is no room in present circumstances for any improvement whatsoever. Their methods are absolutely up to date, and they are the last word in industrial organisation.

I feel that manufacturers have some ground for resenting some of the statements by critics who are mere theorists with regard to our industrial organisation. Two or three weeks ago I went over an undertaking 20 miles from London, where the raw material came to a wharf at the side of the Thames. The undertaking employed about 3,000 people and in its organisation and machinery it was the very last word in efficiency. Following that, some of us went to the Midlands and looked into the textile industries—particularly in connection with hosiery, which concerns my own constituency—and I am certain that those who accompanied me would come to the conclusion that many of the factories we visited in that particular industry were, again, the last word in efficiency and up-to-dateness. I asked a question in the House some time ago about the importation of cheap Japanese hosiery into this country and the Minister of Labour, wanting to score a point, hailed me at once as a supporter of the Government's policy of excluding cheap goods by means of tariffs. He was quite entitled to do that. While visiting some of these hosiery factories I tried to find out whether it was possible to produce cheap hosiery in this country. I came across a manufacturer whose plant was very efficient and he was actually able to produce artificial silk stockings at sixpence a pair. He told me at the same time that he could make a reasonable profit out of the business, and he allowed us to question his workers, who were getting decent wages.


I want to make it quite clear that neither my hon. Friend nor I indicated or wished to indicate that we considered British industry was inefficient. What I am personally aware of—and I have considerable knowledge of the subject—is that a great many producers in the industries with which I am connected are most efficient. Take the iron and steel industry, for instance, in connection with which you had a report that some of the producing units were on the highest plane of efficiency, while a number of units were not efficient and are redundant.


I completely fail to understand the purport of the two speeches to which we have listened if the construction I am putting upon them is incorrect. In my view, one of the major arguments which both hon. Members advanced was that there was a good deal of inefficiency in British industry. The point I was trying to make was that, in spite of the efficient plant to which I am referring, and the fact that hosiery can be made so cheaply, with all the operatives in receipt of relatively good wages, nevertheless it is perfectly true that the goods so produced cannot compete in the English market with those cheap products from Japan. The only comment I want to make on that is that so far as I can see tariffs are no remedy for that situation. At the moment there is a 20 per cent. tariff on such goods, but if you raised it to 100 per cent., it would not make any difference. The Japanese would still be able to undersell British goods in the home market in that particular line. Let me say here that we on these benches are not old-fashioned Free Traders. Some of us have definitely reached the stage▀×2 and I among the number—where we should do everything we possibly could to protect the working-class standards of life which have been attained in this country. We would go to the length—I would, without hesitation—of prohibiting the importation into this country of goods made by such sweated labour as that which obtains in some Eastern countries. I should not have any hesitation at all about doing it.

There are certain facts concerned with industrial organisation in this country about which we are all agreed. We all agree that under present conditions the country's productive capacity exceeds the demand for its products. Take the coal industry, to which the hon. Member for Doncaster refers. I well remember, during the Debates on the Coal Mines Act, 1930, that the late Mr. William Graham on more than one occasion told the House that if the coal industry in this country was working at full time, with all the pits operating, its output would probably be in the region of 330,000,000 tons a year. We are now in an industrial phase when we cannot possibly sell more than 220,000,000 tons of coal a year. The same is true of textile products, and the same would be true of the products of the boot and shoe industry and of many other commodities. I hope the hon. Member for Doncaster agrees with me, for I hope to carry him along with me as I seek to deal with certain arguments he advances. We should all be agreed that the employment-giving capacity of British industry over the whole range of productive processes is still expanding to some degree. Supporters of the Government find great consolation in that fact. I do not deny that to some degree this employment-giving capacity is still expanding, but that expansion is not regular and continuous. Everybody agrees that the system is subject to pulsations of expansion and contraction which periodically produce chaos. Some Members might not use the word "chaos." They would prefer a much milder word and call it "depression." We are all agreed that there is a greater volume of labour available than can at the moment be profitably employed. Yet, in spite of all that, is it not true that in many industries very long hours are being worked, that overtime is being worked, and that the working-week is abnormally long for some sections of workers?

I can illustrate this point in connection with mining. Everybody knows, and nobody better than the Secretary for Mines, that the mining industry is undergoing a revolution. In that industry there is taking place very rapid mechanisation. For instance, as the hon. Member for Doncaster would agree, there are many collieries in this country which are very modern and up-to-date and which are the last word in efficiency. The hon. Member went down a colliery with me not long ago and there we saw steel arch roadways, steel props, roadways well lighted, coal cut by machine, and mechanical conveyors. It was a really up-to-date colliery—and it is not an isolated instance either. In the coal industry, in many places, you have the very last word in efficiency with every modern device that can be used actually in operation. And yet, in spite of this process of revolution in mining, I am certain that in many cases where part of the mine is being worked by coal-cutters and mechanical conveyors and part of the coal is still hand-got, in that part of the mine where men are using coal-cutters and conveyors, men will be found work- ing six, seven and eight shifts per week and overtime is not uncommon. In the same mine other men will be working only three or four shifts per week.

I suggest that when hon. Members are addressing themselves to this problem of British industrial organisation they should take cognisance of these facts to which I am drawing attention. I am very glad that the Lord President of the Council some time ago made an appeal to employers to cease the working of overtime. Will the President of the Board of Trade tell us whether the Lord President's appeal had any general effect on employers? And could he give us any information whether his appeal has bad any effect on coalowners working mines by modern machine-mining methods? We are all agreed that, on the one hand, we have a lot of idle workers and idle machines, and unused resources both natural and monetary; and that, on the other hand, there is a great lack of consuming power. Working as uncoordinated units the various industrial plants in this country are pouring their goods into a market which, periodically, they glut and choke with commodities for which at such periods no sale can be found. I suggest to the hon. Members who have submitted this Amendment to the House that that cannot be called industrial organisation at all. It is not industrial organization—it is anarchy.

I am astonished at the hon. Member for Darlington suggesting that we can relieve this problem by leaving the producer free to do as he likes. That is where the anarchy begins. That is the source of the anarchy, and none of this talk about centralisation and reorganisation to which both hon. Members have referred can be effective if you leave the individual producer free to do as he likes. There is a point which arises out of that anarchy which we all very much deplore. Let me for a moment turn my attention to the state of things which the hon. Member for Doncaster would like to see. He recognises the bad social conditions arising from the prevailing economic structure. What has he been advocating? He did not use the word—which, I agree, was an overworked word for a long time —but what he was really advocating was rationalisation. He did not use the word; it has temporarily gone out of fashion; but that is what he really wants—the modernisation of inefficient plant. Is he not very well aware of the fact that many efficient plants are standing idle, and that many efficient plants cannot find work for those who usually man them?

What are the reasons for suggesting that this course should be pursued? He wants to reduce the unit costs of production, so that even the present wages of the working class may buy more goods than they do at present. He wants to increase Britain's competitive power in the markets of the world. He has a vision, apparently, of Briton's industrial machinery and organisation being so efficient that the commodities it turns out will be so good and cheap that all the world will be clamouring for them. I really cannot accept that in the present condition of the economic life of the world. He sees Britain once more as the workshop of the world. Perhaps he overlooks the fact that there are now many other workshops in the world besides Britain, and the changes he seeks to make in our national workshop would be quickly followed by similar changes in other national workshops. Therefore, he has put forward no proposals which can solve or even alleviate our problem. He merely desires to postpone facing up to the real problem with which we have to deal. He is also perturbed about the idle money in the banks. To him there is a job to be done, and the means are at hand to do it. On the one side, there is unused capital, and, on the other, bad organisation and obsolete machinery. Why should you not use the unused capital to replace the obsolete machinery? Then he goes on, in effect, to say that with new resources and new technical efficiency we should set to work again pouring out our goods and capturing the markets of the world.

That, roughly, is the summary of the thesis that underlies the speech of the hon. Member who moved this Amendment. I wonder whether in this connection he has ever studied the details of the national income? Has it not some relation to this problem? Does he not know that a big minority of people have incomes which they cannot spend and which they must reinvest, and that profitable sources of investment are scarce at the moment. So money is not being used. But does he not know, on the other hand, that there are millions of people with insufficient incomes who would spend if they could, and would be delighted to buy many of the products of our industrial organisation if they could possibly buy them. What does he propose to do about that fundamental problem? Perhaps one of his hon. Friends will tell us at a later stage in this Debate, because, unless he can solve that problem, it is certain that none of the suggestions which he has put before the House to-day will have any real effect upon the situation which exists in this country.

In conclusion, I will say a few words on the industrial organisation which we really want. These privately-owned industrial units plunge further into these periodic gluts' with which we are too sadly familiar, and, following upon these periodic gluts, there is a trail of suffering, misery and despair, which, in a society with a sane and sensible economic system, would never occur. There is no opposition on these benches—let me make this quite clear—to the improvement of the technique of industrial production and organisation as such. Everyone of us on these benches would do everything he possibly could to further the throwing of work on to the machine and relieving human labour of some of the laborious toil in which it has still to engage. We have no sort of opposition whatever to throwing increasingly the burden of work on to the machine. But, as we throw that burden of work on to the machine, as industrial development inevitably does, we want to see, as the result of it, the industrial resources of this country used to their fullest extent in order to bring about the material well-being of the millions of the working-class population of the country. We do not find in the suggestions which have been put to us this afternoon by the hon. Members who have addressed the House any proposals likely to bring about that desirable end, but we are not adverse to their suggestion that a departmental committee should be set up. It would be a nice way out for the Government, among other things, but we are sure of the fact that, unless fresh minds are brought to bear on this problem, and there is a fresh outlook and an entirely different method of dealing with it, and some fundamental reconstruction of our economic lot, we shall have talked in vain here to-day. Consequently, though we welcome the Amendment moved by the hon. Member for Doncaster and this discussion, and do not disagree with the setting up of a committee, we hope that, if such a committee be established, it will turn its attention to dealing with this problem in unusual and uncommon ways, and that the members of it will tackle the problem with fresh minds and a fresh outlook determined to build out of the chaos and confusion of to-day a saner and more humane economic structure.

5.23 p.m.


As this is the first occasion that I have had the privilege of addressing the House, I hope that it will be good enough to give me that measure of indulgence which it usually accords to novices. The House must have been deeply impressed by the very able case that was put by the hon. Member for Doncaster (Mr. Molson) and the hon. Member for Darlington (Mr. Peat). They put forward with great clarity many of the more superficial attractions of the economic scheme which, for the purposes of this Debate, we are calling planning The speech of the hon. Member for Mansfield (Mr. C. Brown) was very refreshing to capitalist ears. Attractive, however, as the theories put forward by the planners undoubtedly are, I should like to be allowed to direct the attention of the House for a few minutes to some of the dangers that I see in those theories. The planners ask that a substantial majority in an industry should have the right to coerce the minority, however unwilling they may be, into federations or cartels; but before this extreme power is given to any industry, surely it is necessary to prove that such power will be used in the interests of the community, and that the interests of the industry itself will be best served by such measures. I suggest that in most cases this is unlikely to be so.

The adventurous spirits in industry arc always in a minority, but it is to those adventurous spirits that the world owes such progress as it has made. I cannot imagine that the majority of the coaching industry in the 19th century would have welcomed the arrival in their midst of wild fellows advocating the advantages of steam traction, nor do I recollect that the transport industry in this country rejoiced very much at the arrival of the motor car, while the federation of shop- keepers would hardly have given a hearty welcome to Mr. Woolworth. Monopolies have been regarded by Parliament for many centuries with the greatest suspicion, and rightly so; the objections to them are as great to-day as ever they were in the past. A State monopoly which was able to dictate prices to consumers without that fear of competition, which now keeps even the strongest cartel on the qui vive, is not likely to work in the interests of the community. After all, the main object of fixing prices must be to fix them above the ordinary level of the law of supply and demand, otherwise there is not much object in having price-fixing agreements, and "orderly marketing" really means the raising or the maintaining of prices. Pools and marketing boards have always had this object in view. The result of such a policy, however much it may be denied by the hon. Members who moved and seconded the Amendment, must inevitably be, in my view, restriction of sales and eventually restriction of production.

I doubt very much whether there is any advantage in artificial restriction. It is urged by the planners that the restriction will be relaxed if the demand grows, but are associations of producers likely to be good judges of the interests of the consumers when they are not hampered by competition? There is, after all, no such thing as demand irrespective of price, and as long as price exists there is an unsatisfied demand for the product. It is true that the time may come when it Will pay producers better to produce something else, and they may find it more profitable so to do, but even if they had the support of and were watched by a strong independent committee, I should not be inclined to trust producers to form an altogether satisfactory opinion as to the price at which their products should be sold. Restriction involves restriction of labour and restriction of production. At the best, restriction of labour means that no more is produced, but that more people do the work. That must mean either a reduction in the income of the individual worker, as in the case of the weaver, who, perhaps, is used to tending four looms and is only permitted to tend two, or, if it is assumed that the same weekly wage is to be paid for less work, the inevitable result is increased cost per unit, less goods sold, and, in consequence, eventually more unemployment. I will try to illustrate this point in a few minutes by quoting some figures of unemployment in the United States of America, As for restriction of production, if it succeeds it deprives those who would have gained by greater cheapness, of the benefits of technical improvements, and it therefore benefits the producer at the expense of the producers of other commodities. Restriction all round must lead to general impoverishment, and a rise in prices brought about by this would be a sign, not of increased wealth, but of increased poverty. I do not know whether hon. Members saw a letter some time ago in the "New York Commercial and Financial Chronicle," on the question of the American pig restriction scheme. May I be allowed to quote from it, because it throws a light on the lengths to which restrictionists are inevitably forced: Dear Sir, A friend of mine in New England has a neighbour who has received a Government cheque for 1,000 dollars this year for not raising hogs. So my friend now wants to go into the business himself, he not being very prosperous just now. He says, in fact, that the idea of not raising hogs appeals to him very strongly. Of course, he will need a hired man, and that is where I come in. I write to you as to your opinion of the best kind of farm not to raise hogs on, the best strain of hogs not to raise and how best to keep an inventory of hogs you are not raising. Also, do you think capital could be raised by issuance of a non-hog raising gold bond? The friend who got the 1,000 dollars got it for not raising 500 hogs. Now, we figure we might easily not raise 1,500 or 2,000 hogs, so you see the possible profits are only limited by the number of hogs we do not raise. One of the effects of restrictionism is to maintain the value of capital invested, and there are always those who are anxious to try to preserve capital in this way. I believe, however, that it would be wholly wrong and contrary to the interests of progress to try artificially to preserve the value of capital by restricting, for example, the business which a motor transport concern might do in a certain area in order to preserve the capital invested in a railway company. The worst of restrictionism is that it spreads. When, for example, the American farmer was restricted in the acreage of wheat he might sow, he immediately proceeded to produce the same amount of wheat by a greater use of artificial manures. One difficulty inevitably leads to another. It seems to me that restrictionism is really of the very essence of this sort of planning. As Professor Robbins says in his recent book If planning is not a polite name for giving sectional advantages to particular industries, what does it denote but Socialism—central control of the means of production? A planned economy introduced by right-wing parties might, for a time, until the parties of the left got control, acknowledged certain rights to the receipt of income, in the past associated with the ownership of property, which would be destroyed at the outset by a purely Socialist dictatorship. But, if it were to be true to its name, it could not acknowledge the substance of ownership, the right of individual disposal of the actual instruments of production. For planning involves central control. And central control excludes the right of individual disposal. Nothing but intellectual confusion can result from a failure to realise that planning and Socialism are fundamentally the same. Have those Conservative Members of Parliament who are now flirting with extreme ideas of planning really faced up to what such a form of planning means and involves They do realise that it means, as the hon. Member for Darlington has indicated, the destruction of all small enterprises, the doom of all small shopkeepers and farmers. Do they not think that it is worth preserving that independence of character which is alone gained by real responsibility? Do they not think that the people of England are far too individualistic and fond of liberty to want to have anything to do with things of this sort? Even if greater efficiency were attained—and that I profoundly disbelieve—would it be worth the sacrifice involved? Do they even believe that these huge structures, to control which it is necessary to find supermen, who do not exist, are for the benefit of the community? Have they thought of the unparalleled catastrophe which a big failure on the part of supermen has brought in cases where a plan goes wrong?




Yes, £70,000,000 of debts owed by one man. It is incredible. We are fortunate in this country in that we move slowly, and we have had the advantage of watching the great experiments in planning in Russia and in the United States of America. I do not think it can be doubted that the new deal in America is proving a failure. It had two great objectives—the recovery of the farmer and the solution of the problem of unemployment. The recovery of the farmer, in so far as it has taken place, must be attributed to the disastrous drought of last year rather than to government action, and the reduction of unemployment has not been achieved. I quote from the report of the Commercial Counsellor to His Majesty's Embassy at Washington the figures of unemployment in the United States. In April, 1930, according to the figures of the American Federation of Labour, there were 3,100,000 unemployed. The average of 1931 was 7,400,000, and of 1932, 11,489,000, which had fallen by December, 1933, to 10,700,000. By November, 1934, it had increased to 11,459,000. And do not forget that the cost of the new deal, to quote the words of the Commercial Counsellor at Washington, is like the cost of waging war, on the whole not currently paid for but financed by loans, with a shifting of the burden from the present to the future earnings of the community. The truth of the matter seems to me to be, that planning in its very essence must destroy the confidence of the business man, and it is to a return of confidence in this country, for which we are indebted to the National Government, that we owe the fact that unemployment has declined here while it has increased in the United States. We cannot be too grateful to the Government, and in particular to the Chancellor of the Exchequer and the President of the Board of Trade, for the courage with which they have resisted the tempting proposals that are constantly being made for a new deal on similar lines here. If only we can get another period of sound government, confidence will be increased again. The unemployed can only be reabsorbed into industry by the restoration of our export trade, and this in its turn can only be achieved by a continuance of the policy which the Government are now pursuing. To get that increased confidence the Government must and will strive, and are striving, continually for world peace, for the cessation of economic war, for the stabilisation, as soon as possible, of currencies, for the lowering of trade barriers, for a greater flexibility both in wage rates and in cartel prices, and, finally, for an appreciation by governments all over the world that it is time they gave up interfering in business, and went back to their own business of government. Mr. A. P. Herbert once wrote a happy couplet, entitled "The President of the Board of Trade," which, although it could never by any stretch of imagination be applied to the present distinguished occupier of that high office, sums up so well what I have had in mind this afternoon that I will conclude by quoting it to the House: This high official, all allow, is grossly overpaid, There wasn't any board, and now there isn't any trade.

5.41 p.m.


It fell to my lot a few weeks ago to follow the maiden speech of the hon. Member for Wavertree (Mr. Cleary), and to-day I have the privilege in voicing to the hon. Member who has just spoken what I feel sure will be unanimous congratulations of the House on the admirable speech he has delivered, and a cordial welcome to our Debates. He has spoken with clarity, with conviction, with courage and not least with humour, and if his views may not command absolute and complete agreement perhaps they are none the worse for that. To a Member like myself who entered this House more than 30 years ago, and is devoted to its service, it is a great pleasure indeed to welcome a young Member of ability and sincerity, who will help to carry on in the years to come the great traditions of this Assembly. The hon. Member struck a cautionary note, and has urged us not to be carried away by the force and cogency of the speeches of the Mover and Seconder of the Amendment. Yet I think that there is a general feeling in the House and country that in these matters of industrial organisation we cannot in these days take a merely negative view, that it is not enough to say that we must rely simply on private enterprise and energy, valuable and indeed indispensable as they are. The framework of our industry, its degree of organisation, is undoubtedly a matter of immense importance, and when we compare the successes which have been won in various spheres in other countries by well organised industries we cannot complacently assume that everything is perfect in Great Britain in this respect.

It was my duty, nearly 10 years ago, to preside over an inquiry into the organisation of one of our most important industries, the coal industry, at the behest of the then Prime Minister who is now Lord President of the Council. We sat for six months. We were sentenced indeed to six months' hard labour. We investigated every aspect of it, and had the advantage of the most expert advice. We came to an absolutely unanimous conclusion on all points. The main conclusion, in brief, was that the coal industry was suffering from inadequate organisation, that it was divided into hundreds and hundreds of separate units which were too small to be economically right, and that a concentration of these units was essential; and that to that end the nationalisation of mining royalties was an indispensable step. Let me remind the House of the composition of that commission. It was a small commission of four members, and among those members were Sir Henry Lawrence, who is now the Chairman of Vickers, Sir Kenneth Lee, one of the ablest business men in the Lancashire cotton industry, and Sir William Beveridge, one of our most capable economists. After giving the most careful consideration to this matter, we were all emphatically of opinion that it was of vital importance that the nationalisation of royalties should be effected. We did not recommend the nationalisation of the mines, but we said that the nationalisation of royalties was essential to the reorganisation of the industry. There followed in 1930 the Bill which was introduced by the Labour Government, and into that Bill was inserted, as a matter of fact on pressure from these benches, a provision for the establishment of a Reorganisation Commission. That Commission has been labouring for nearly five years. Its results are exceedingly small. It has been faced by obdurate and obstinate resistance on the part of many of the interests affected.


By the people who know the business.


That Commission came to exactly the same conclusion as the Royal Commission and every other inquiry of recent years, that unless the State can exercise the power of a landlord in mining leases and secure proper organisation of the industry by that means, no effective progress will be made. When the present Government appointed a Commissioner to investigate the conditions on the North-East coast the Civil Lord of the Admiralty, who presented an able report which has been justly praised, came to precisely the same conclusion. What has been done? For nearly ten years this measure has been advocated by every impartial inquiry that has been made into the industry, and the position is exactly the same in the end as at the beginning. We are told now by the Government that the matter is under active consideration. I have no doubt it has been under active consideration for the last 10 years. We feel that it ought not to be under active consideration for another 10 years.

When the hon. Members who moved and seconded this Amendment propose that a further inquiry by another committee should be made into all these matters, we legitimately ask at the outset that at all events the first step should be to carry out the recommendations of all the inquiries in the past, unanimously made by all the members of every Commission. Then with regard to the other proposals that my hon. Friend has made to-day, many of them, I think all of them, it may be said, are by no means novel. They too have been the subject of various inquiries and investigations in the past, official inquiries and non-offilcia1 inquiries. In 1927, under the auspices of my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George), there was set up an unofficial inquiry into the whole organisation of British industry. Its members included several ex-Ministers, and they were assisted by several of the chief political economists in this country and by a number of business men. We sat for many months, made a most painstaking inquiry, and published the resulting a book, "Britain' Industrial Future," which appeared in 1928.

If my hon. Friends will look into that book, they will find that almost all the proposals they have made to-day are in-chided in one form or another—that industries should be grouped together; that there should be certain powers exercisable under proper conditions by what we called public corporations, which would govern those industries that are natural monopolies or quasi-monopolies; that we should not seek to keep all our industries in separate highly competitive and unregulated units, but should rather encourage the movement for concentration, provided always that certain conditions were fulfilled—conditions which we described; and that the trade associations should be placed upon a statutory basis and should be given certain limited and specified powers. We went further and said that in order to secure the effective adoption of all these measures a new Ministry should be created, a Ministry of Industry, which should absorb some of the existing departments or sections of departments, and make it their main business to see that British industry shall be highly effective and efficient in all its branches. It seems absurd that a great nation like this; dependent for its very life on industry, should have a Ministry of Agriculture, a Board of Trade dealing with commerce and a section dealing with mines, but should have in the Cabinet no Minister of the first rank whose whole business should be to assist our industrialists to make the organiation of their trades as efficient as it can be made.

During the eight years that have passed since those recommendations were made—they did not have the authority of an official report—hardly any progress has been made in these directions, which have been so forcibly advocated to-day by the hon. Member for Doncaster (Mr. Molson) and the hon. Member for Darlington (Mr. Peat), in their admirable speeches. There has been only one new achievement on these lines: The cotton industry has come to Parliament and has asked for an Act which will give statutory validity to wage agreements voluntarily entered into by employers and employed. That was essential, because the voluntary agreements that had existed were being undercut by competitive forces and were made futile and inoperative, working the grossest injustice between good employers who paid the standard wage and those who did not do so. That has been done. The President of the Board of Trade took up the matter, proposed the Bill, Parliament readily and almost unanimously enacted it, and it is now the law of the land. It may prove to be a model for other industries in days to come. That is practically the only measure of importance which in all these years Parliament has adopted.

The dangers are real. They have been emphasised by the hon. Member who has just spoken. There is a danger that the great industrial corporations, exercising their functions over very large sections of industry, may become so great as to be unwieldy and may become bureau-cratised, and that instead of having the vital energetic action of individual employers you may have a few able men at the top, but below them a machine so complicated that a great bureaucracy has to be set up to work it. That is the real danger. Any who are charged with the administration of these matters must be on their guard against it. Some of them are aware of this danger and are successfully coping with it. Private initiative is absolutely essential. Anyone who studies industry knows that what matters most is management. You may have whatever plans you choose on paper, but unless you have individual people who are competent, honest, active and successful in what they undertake, your industries will not prosper.

Although to-day hon. Members have criticised our industrialists, it is right that in this House tributes should be paid to the very strenuous efforts that have been made during these last few years of depression in many industries to make head against the great difficulties which have surrounded industry. It is undoubtedly true that in many of the new industries particularly, and in some departments of the old, men have come forward and have risked their capital and branched out into new lines, have conducted admirable works of scientific research with a view to improvement of their methods, and have greatly bettered their salesmanship, with the result that we have to some extent in those departments been able to make head against the great depression. An interesting point is that most of the men who have so distinguished themselves are the very ones who are most in favour of a large measure of organisation for the whole of the industries in which they are engaged. The other great danger is that to which the hon. Member for Rushcliffe (Mr. Assheton) has drawn attention, the danger that comes from monopoly, the danger of restriction, the danger of an undue rise in prices. None of us wishes to see goods sold, whether agricultural or industrial, below the cost of efficient production. The producer, whether the farmer or the manufacturer, is of course entitled to a fair reward for his labour if his labour is really efficient and if his product is one which the natural conditions in this country make advantageous. But there is a danger that, if you group people all together in an industry they may not be content with these perfectly legitimate and proper profits, but may go beyond them and use their monopolistic powers in order to squeeze the public. Although the hon. Member who seconded the Amendment said that it was not to their interest to do so, and that it would not be found that the evils of monopoly would ensue upon the measures he proposed, experience has not in fact always endorsed that view. In America and other countries it has been found that where a complete monopoly has been created and is protected from outside competition by a high tariff so that competitors cannot bring prices down to a normal level, the public is squeezed, undue profits are made and vast fortunes built up by the use of these monopolistic powers. That is why in the report to which I have referred we suggested that where a monopoly or quasi monopoly was created, it should be the subject of special statutory control, that there should be created a new class of organisations which we called public corporations, and that they should have special State inspection and regulations in order to avoid these dangers.

My hon. Friend the Member for East Wolverhampton (Mr. Mander), if he has the good fortune to catch Mr. Speaker's eye, will develop further son of these matters, with which he has close personal acquaintance. Let me say this in conclusion. However much our British industry may improve its methods, however much it may develop scientific research, however much it may organise its operations, if the markets of the world are closed against it, it cannot prosper. As the hon. Member for Rushcliffe said, that is of the very essence of the whole situation. But even if the markets of the world were open to us, if the peoples of the world are impoverished and cannot afford to buy the goods of high quality which are the staple products of this country, our industry cannot prosper. The conclusion of the whole matter is this: That the welfare of any one country is dependent upon the welfare of the whole world; that no one country can prosper except in a prosperous world. Employment, production, commerce, peace—these four are inseparably linked together, and a wise statesmanship must simultaneously seek to promote them all.

5.59 p.m.


I wish to address the House for a few minutes, because I think I take a view on this Amendment which is rather different from any view hitherto expressed. I would begin by adding my tribute to my hon. Friend the Member for Rushcliffe (Mr. Assheton) on his maiden speech. I have never heard a maiden speech which so clearly and incisively expressed a definite point of view. I congratulate my hon. Friend warmly on having shown that he is one of those people whom this House perhaps too much lacks, a born, debater. But I think he was, very largely, debating an issue which was not raised—certainly not1 by the speech of my hon. Friend the Member for Doncaster (Mr. Molson). One could warmly agree with everything that my hon. Friend the Member for Rushcliffe said, but as warmly agree with everything that my hon. Friend the Member for Doncaster said. I am not sure, however, that I agree entirely with either of them. I want the House to consider this question: What is the real political issue which we are discussing? I agree that industry and commerce are not matters with which politicians can deal efficiently. We in this House therefore ought to concern ourselves chiefly with the broad political issue which is raised and there is a broad political issue at the present moment, on which many future Elections will, I fancy, be fought. It is this. We have a state of unemployment. We are caught in that vicious circle of under-consumption and unemployment, in which the whole world has been struggling since the War.

There are two broad proposals for remedying that state of under-consumption. One is a proposal, increasingly represented by hon. Members opposite and by their friends of the Labour party outside. It is the expedient advocacy of which they share with other so-called reformers like Major Douglas, of distributing token purchasing power to the consumer in order that consumption may thus be increased. That is not a proposal which I intend to argue this afternoon. The only alternative to that subsidisation of the consumer by the manufacture of currency is to revive consumption in the only way in which it has ever been revived in the last century, namely, by the reduction of the costs of production and reduction of prices, a deliberate paring of prices so as to reach a deeper level of demand. Having reached that deeper level of demand you get an increased demand which enables increased production, increased employment and increased wages to follow and thus you get out of your vicious circle into what I may call a virtuous circle. That is the political issue with which, not in this Debate only but in all our policy, we have increasingly to deal.

If, as the vast majority of hon. Members do, we agree that that is the way in which the vicious circle must be broken, it may be asked, why has it not been broken by the free operation of industry in the last few years? I know that there is one possible answer to that question— an answer which was indicated though not emphasised by the hon. Member for Rushcliffe— namely, that that failure to break the vicious circle has been due to the state of international trade and to restrictions placed upon international trade, and that the vicious circle can only be broken by an increase in our export trade. I believe that to be untrue. I believe that restrictions on international trade are only a symptom of the disease, and that the foreign market is in the same position as the home market. The texture of demand has changed. The character of consumption has changed, and it has changed, broadly speaking, in this way. Hitherto the industry of the civilised world has been dealing with an expanding market. It has never done much more than scratch the surface of a continually expanding market. In the old days there were always numbers of new little niggers to whom Mr. Stiggins could send moral pocket handkerchiefs. That situation has changed owing to a number of factors, such as the industrialization of other countries and the holding down of the growth of population until there has been reached throughout large areas in the world a state in which population figures are practically stationary.

Owing to these factors, and owing also, I think, to the taking of the first bloom off great markets like that of Africa, we are now faced, as we have never been faced before, with the problem of the intensive cultivation of a market instead of ploughing virgin land. It is necessary to reach a deeper level of demand. It is necessary to study the market as it has never been studied before. For that purpose, the existing organization, or the ninetenth century organization of industry, is in some ways ill-adapted. After all, one is only repeating what every sales manager knows, and what various committees and commissions have reported, in saying that our sales organization in industry has been too largely concentrated on extension into new markets, and has never been so organized as to study the market intensively. Even if it had been so organized, your sales organization, after studying the foreign markets, would not have been able— it has never been able—to influence your production factories at home to the extent necessary to change the character of production so as to meet a new, deeper and wider level of demand.

If that statement of the problem be more or less accurate, what, then, is the duty of the Government in regard to it? My hon. Friend the Member for Darlington (Mr. Peat) in a speech which was, despite what he said, mainly devoted to the problem of certain old industries, made one statement with which I warmly agree, namely, that any reorganization of industry should take the form of unified selling organization and independent, individual producing units, rather than of any aggregation of producing units. That, I believe to be profoundly true. I believe that the common superstition which is going about the world to-day, that there is a tendency to more and more intense aggregation of producing units is a fallacy. I believe that there are many influences tending, if anything, towards a greater individualization of producing units, and the one thing, to my mind, which is holding up that individualization of producing units is the lack of any joint selling organisation, and the fact that the small producing unit is unable to carry out that study of the market which is essential in order to expand producing power to-day. If there be anything in that view, is it not possible that the way to get what I believe the vast majority of my party wish to get, namely, a far greater freedom and volume of individual private enterprise in production, may be by the better organization of marketing?

Now I come to my main criticism of the speech of my hon. Friend the Member for Doncaster. I think he had the idea of compulsion far too constantly before his eyes. Compulsion is a very necessary element where you have an industry which, for any reason, has reached its full possible development. Clearly when the railways in this country or any other country were fully developed, it became essential to stabilize that monopoly under statutory powers. The worst thing you can have in railway development in any country is continual competition by new tin pot railways. Everybody agrees with that view. It is a question whether the other industry mentioned may have, on its heavy side or at any rate on its structural side, reached that position, but when my hon. Friend says that the same thing applies to the canning industry, I ask him to look at the way in which the canning industry has been over done. Surely there is, in that case, no necessary element of compulsion at all. What the canning industry had not was a scientific marketing organisation which would have told any intending entrant into that class of production that there was no extra market available except by a certain reduction of price. The very existence of a voluntary marketing organization means that there is an organization which acts in a selective capacity and by its mere information chokes off ill-advised competition in that market.

If, as I believe, the function of Government is not to try to lead industry in a way in which industry does not want to go just because the Government have formed a certain idea of the public interest; if as I believe the duty of a Government is to help commerce and industry along the main lines of their obvious trend, then ought not our main demand on the Government to be that they should remember the course on which this country embarked 20 years ago, and ask themselves whether that course has not been broken off much too soon? Rather more than 20 years ago, the Government of this country deliberately set itself to establish on a voluntary basis research associations for industry, by co-operation with the industries— a co-operation encouraged by subsidy. My right hon. Friend the President of the Board of Trade had a good deal to do with that policy in its early stages, and that policy has been, at least up to a point, remarkably successful. In connection with the cotton industry we have in the Shirley Institute the finest cotton research organization that exists in any country in the world. It is however unaccompanied by any organization which would link up that research with the study of markets. It is true that the Shirley Institute has undertaken, on at least one occasion some study of a market situation. But surely what the cotton industry needs most at the present moment is a scientific marketing organization, corresponding to the research organization which it has built up, and closely linked with it.

Does that general line of policy, the encouragement by the Government of the establishment of voluntary marketing organizations in industry, conflict with the proposal that certain industries which are in a state of peculiar difficulty, like the cotton industry, should also be given certain compulsory powers of reorganization? I do not think there is any conflict between the two, but I do increasingly regard that form of compulsory reorganization as an exceptional measure to deal with an exceptional situation. My complaint there against the Government—and it is not only against this Government, but against previous Governments—is that, after all, we have been faced, as my hon. Friend the Member for Doncaster said, by this problem of unemployment, distress, dislocation, and confusion in Lancashire for more than 10 years. We have had discussion after discussion and negotiation after negotiation, and we none of us, except one or two on the inside, quite know what has happened in the back rooms of the Board of Trade, what industry has asked for, or what the Board of Trade has refused to agree to. That is why I am so anxious to have some statutory form of regular procedure by which the proposals of industry in such a case can be openly stated and fully worked out by a regular, recognized machine.

But, if my hon. Friends will allow me to say so, that exercise of compulsion in the reorganization of certain industries seems to me to be the least important part of the case that we should urge upon the Government, because, after all, the increase in consumption which you wish to bring about in order to break your vicious circle is an increase in the consumption of consumable goods, and, with the exception of the cotton industry, it is true that these schemes of reorganization are mainly proposed for the reorganization of industries producing capital goods. That is really to begin at the least important end. If you are to break the vicious circle, it is the consumable goods, in all their varieties, which you need to cheapen and in regard to which you need to dig down to a deeper level of demand. For this purpose, you have to establish marketing organizations which can enlist the voluntary co-operation of an enormous number of small and medium-sized producers. It is not, I think, a problem which can ever be dealt with by rough and ready legislation, but it can be dealt with by administration. It is, after all, administrative action by the Government which we are pressing on the Government on this occasion. We ask from the Government a statement of policy not about an enabling Bill for the application of compulsion to industry, but a statement of policy on the broad lines of the question put by my hon. Friend the Member for Doncaster, a statement which covers a wide field and a whole range of topics on which we do ask the Government to give us an idea of the broad, long-term policy which it has in mind.

6.20 p.m.


The Noble Lord the Member for Hastings (Lord E. Percy) started to deal with this problem, as he said, as one which raises a broad political issue, and he stated that it was the policy of those on these benches to distribute token purchasing power, whereas, if I may say so with respect, that is the first time I have heard that such was the policy of the people on these benches. We have no policy that is similar to that of Major Douglas or any of these social credit or various other monetary schemes. We believe, however, in the necessity for planning production for the use of the consumable commodities in regard to which the Noble Lord was saying the trouble is that they cannot at the present time distribute them.


I was basing my statement of Socialist policy on as intelligent a study as I could give to Mr. G. D. H. Cole's last book on the "Principles of Planning".


I am afraid I have not read his last book. I have only read the last but one, but that, of course, does not happen to be the policy of the Labour party, although I have no doubt the right hon. Gentleman has interpreted the book rightly. The right hon. Gentleman says that one has to proceed somehow or other by bringing about a reduction of costs, and so a reduction of prices, in order to get down to a new bottom of distribution. I think his own expression was "a deeper level of demand." Surely that is precisely what was tried from 1870 to the end of the last century— the reduction of wages to low levels in order to cheapen production and thereby to lead to the good spiral of increase of distribution and production, and it is nothing more, although it is approaching it from a slightly different angle, than a general inflationary scheme, by which you get the same readjustment of proportions, the one by going upwards and the other by going downwards. We certainly do not believe that any such attempt can conceivably solve the inherent contradiction which lies in the present scheme.

The right hon. Gentleman said one thing with which I entirely agree, and that is that always prior to the War capitalism had found itself in an expanding market. The capacity for production was unable to keep pace with the expansion of the markets all over the world. We were, in association with one or two other countries perhaps, still substantially the workshop of the world, and, mass production having hardly come on the scene at that date, the expansion of productive capacity was less than the expansion of markets. But since then we have entered a new state of affairs, wherein capitalism finds itself no longer with those expanding markets, but with the potential productive capacity in fact greater than the market capacity, and that is the changing circumstance to which the right hon. Gentleman quite accurately referred as having made this dislocation in the system so obvious and so noticeable and so tragic in the world in the post-war era. He says that in his view some voluntary solution, some voluntary action by industry along the lines along which it is naturally proceeding, should be encouraged by the Government.

I think his argument as regards voluntary procedure by capitalist industry was sufficiently dealt with by the hon. Member for Darlington (Mr. Peat), who has perhaps as wide an experience as anybody in this House of what one might call gentlemen's agreements. When anybody comes into my chambers and starts the conference by saying, "This has to do with a gentlemen's agreement," I always know that he is either asking me how it can be broken or whether it has been broken, because that seems to be the chief incident of what is known as a, gentlemen's agreement. A legal agreement, of course, is a different thing altogether, the difference being that you have to keep a legal agreement, and the law can get at you if you do not, but a gentlemen's agreement is something which you are only honourably bound to keep, and the law cannot get at you if you break it.

The hon. Member for Darlington made it quite clear that you cannot attempt to reorganize industry upon the basis of such voluntary agreements, because, for the different reasons which he gave us, it has been found so often in the past that through their lack of permanence and what he talked of as a lot of backsliding and the very long time which they take to complete, it makes that type of arrangement or agreement impossible to operate. If anybody wanted to know how difficult it is to organize capitalist industry, not merely by voluntary agreement, but by actual legal agreement, he need only ask the Minister of Mines, as to his experience with regard to the arrangements as to minimum prices which have been made legal among the coalowners, to find out how many of them have ever kept to the arrangements which have been made.

If voluntary agreement is of no use, the question arises as to whether a compulsory agreement within capitalism it- Self, within our existing economic system, is one that can bring any alleviation or improvement in the present difficulties of the situation. I think it is apparent from the discussion to-day that laissez faire Liberalism has gone into the limbo of the long-forgotten past. Nobody to-day even suggests—not even, I think, the right hon. Member for Darwen (Sir H. Samuel), with his corporations and his building-up of control of every kind —that there is any possible advantage to be gained from uncontrolled individualism. Therefore, the question arises as to what form of control is to be imposed. Is it to be a voluntary control within capitalism; is it to be a compulsory control, as the hon. Mover and seconder of the Amendment suggested; or is it necessary to get rid of the whole basis of the economic system in order to make planning effective, as has been demonstrated by the hon. Member for the Rusheliffe Division (Mr. Assheton), in his very able speech, if I may say so, and in the passage which he cited from, I think, Professor Robbins's book? If there could be a, solution within our existing system by voluntary or compulsory control, it would be far better, and there would be far less disturbance and difficulty entailed, but if we look around the world, the first thing that we must notice is that nearly every conceivable kind of control has been tried in one place or another, as, for example, the experiment of President Roosevelt in America, which has shown itself to be entirely incapable of coping with the situation.

May I first examine for a moment the sort of lines upon which the proposals which are made by the Mover and Seconder of the Amendment proceed? You are to give industry within its own ambit complete powers of controlling all the units within that industry, all the prices and, presumably, the quantity of production. You are going, in fact, to create a paradise for the monopolist and the cartelist, the thing of which they are always dreaming, when nobody in the world will be allowed to stand out against them, and they will be given the absolute, final autocratic control of the whole of industry. There would be no competition by which the consumer could hope to get price reductions, and no competition by which the worker could hope to get better terms. They would be the absolute masters of the Fascist corporation which would thereby be created. That, of course, is what has been done in the Fascist countries of the world. The hon. Members said that the evil at the base of the trouble to-day is a lack of efficiency. If only we could rationalize and make our industries more efficient! What do they mean by "more efficient"? More efficiency reduces costs. It is the same thing as the right hon. Gentleman said, only he wants to do it voluntarily, and they want to do it compulsorily. How are you going to reduce costs? By eliminating some part of the labour costs That is the only way in which to do it— either turn people out altogether, or else reduce their wages. The right hon. Gentleman shakes his head. How else can you reduce costs?


By increasing your sales, and thereby decreasing your unit costs.


And thereby reducing the labour cost per article produced. I do not know how else you can do it.


You also increase consumption thereby.


I am not dealing with that. I am dealing with the method of reducing costs. The only way in which to reduce the cost of an article is by taking some of the labour out of it. [Horn MEMBERS: "No!"] The right hon. Gentleman has just confirmed me. The capital cost is all reduced to labour cost in the last resort. If you put in a new machine you may call it capital cost, but the cost of the machine depends on the labour that is put into it. In the last resort, if you are going to produce an article at a cheaper cost per unit, it means there is less man-power in it. That must be the ultimate result. The right hon. Gentleman agrees with that, of course.


But what follows from that?


I can only deal with one point at a time. I propose to follow the argument through. The attempt is, in the first stage in the right hon. Gentleman's cycle to eliminate some part of the cost of production per unit, for he says, you cannot increase consumption until you have lowered the cost of production. First, there is to be a lower cost of production as it stands to-day. That has to be done by lowering either wages or the number of men employed. [HON. MEMBERS: "No!] Until a man increases his production, he cannot start from the present moment decreasing his costs unless he can reduce some of his costs on the present level of production.


That is not the way in which it works out. He gets an order for three times the number of motor cars that he got last year. He starts on that basis.


The right hon. Gentleman does not get the order until he has reduced prices.


Your marketing organization exists for the purpose of sales. I can give you an order for so much and you will be able to sell so much if you can sell it at a certain price, and on that basis you produce it.


Sir Herbert Austin might tell his agents that if they get orders for three times as many cars he will drop his price by £5 per car. The right hon. Gentleman does not suggest that he is such a fool as to avoid doing such an obvious thing if it is going to recreate British industry. We have the great iron and steel people who have their large selling organization; even the cotton industry has got some intelligence; there is the Imperial Chemical Industries, that great combine of the heavy and light chemical trades; and then there is the Doncaster Collieries' Association, a vast combination of coal mines. Surely all these people are not standing by when, simply by telling someone that they would take a lower price if they sold more, they could expand their production and set going this cycle which would lead us back to prosperity.

If that is the proposition, it is disproved by current events without any necessity for disproving it any further; but it includes what the right hon. Gentleman entirely neglects to observe, that is, the fact that you are trying to balance the consumption on the one side with the production on the other, of these great common commodities, these necessaries of life, and you are inserting in between the factor of interest, of profit, or whatever it may be. The right hon. Gentleman laughs. If he will look at it in terms of consumption, it has somehow or other to have a corresponding production by the State or the community of a similar amount in order to balance the totality of consumption and production in the community, with the result which is seen everywhere, that that does not call for the production of necessaries. It calls for the production of capital goods and luxuries. To-day, however much we desire to do it, we cannot prevent the building of flats in Park Lane while we are not able to build small houses for working people. That is inherent in the system because we insist on this method of distribution and production, on taking out at a certain stage a sum of money which has to have its equivalent in goods which are going to a particular limited number of people—whoever they may be does not matter.

To attempt by rationalizing or by creating greater efficiency to get over that factor in distribution is perfectly hopeless. If you neglect that factor you can go on organizing industry until you are blue in the face, and you will still always have to organize it on the present basis, that is, the basis of a scarcity market to which the right hon. Gentleman so accurately and justly drew our attention. So far as the great common necessaries of life are concerned, a scarcity market must always produce a very low standard for the workers in industry. That has been the uniform experience of all capitalist industry, and it is no good saying that by using exactly the same economic system, but making it more efficient, you will be able to cure that inherent defect. The right hon. Gentleman has not pointed out a single thing in the suggestion that he has made that will cure that defect. He has not pointed out how the system with which he is now dealing— this voluntary marketing by voluntary association— is going to make the capitalist system capable of producing and distributing abundance as against scarcity. He has not told us how his price system will operate in a market that is always glutted, that is, in which there is always abundance. He knows perfectly well that inherently his system cannot work unless there is always enough scarcity to maintain price.




Then is the right hon. Gentleman prepared to abandon all scarcity devices within Capitalism— tariffs, quotas, restrictions of every kind, including price restrictions? Is he prepared to let prices fall to the natural level by keeping every man in the country employed on the production of necessaries?


What has that to do with the hon. and learned Member's proposition?


It has a great deal to do with it. The right hon. Gentleman is suggesting that by a voluntary marketing scheme— voluntary as regards exports and the internal market— you will, by reducing costs and prices, get a total distribution in accordance with the productive capacity of the community. That is what we are all aiming at, of course. What I am suggesting is that unless under the right hon. Gentleman's system the price level can be maintained somehow— a low or a high price level, but a level— then the level of wages must fall to allow the profit factor and private enterprise to continue with its operations. Unless that price level can be maintained, obviously production must cease. That is the law which always operates with private enterprise under Capitalism which the right hon. Gentleman does not dispute.


I dispute absolutely that it applies any more to Capitalism than to Socialism. Production and consumption must balance under any conceivable system.


The right hon. Gentleman is accurate, but the whole question is, are you going to balance it for the whole community or are you going to try to balance it for each unit of production? The right hon. Gentleman says that he would balance it through each unit of production— each little factory, shop and unit. In order to do that he has to maintain his price as regards each little unit. The unit will go out of production unless it can maintain its price high enough to reward the little producer for his little production.


On the contrary, it is under a system of State control and Socialism that prices are based on the marginal cost of production of the less efficient producer. The whole advantage of Capitalism and private enterprise is that you are not bound down to that terrible restriction.


I think that when the right hon. Gentleman reads that remark in the OFFICIAL REPORT he will see how perfectly ridiculous it is. He says that under a State of Socialism you are bound down to price by the less efficient producers. There are not any individual producers—


Well, the least efficient producing unit.


At one time the right hon. Gentleman was in charge of a very fine Socialist service, that of education. Did he find that the charge for elementary education was regulated by the cost of teachers in the least efficient elementary school?


I could hardly have asked for a better instance. If the hon. and learned Gentleman will look into the question of the cost of education, he will find that what limits the expansion of education in relation to this cost is just precisely that thing.


The question is whether the price of education is limited by the cost in the most inefficient unit. The answer is that neither the right hon. Gentleman nor I would have been so extremely foolish as to attempt 100 per cent. Production and distribution of education through a capitalist system, because we know it could not have happened. If we tried to relate the price of education to its cost, we know that we could never have distributed it. That is precisely what the right hon. Gentleman wants to do with regard to the other necessaries which are produced in this country. It is for precisely the same reason that that system is not operating to-day. I am sorry to have carried on this back-chat with the right hon. Gentleman, but it was so interesting that I had to go on with it.


I apologise.


Let me in a few words summarise our objections to the system proposed by the hon. Member and his Seconder. First of all we say that if you did start a system of compulsory organization you would be laying the consumer and the worker open to the maximum of exploitation by the worst form of monopoly. Secondly, we say that it is taking an entirely wrong view of the problem to imagine that it depends upon the creation of efficiency in what is at present inefficient industry from the technical point of view. That, in fact, is not the problem at all to-day. The problem is that of somehow or another avoiding those wastes which occur through luxury production or by the production of goods that you do not require or which you export and for which you never get paid by somehow or another balancing the consuming against the producing power. However much you monopolise or reorganize you cannot to-day do that through single units or single industries, you must, in fact, do it for the nation as a whole, exactly as the hon. Member who seconded realized that you cannot deal with foreign trade to-day except through a foreign trade monopoly. He realized that and that is part of his idea.

Finally, we say that you can only bring about that planning which is essential for the proper balancing of the consuming power and the producing power in the nation as a whole if you have control of the productive units. To have control of marketing alone is obviously not sufficient, because you cannot then direct your productive energy into the channels where you must have it in order to create a balance of production and consumption. That is why none of these schemes of planning under capitalism can do anything except to force capitalism into a straight waistcoat in which the very principles of capitalism cannot properly operate. Once you put it in the straight waistcoat you have to keep it there, and use more and more force in order to maintain it there, and that is exactly what has been the process of the development of the industrial and economic side of Fascism in various countries in Europe.

6.48 p.m.

The PRESIDENT of the BOARD of TRADE (Mr. Runciman)

This has been one of the most interesting debates on industrial subjects which we have had in the House for some time past, and I think we are indebted to those who have addressed the House for the contributions which they have made. I listened with great interest to the opening speech of my hon. Friend the Member for Don- caster (Mr. Molson), and I would like to commend him for the care and caution with which he approached these very difficult subjects. I would like to add a word of commendation to the hon. Member for Rushcliffe (Mr. Assheton), who enlightened our proceedings with twenty minutes of sparkling speech, and I trust that in the future and on other subjects he will always prove as entertaining and informative to the House. I do not propose to discuss the high economics which exercise the minds of the hon. and learned Member for East Bristol (Sir S. Cripps) and my right hon. Friend the Member for Hastings (Lord E. Percy). I would like to imagine myself as coming down to the House this afternoon as a visitor and sitting in the gallery upstairs or under the gallery downstairs full of anxiety to know what contribution the House had to make to the prosperity of the industry on which I depended. If I were a commercial traveler on a large scale, home from China, I should want to know what the House had to say that was going to make it easier for me to sell my goods in China, and how I could get hold of markets which appear to have been closed and which may be closed more effectually in the future than they are now. Or I might be interested in South America, and should listen with great care to hear whether on any side of the House there is any solution coming to the problem which I have to solve of getting orders for my own concern here and, in effect, bringing home work for our people.

I must say I should have listened, although greatly interested, with a certain degree of disappointment. My hon. Friend the Member for Doncaster was naturally full of the necessity of reducing the costs of production. There are practically four elements in the costs of production which can be tackled, and I should like to know which he would take first. First and foremost, there are wages. I see that my hon. Friend has now taken his seat. I was just drawing attention to the way in which my hon. Friend approached these problems. He wished to bring about a reduction in the costs of production. I was pointing out how the costs are made up al; the present time, in the main by wages. Does my hon. Friend want to bring about a reduction of wages? He certainly does not. Does he want to add to the amount of machinery in industry—I mean the kind of machines which; takes the place of men? I have no doubt he is able to defend on strictly sound lines the introduction of machinery and the displacement of labour for the time being, but, if there is to be that displacement, you have a social problem to be dealt with in other ways.


I fully recognize that, if that concentration which I advocated upon the best pits takes place in the coal mining industry, the first result would be to increase the number of those totally unemployed, but to reduce the number of those who at the present time are under-employed in a large number of pits.


If that can be achieved my hon. Friend has taken a great step in advance, for we have all been through the very painful process of having to get rid of the least competent labour and to replace it with ingenious machines. We must not shirk that point if we are to look ahead either in the manner of planners or of the Socialists or of those who are neither. That is one of the subjects which must be taken in hand. Then there is the next element, the saving which comes by the centralization of control, the reduction of overhead charges. By all means there is much to be done, providing there are not countervailing disadvantages. Then there is, finally, the contribution to be made by cheap capital. I think we can dismiss the latter at once. There never has been a time when capital was so cheap, and any capital that is required for wholesome and promising industries can be obtained in the market with comparative freedom. Only in the last few weeks we have seen very large amounts provided by the investing public for industries which they thought had some chance of success, and I have no doubt that the contribution of cheap capital is one of the elements which is likely to bring about a considerable change in the whole trade of this country, the costs of our production and I think, ultimately, in the selling of our goods.

Let it be noted that throughout the whole of our discussions we have been proceeding on the assumption that by better organization we are going to increase the profits of our industry. May I say that if we wish our industries to expand, if we want our sales to be on a large scale, we shall have to sell on a lower scale of prices It will be the price level which will have its effect on the total volume of trade and only the price level. There is no doubt that we could regain a considerable amount of what we have lost in China if we were able to bring our costs down, so that our remunerative prices in China were below those or were equivalent to those obtained by the Japanese. Therefore, I come back to my practical suggestion. Let us test things in terms of China. So far I can only say that I have seen and heard nothing this afternoon which will help us in solving the China problem. There is one thing which is clear, that every time you have a lowering of the scale of prices you increase to an almost immeasurable degree the number of your customers, and that is exactly what we want. There are not enough people consuming the things we produce in this country. Let us take a lesson out of the book of those who produce tobacco. They taught the Chinese to smoke, and one of the most prosperous departments of their industry—far more prosperous than pepper—is to be found in China. If the Chinese standard of living were raised, if they got a liking for more clothes and a greater liking for sugar, there is no doubt we should add greatly to the demand for commodities which we can produce and from which we get profit. We can only do that provided we can get the range of prices down to an attractive level.

That is one of the things which, I have no doubt, is in the minds of those who, like my hon. Friends, are looking ahead and wish to plan industry on what they believe to be profitable lines. They are hoping that by concentration they will be able to reduce the costs of output. I am heartily in agreement with them there, but may I point out that if we are to proceed with the solution of this problem we cannot do it by any one cut-and-dried method. That is where some of my hon. Friends, if they will allow me to say so, are too didactic. I do not believe you can by one and the same effort provide for the reorganization of shipbuilding, the chemical industry, iron and steel and cotton. The conditions in all those industries are so varied that you cannot possibly apply one and the same system to all of them. In order that we may know exactly where we stand and what necessity there is, or may be in the opinion of some, for a reorganization of industry imposed from above, may I point out what has already been done in the way of modern reorganization? Long before the present method of dealing with these industries was ever contemplated a great deal of voluntary amalgamation had gone on. It is the same idea; it is done with the idea of reducing costs, bringing concerns under one control and with one selling agency, as recommended by the right hon. Member for Hastings. There are all the advantages which come from massed control.

Those attempts at amalgamation have in some cases been failures and in others a success. Let me mention one of the failures which must be fresh in the minds of the House. What happened to the Royal Mail Steamship Company? There was gathered together into one organization a vast congeries of trading concerns — shipbuilding and shipowning concerns. They were all under the control, ultimately, of one man. That one man made profound blunders. His judgment was wrong and to his mistakes can be traced the whole of the upheaval which led ultimately to the break-up of the Royal Mail group. That was an attempt at voluntary concentration, but along the wrong lines; and it overlooked one fact, that there are some industries which do lend themselves to this massed control but others which are better left under the control of a large number of people. If you like to put it in another way and apply it to ships, it is far better to have many shipowners each with a small fleet than to have one shipowner with a gigantic fleet. There are some lines which I might mention to the House if it would not be impertinent on my part to do so which, because they are small, are able to run their concerns better. Their passenger ships are more attractive, they can take action very quickly, and they keep their ships in better order. They come right up to the standards asked for by the right hon. Member for Swindon (Dr. Addison). There are other big concerns where that close personal touch is impossible. There are some lines which because they are small in number are able to run their industry better. There are rather big concerns where close personal touch is almost impossible from the nature of the problem. I do not say you can apply the same rule to all industries. In the case of shipping it might be that the mere factor of size embarrasses it.

I would like the House to follow me as I give a list of industries where voluntary organization has been a success. First of 'all, I take the case of the production of motor cars. We have two or three concerns in this country which are as good, as efficient and as remarkable as anything in the world and which owe their success entirely to the range of the organization of a comparatively small number of concerns. They have grouped together under their control a number of industries which are closely related. That has been done quite voluntarily and because they could make it pay. That was the very simple incentive, which induced them to do it. They may not have known very much about economics but they knew how to reduce costs or to correlate various branches of the industry to enable them to produce at a profit. The motor industry of this country has therefore been to some extent reorganized on a voluntary basis. The electrical engineering industry which is now, I think, more prosperous in this country than in any country in the world has succeeded in bringing in a steady flow of orders from those very customers whom we wish to cultivate in other parts of the world and who have offices and place orders here in England. The electrical engineering industry has been transformed by voluntary reorganization. It is the same idea; it is necessary, in order that you may not waste too much of your money in overhead charges or in selling organization that the industry shall be more or less unified. I might mention rapidly, in passing, the chemical industry, which now covers under the new organization a great many industries which are not directly chemical producers but which are rather akin to that organization. The production of cement has been organized on a voluntary basis with the same object in view. The production of soap and of margarine has come under the same reorganizing transformation.

The right hon. Gentleman the Member for Darwen (Sir H. Samuel) as well as other hon. Members have asked why the Government have not done more. I

wonder if my right hon. Friend realizes how much the Government have already done? Let me point out in the first place that so far as shipping is concerned our consent to the granting of a subsidy for tramp shipping was absolutely conditional upon the reorganization of that industry, and they have succeeded very well. I can tell the House to-day that they have taken, I will not say command, but a repeat deal of control of one or two markets upon which British tramp shipping depends for employment at a profit. One of the conditions 'which we laid down, apart from the labour conditions which are inherent in the scheme, was that there should not be dissipation of the financial assistance that we gave because of internal competition If there were to be any benefit from the subsidy, it must go to the tramp shipping industry itself. How did they set about it? They set to work on a voluntary basis, I may say, before the Bill had gone through the House. They succeeded in formulating a minimum freight scheme for the homeward trade from the River Plate, and up to date, I am informed, no less than 156 vessels have been chartered under the scheme. Of these almost one-half were foreign vessels, but that is all to the good, because we have by our scheme and by the pressure we brought to bear upon our own industry actually succeeded in sweeping in foreign shipping industries as well, and they are not now undercutting us as they were this time last year in the River Plate. They have extended their operations now to the St. Lawrence grain trade. Their scheme covers the Australian grain trade which has been approved by the British owners in that trade both for tramps and liners under the form of contract which was adopted by the administrative committee only a few days ago. Therefore, the steps which we have taken and successfully achieved are exactly on the lines which have been suggested by hon. Members this afternoon. The tight hon. Gentleman the Member for Darwen will be glad to hear that some good thing has come out of the subsidy.

Let me turn to cotton. Cotton is by no means a simple product. There is probably no industry in the world which is so highly specialised in almost every branch We have been ready from the first to take advantage of any movement showing itself in Lancashire, and we were prepared to give every assistance. One of the first things which had to be done was to study the things which are advocated in Lancashire itself. I do not envy the man who without a close study of these things attempts to dictate to Manchester as to the way in which they should run their trade. Fortunately in that industry there are a good many live men and men of great ability, as well as men of not so great ability; there are some bold men who are prepared to take bold steps in order to do what is necessary for the better organization and the salvation of Lancashire. What have they done so far? They have had matters under discussion, and the pace at which they have discussed them is not my responsibility. They may have taken a long time to formulate their views, and they have taken a long time to discuss some aspects of their many difficult problems.

What has happened in the spinning section They have come to the conclusion that the right thing to start on there is to get rid of redundant spindles many of which are idle and are becoming dustier and dustier and stand in mills which are silent. It is possible that whenever there appears to be a turn in the market a lot of those idle spindles may be brought into use again, and by increasing production again reduce prices to a less remunerative level. But those who are in the industry made up their minds that they must deal with the position somehow or other. They were fortunate enough to get Lord Colwyn to undertake the chairmanship of their committee. I can tell the House what progress they have made. They have succeeded in getting the necessary majority, and it must necessarily be a large majority if compulsory powers are to be given for reorganization, in favour of redundant spindles being wiped out. They have done that under a scheme which we have discussed with them from time to time, and ultimately they have reached the happy conclusion to wipe out anything up to 10,000,000 spindles, a very large proportion of which are already idle and a certain proportion are in use or occasionally in use. The displacement of labour by the wiping out and the scrapping of those 10,000,000 spindles is, I am assured, not a very serious problem. Where it arises I think it is incumbent, upon the industry to make their contribution towards work for these men. They hope to wipe out 10,000,000 spindles at a compensation cost of £2,500,000 and with the sale of the scrap to bring in 2500,000, so that £2,000,000 has to be found.

The industry is going to find that sum itself. That will involve them for 15 years in a charge of some £180,000 per annum. There is just a possibility that the surviving spindles will not be enough to provide £180,000 per annum and may fall short of that. The Government have gone so far as to say, in order to give that scheme a chance, that they will undertake a guarantee of part of that sum, whatever it may come to, which the industry itself is unable to produce. That is an experiment which we shall watch with very great care. I should like to make it clear that by describing what has been done I am not committing the Government to repeating the same process again. We must see how it works out. It goes without saying that what has been done in the case of the spindles of Lancashire might be quite unsuitable for some other forms of re-dundancy elimination.

Let me turn to iron and steel. Here we have a very different problem. The hon. Member for Darlington (Mr. Peat), who speaks with great knowledge of the subject, would I am sure confirm what I am saying, namely, that the iron and steel industry has had to be pushed into reorganization. There have been some very serious obstacles standing in the way. For a long time it was impossible to secure unification of the interests, for instance, of the North East coast, and it has been very difficult to get them to agree to draw together all the organizations and bring them under the control of one administration. I am glad to say that great progress has been made there. Indeed, we have been able to promise that we shall recommend to the House of Commons a grant of a considerable degree of protection provided that they will, in the first place, do nothing to injure the interests of the consumers. That is an integral part of the undertaking which we have given. In the second place, they are to endeavour to come to some agreement with the Continental cartel instead of providing as we do at the moment a very curious situation on the Continent where it is impossible for all those producers in the North to come to an agreement. Finally, they are to draw themselves together into one organisation of which an independent chairman has been appointed as head. We hope that we shall by the means that have been taken already bring the iron and steel trade out of a state of comparative disorganisation into a position where the industry will act together. They will no doubt arrange their prices in conformity with the views of the majority-I am not sure whether we cannot go further and say the whole-of those who are organising the federation. I would like to point out that, if that is to be done, and if they are to continue to receive our support, they will have to comply with the conditions that have been laid down. That is not on all fours with the scheme which has been proposed by hon. Members, because it does not follow exactly the lines of an enabling Bill, but the House will see that by one means or another we have been able to impose these conditions upon an industry which has not been too willing to set up a central organisation.

In order that the list may be complete, I would point out what has been done with our main electricity supply, the grid, and what has been done also with regard to railways and road transport. Let it be clearly understood that some of the principles which have been advocated here to-day found their way into the London Passenger Transport Board. Many problems have been solved to some extent by the measure of control which is now exercised. Finally, there is the group of industries which are covered by agricultural marketing. Having mentioned these and having shown that a great deal has already been done, I would emphasise the point that you cannot apply the same principles to all industries.

I must now deal with some of the other criticisms which have been offered in the course of the Debate, and I will do so as rapidly as possible. First, I will deal with the question of mining royalties. The right hon. Gentleman the Member for Darwen takes a paternal interest in this subject. I am sure that he will be glad to hear that we are actively examining the whole question at present, and that we hope that the difficulties which we are meeting will be overcome and that we shall be able to carry into effect a recommendation which is not exactly the same as his, but which has come to one Government after another and that will lead to unification of royalties. I say nothing more about voluntary organisation in the iron and steel industry which, as I said, has gone a very long way.

I would like, in conclusion, to draw attention to some of the difficulties which we have to meet directly we sit round a table with the people who are interested in these trades, and which will have to be met no matter to which party we belong or how our Governments may be constituted in the future. The first question to which we must find an answer is What is the consumers' position as a result of the compulsory ring which undoubtedly is being formed in many industries, and which is part of the reorganisation proposals? Reasonable safeguards are to be used against exploitation, but we must find an answer to the question: What is a reasonable safeguard? Some people might say that no ring at all is the only safeguard, but I am afraid that we have passed that stage, and that in this year of the world's history we have to face very large organisations and to see that they do not obtain control. They must be subservient to the public interest. We have to answer a still more difficult question: How are we to encourage new entrants into these industries? We have been talking to-day about old-established concerns and about various companies which we have had under discussion as though they have gone on for ever and are going on for ever. If we do anything to block the way to new entrants to these industries, we shall do a great deal to destroy the free enterprise upon which we depend. That question has to be faced, and it must be answered.

Then I would ask the next question:In the reorganisation of these industries, who is to take the first step? Are we to assume that the Government are always to take the first step, or are the Government only to come in in the last resort? The next question is this: When you have secured these very large organisations, covering a great variety of concerns in many parts of the country, how are you going to run them? Somebody said this afternoon that you can only run them by supermen. If that be the case they will never be run at all. There are no supermen. Then comes another very awkward question. If we are to proceed with the planning of industry from outside, we must ask ourselves the question: What is going to happen while that planning is going on? There is one danger which I may say I foresaw from the first. It is that if you allow industries to know that Parliament and the Government are to solve their problems for them, they will not move, and will wait for us to move. That is the wrong way about. They should not be encouraged to sit back and wait while other people and Governments do something for them. They should receive every stimulus from outside as well as from within to make their concerns pay in the interests of everyone attached to them.

Another question to which we have not received any answer, and which naturally touches everybody who is at close quarters with the problem, is: Who is to be responsible for an industry making profits or losses? If it be the Government of the day, it entails a very great responsibility, not only for those whose capital is invested but for those who are in control of a concern and their employeés. A mistake made there might very easily lead to a great deal of harm being done. The next question I would like to ask, and I ask it only because it occurs to me whenever I sit down to deal with these problems, is Can Parliament ensure the prosperity of these industries I say emphatically that we cannot. If it be not within the ability of the industry to make its operations profitable, we shall not be able to do so. Then will Parliament give these powers but disclaim an interest in the profits of industry, or responsibility for its losses? If Parliament is to do that, it must give up the idea that it can solve these problems itself. I put these questions, not with the idea of raising bogies or attempting to put obstacles in the way of enterprising and ingenious men—far from it—but because, if we are to approach those problems with success, we must do so in a different spirit.

We have succeeded in many cases by voluntary organisation. Very cautiously we have proceeded, with the help of this House, in the reorganisation of industry. We are going in the right direction. Do not let the House believe that we are going dead slow; far from it. I noticed that my hon. Friend the Member for Rushcliffe, whose maiden speech we so much enjoyed, referred to the views of Mr. A. P. Herbert, who made some reference to the Board of Trade. Another hon. Member said that he would like to see a Ministry of Industry, apart from the Board of Trade. I would like to know where he draws the line between trade and industry. They are very much interwoven. I do not know that there is a Minister great enough in status to meet all the needs of the many industries, but I would hesitate to see him cut up into a number of little ministries which would be drawn together only from time to time. For the time being, the hest departmental Committee that the Government can provide is the Cabinet, and the best Minister that the Cabinet can provide is the President of the Board of Trade.

7.22 p.m.


We have just listened to a speech of considerable interest from the President of the Board of Trade. Before I reply to some of the questions which he put, I would like to refer to some of the other speeches. A certain number of the speeches to which we have listened cancel each other out. The hon. Member for Mansfield (Mr. C. Brown) chaffed us because he said that we were reluctant to change from one economic system to another. He called us reformists, but that is exactly the expression that those on the left of his party would apply to him. He and his friends think that the economic system is like a sort of hat. If you do not like a bowler, you can buy a cap. They think that we can change from our present economic system to the economics of Socialism, as it suits us. But we do not live under what can be called entirely a capitalist system, any more than we live in a completely collectivist system. Taking the whole range of the energies of this country, some are carried on upon a collectivist basis, some on a profit-making basis and some upon a public-utility basis. There is every gradation of economy, and it is no accusation against a set of proposals to say that they do not make a sudden switch over from one system to another. It would be utterly contrary to the whole of our history if we undertook any such futile programme.

The hon. Member for Rushcliffe (Mr. Assheton), in a most brilliant maiden speech which everyone in the House enjoyed, rather took the other line, and said that we were going too fast. I very much enjoyed the quips with which he accompanied his criticism. It is rather fortunate that he has been so short a time a Member of the House. If he had sat here from the beginning he would have had to vote for a number of Measures all of which must have come under his condemnation. I do not see how he could be, with the views he expressed, a Protectionist, and agree with the most complete interference with the free flow of trade. I hesitate to say what might have happened when the Minister of Agriculture was presenting various schemes for the consideration of the House. Before I come to the speech of the President of the Board of Trade, let me refer to the hon. and learned Member for East Bristol (Sir S. Cripps) who presented to us the full Marxist doctrine which we have learned to associate with him. He gave us, none the less, a very interesting dissertation on the application of Marxism to modern England. There was one sentiment which he expressed with which I found myself in agreement. He pointed out that the oldlaissez faireof the Manchester school of Liberalism was now almost entirely abandoned, and had passed into the limbo of forgotten things. I agree, with this reservation, that it lingers in some of the darker recesses of that part of the Tory party which has suffered from a continuous infusion of Whigs.

The President of the Board of Trade asked a number of questions as to the application of the views put forward in connection with that part of the Amendment which deals more specifically with industrial reorganisation. He asked questions, and I am glad to say that, unlike Pilate, he has stayed for the answer. In a very sympathetic reply, which we welcomed very much, he pointed out that the Government were in fact operating in many respects as hon. Members wished. He pointed out that shipping, cotton, iron and steel and other industries were directing their attention towards this kind of organisation. Everybody recognises that, although some of us think that we might have made more rapid adjustments along those lines. After all, the iron and steel duties were Voted in this House in 1932, and three years later we are still considering reorganisation in those great industries. The speech which the right hon. Gentleman made was far in advance, and far more sympathetic, than those that have hitherto fallen from Members of the Government Front Bench. The answer to the question he asked in respect to our views on the question of enabling legislation, are largely to be found, of course, in the drafting of the various Bills of people who put forward legislation of this kind.

It is obvious that safeguards against the difficulties that we foresaw, to prevent rigidity of trade and to allow for new entrants into trade, are an essential part of any schemes of quotas or control, but there is one thing which I would venture to commend to the President of the Board of Trade. This is not a question of the interference of Government with industry. What is suggested, whether rightly or wrongly, is the exact opposite. It is the giving by Government of certain rights to industry by permissive legislation, and giving, under certain conditions and certain safeguards, the right to undertake their own reorganisation. The Government are very fond of telling industrialists:" Put your House in order and we will help you." The suggestion in regard to an enabling Act amounts to a proposal that under certain conditions and subject to safeguards, and after very careful investigation, under certain limited circumstances a majority shall have the right to govern. Is that so revolutionary a proposal to put to an assembly of this kind? Even on these schemes it takes majorities of 75 per cent. to have a right to govern. Our proposal, our conditions, are not governed by more narrow majorities. We are told it is the duty of industry to put their house in order. But industry say, "Give us the power to put our own house in order." There is only one political institution in the history of the world which required a 100 per cent. vote to carry its proposals, and that was the old Parliament of Poland. Not unnaturally, it led to three partitions. Under the present conditions a 5 per cent. or a 10 per cent. minority can wreck any scheme that is put up. It is not at all a revolutionary proposal to say that given certain conditions and certain safeguards the majority shall receive the permissive right to make use of their powers of reorganisation by enabling legislation of this kind.

Much as I welcome the very sympathetic reply of the President of the Board of Trade, I venture to call the attention of the House to the second part of this Amendment. It deals, first, with modern methods of production and distribution and the existence of cheap money. It is because the use which Parliament and the nation may decide to make of the present abundance of cheap money is intimately bound up with the organisation of industry that I venture to put before the House some considerations upon this monetary aspect of the problem. It is common knowledge that probably the great division between parties in the future may be an argument as to the desirability or not of increased public expenditure for the definite purpose of dealing with unemployment. It is common knowledge that there is now before the Government some proposals associated with the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) and also with a certain group of Members of this House that have the common object of using the monetary resources of the country in order to increase employment, to bring idle capital and idle workers together; and it is because this question of industrial reorganisation has so close a bearing upon the decision that has to be taken that I venture to impress on the Government the importance of organised industry looked at from the point of view of capital expenditure.

What is the real argument? What is the serious argument against expansionist capital expenditure, expenditure on capital account? What is the ease which the experts of the Treasury, the people who really govern England from the Box that is outside? What is the argument which those who have studied economic thought and theory will submit? It will not be that the policy of capital expansion is impossible, but that it is unwise. It will not be that you cannot increase employment by public expenditure, but that public spending will result in even greater unemployment, and your last case, it is said, will be worse than your first. They say the economic consequences of a policy such as has been put forward by the right hon. Gentleman the Member for Carnarvon and such as is now under the sympathetic consideration, I believe, of the Government will be roughly as follows: First, that the money goes into the production of capital goods; secondly, that the wages and salaries distributed in the production of those goods come into effective demand for the consumption of goods; in the third stage, that the industries supplying consumers' goods expand their output and add to the purchasing power in the hands of the people; and, fourthly, that the prices of consumers' goods are put up to a more economic level. But fifthly, and here is the rub, the capital plant and equipment is multiplied by the competing producers, and at last supply once again begins to outstrip demand, prices once again fall, workers once again are thrown out of work, and the market constriction begins all over again. That is what happens with this dismal alternation of slump and boom. At the end of the artificial boom you are left with the inevitable slump, with a still greater proportion of redundant plant as a result of over-investment. The problem of every manufacturer is therefore accentuated and the burden of debt on the community has been increased.

I think that is a fairly simple and fair statement of the case against expenditure on capital account. In spite of those arguments, I still remain in favour of expansion, not because I think the arguments of the well-informed opponents are without foundation, but because I consider the danger can be avoided. When these critics put up the destructive side they are right, but when they turn to their constructive side they are wrong. They see the error which may be committed by doing something, and therefore they say:" Let us commit the crowning error of not doing anything at all." My submission is that it is by the policy of industrial reconstruction which is advocated in this Amendment that we have a means of safeguarding ourselves against the dangers of over-investment and the unwise direction of our productive forces. The dangers arise from a system in which any private speculator is allowed to engage in short-term speculative investment in an industry; is allowed to scoop the cream during the profit-making period and then get out of the industry and get out with the swag, when times are not so good, leaving the industry over-capitalised, burdened with redundant plant, and with all those features to which the President of the Board of Trade has mentioned in respect of particular industries, and that long trail of disaster from which 12 or 15 years after the War we are still trying to recover. Reorganisation of industry is required following the character of the particular industry as regards technical administration. We are trying to set up joint control of selling which will prevent these evil results which would otherwise follow from an expansion now on the lines of the policies under the consideration of the Government.

I would say this to the Government. If they decide not to make any movement in the direction of the policies advocated by the right hon. Gentleman the Member for Carnarvon on capital account, if they decide not, to follow the policies put forward by the group of Members representing northern constituents, if they decide not to attempt to use the power of government to bring together the idle money and the idle worker, if they pursue a policy of monetary laissez faire, there is no need to proceed along the lines of this Amendment and this Amendment is contrary to what they should do. But the Government must take some step. They cannot afford to see 2,250,000 workers left idle. The Government dare not face the situation in which men are kept out of work, not because there is insufficient money to employ them, but because there is too much money. They are bound therefore to embark to a greater or lesser degree on some such policy of expansion as is now in everybody's mind; and if they are to avoid the evil effects of an expansionist policy, they must take steps now to ensure that the organisation of industry can benefit from what an expansionist policy can give without the evil results that will follow it in a state of disorganisation.

You must make your choice, and the choice of the nation is absolutely certain. I am convinced that the support which these proposals have met emphasises this. Three years ago I ventured to speak on these lines as a private Member, and I could expect nothing more than the courtesy I then received. Two years ago some colleagues of mine presented these proposals for the consideration of the Government. Now

opinion is changing, not among academic thinkers, but among the leaders of industry. For instance, when I went to Manchester the other day, I found that the one thing which the large number of industrialists who were good enough to come to discuss this matter agreed upon was that they should have permissive rights under enabling legislation of this kind. They have in Manchester the largest branch of the Industrial Reorganisation League in any part of the country. The people on the reorganisation committee are not academic theorists they are men who are up against the present problems of industry. The members of the council and the executive committee would, I think, at least show the Government that these proposals are not, as they were three years ago, of a theoretical nature, but that they now have the earnest attention of industrialists.

The right hon. Member mentioned one industry which has voluntarily organised itself in a satisfactory way. One of the particular industries he mentioned, namely, the flour milling industry, is one of the keenest supporters of these proposals. Having made this voluntary association, having imposed a voluntary levy and raised a sufficient amount of money to put redundant plant out of operation and having got that balance of production and demand which was essential to employment and a reasonable margin of profit, there begins to come in, since it is only voluntary, the blackleg, the new entrant who comes in on the basis of the financial sacrifices of those who put the industry on a regulated basis. There is no stronger supporter of statutory regulations than those who have made individual sacrifices from which they are now suffering. I therefore venture to say to the Government that opinion in the country has largely changed. Industrial opinion has changed. I quite recognise some of the views of the Labour following that this is an idea for making the world safe for capitalism. I believe, however, that Labour opinion is strongly in support of a reorganisation of industry which will bring demand into balance with supply and so bring in decent wages and decent conditions of labour for their men. The first problem that all of us are up against,— —


Would the hon. Member allow me to interrupt him for a moment, because I was not quite sure whether I understood him correctly just now? He was referring to the voluntary measure of re-organisation introduced into the flour-milling industry. Did I understand him to say that there was no one more keen on asking for statutory prohibition against the arrival of new entrants than those in that industry?


Yes. I do not say that it had the official support of the industry; it would not be fair to say that; but, if the hon. Gentleman will be good enough to look at the names of the executive committee of the Industrial Reorganisation League, he will see that the chairman of the milling trade association is a member of the executive committee, and he is one of the keenest supporters of these proposals. I quoted what I have heard from the chairman of this group of companies, and therefore I adhere exactly to what I said. In these circumstances, since opinion has changed in two directions—first, as regards the social organisation of industry, and, secondly, as regards the technical organisation of industry—since something on these lines is generally felt now to be not only a necessity but a practical thing; and because upon the other question, that of monetary expansion, I am certain that sooner or later this Government or the next Government will be forced to make some effort to bring 2,250,000 people who are now unemployed into employment by some method or other, for the pressure will so grow that neither the Treasury nor the Government will be able to stand up against the demand for expenditure in order to promote employment. Since both these things are pending, I venture once more to ask the Government not now to regard these views as the views of a crank or of an individual Member or Members, but to regard them as views strongly held, as I believe they are, by a growing number of those responsible for the conduct of industry; of ordinary people in all three parties, and still more by that vital number of people who belong to no party, and who really, in the long run, settle the government of England.

7.48 p.m.


The Debate this evening on industrial organisation is proving far too important to allow members of the National Labour group to remain wholly silent. Happily, there is a merciful rule against the repetition of what other Members have said, and the right hon. Gentleman the Member for Darwen (Sir H. Samuel) said so much of what I should have desired to say, and said it so much better than I could, that I need cover little fresh ground. He began by warmly congratulating the author of that brilliant maiden speech, and the whole House agreed with him in doing so. He went on to deal with royalties, and I was glad to hear the encouraging reply of my right hon. Friend the President of the Board of Trade; but may I stress to him the point that the matter might be even more rapidly dealt with than, I gather, lie was prepared to encourage us to believe was possible I I think that opinion on that matter has developed during the last few years, and he will find that owners are at least accustomed to the idea of the nationalisation of royalties. I would suggest to him that, if the matter were dealt with as the question of petroleum was dealt with, by introducing a Bill in the House of Lords during the course of this Session, it would at least expedite the matter considerably, and would get us further upon the road to a solution of this important problem.

The right hon. Gentleman the Member for Darwen then emphasised, in a substantial argument, the need for the organisation of industry, and the dangers of the process. With all of what he said on that subject I agree, and I need not repeat any of it. I should like, however, to urge upon the Government the importance of a more definite declaration of policy than we have been able to enjoy this evening. We all appreciate the sympathetic approach of the President of the Board of Trade to the Amendment which is before as, but I believe that more is needed. It seems to me that on the lines of industrial organisation we have one big object of policy to put before the country; with a view to giving the country the assurance it desires, that the Government have a definite policy on this head. We know perfectly well that the Government have pursued a consistent and successful policy, but they have not yet succeeded in explaining that policy to the country. They have been too busy doing the job to formulate a theory of what they have been accomplishing.

Industrial organisation is, it seems to me, the inevitable next step in the policy of the National Government. The basic policy adopted by all Governments since the War has ben the policy of State aid to capitalism, accompanied by measures of control. That was a policy which the House of Commons would not have recognised before the War, and I think we have only gradually recognised it after the War. To me it became decisively the post-war policy during the lifetime of the last Government. It was the basic principle that governed the whole industrial policy of the Labour Government. They were always trying, honestly, and in some cases successfully, to make capitalism work, ad to bring the resources of the State to the aid of hard pressed industry. That is the fundamental policy which we have had now for, not quite 20 years, but for a substantial time, and obviously it is going to be as much the dominant policy of this country during our generation as laissez faire was during the nineteenth century.

That being our general principle, what is to be the next step in the State aid of capitalism? We put forward the assistance of industry by means of an enabling Bill. No one who has ever considered the drafts of any of the Bills that have been framed to deal with this problem will minimise the real difficulties and dangers that have to be faced. And a recognition of the dangers does not by any means imply that complete methods of avoiding those dangers have been discovered. I freely admit that there is the danger of rigidity, the danger of lack of enterprise and progress—all those dangers that we have known since our childhood. They are real dangers, and it is very likely that they will not be fully overcome, but the whole problem is one of balance of advantage and disadvantage. Admitting a reasonable amount of realised disadvantage such as no doubt will occur when we have achieved industrial organisation, is it not still the better alternative What is happening now in the chaos of unordered competition among small units?

My right hon. Friend must have seen the speech of the Chairman of the Bradford Dyers' Association at their last annual meeting, and he must have seen what has happened in that industry, where excessive productive facilities have meant that a whole number of units have not been able to pay their way, and have been gradually losing their financial resources and their power of enterprise. That is the fundamental evil of the process of attrition to which reference has been made—that the companies which are suffering it cannot keep up to date, cannot maintain research, cannot get cheap new capital for the replacement of machinery; and, once that process has gone beyond a certain stage, the industry is practically doomed. The purpose of the proposed industrial enabling Bill, and the organisation to be set up under it, is to prevent that attrition, and to enable our industries to stand upon their own feet and, under proper safeguards, to obtain the advantages of cheap production, adequate research and ease in raising fresh capital.

There is, of course, also the side of the workmen to be considered. In industries suffering from attrition, the workers are in perpetual peril of their livelihood, but in a properly organised trade, such as the milling trade, provision can be made, as I am told it has been made in that case, for redundant staff. What chance is there, however, of making provision for redundant staff in the competitive chaos of unorganised industry? I hope that in this matter we shall have, as we ought to have, the support of the Labour party, or at any rate of those members of it who are more interested in the welfare of the workers than in some rather barren theory. I trust that the Government will regard this Amendment as having been accepted by the House. Of course, we cannot divide on it, but it is quite obvious that it expresses the views of the majority of the speakers this evening, and a very wide and differeng range of thought. I hope the Government will regard it as an important expression of opinion, and that they will be able further to study the question and to make it a central item in the total national policy which they pursue.

7.58 p.m.


I cannot help thinking that the President of the Board of Trade used his colleagues in the Cabinet rather harshly. We have always been led to believe that they were a set of very remarkable supermen, But, as he has informed us that there are no supermen, I suppose we shall have to regard them in future as just ordinary mortals. He dealt in the course of his sympathetic reply with the many dangers that might arise from monopolies, and said that there was a possibility of unreasonably high prices being fixed. Surely one remedy for that would be to give to the Board of Trade special powers to inspect books, and to see that publicity was given to a large number of factors, and, as a final measure, if it were found that unreasonable profits were being made and too high prices charged, there should be a resort to some form of tribunal which would ultimately have the power to prevent abuse by fixing prices. I suggest that as one possible reply to the very important point that the right hon. Gentleman put.

In this Debate we have had evidence of the very widespread movement which exists in all parties in the House, and of which we have seen evidence in publications that have recently been brought out. The hon. Members who initiated this Debate have recently brought out a little blue-book on this subject which is of great interest, and I think that other Conservative Members, more on the right, have also brought out, a book. I understand, too, that another publication is to come out shortly, representing the views of members of almost all parties, very much on the same lines. Then, of course, there are the proposals now before the Cabinet of the right hon. Gentleman, the Member for Carnarvon (Mr. Lloyd George). As the right hon. Gentleman the Member for Darwen (Sir H. Samuel) said, it is not unreasonable for us in the Liberal party to claim that all these ideas found their origin consciously or sub-consciously in the Yellow Book published in 1928, because the ideas that were in that book are really the current coin of controversy at the present time. The Liberal party, as always, is very glad to contribute ideas which other people may carry out.

One of the most interesting features of the Debate has been the rivalry between the capitalists here and the Socialists there. We have had the capitalists criticising to some extent the present efficiency of industry, and we have had art impassioned defence of the high efficiency of industry from the hon. Member for Mansfield (Mr. C. Brown) who spoke just now. Even in regard to tariffs, he seemed to show more sympathy than anybody else in the House with the hon. and gallant Member for Bournemouth (Sir H. Croft). This old controversy between capitalism and Socialism is now dead. Many years ago Sir William Harcourt used the words:" We are all Socialists now." If that was true then, it is much more true to-day. It is really very much the pace at which you are going and the particular method that you are going to employ. I believe that there are in all three parties in the House-not a majority in every case-Members who are in complete agreement as to the methods and more or less as to the pace at which we should proceed along the lines which we have been discussing. They could, if the need a, co-operate with and support a Government in carrying out a policy of that kind. I agree with the statements that have been made that the old strictly limited form of laissez faire that once existed in this country is now dead and abandoned for ever.

The present lack of direction in industry is hampering it very severely. I feel that the object of planning and the result of planning is to give greater freedom and opportunity to manufacturers and business men to make the fullest use of their individuality, because that is the keystone of all success in whatever system you operate. The hon. Member who made such a brilliant maiden speech to-night was rather suggesting that all this planning is unnecessary, but the point is that planning is taking place, and inevitably it will take place. Shall it be slow, sporadic, and inefficient, or, as it is taking place, shall we try to make it as efficient as we possibly can? There is only one answer to that. When the history of these times comes to be written, historians can only regard this period of economic chaos as being very crude and infantile. What we see now is that the problems of production, distribution and consumption have to be co-ordinated and controlled in some way. We do not see quite clearly, as yet, how to do it. Our descendants will regard it as a perfectly simple thing. All we are doing is to grope, not in the dark but in the twilight, and a good deal of light has been shed upon the subject to-night by the various interesting speeches that have been made.

My hon. Friend who introduced the Debate suggested that they wanted a Departmental Committee. That might be useful, but it might be much more effective, and much more rapid progress might be made, if we had a Cabinet committee to deal with the agreed policies of so many different people that they might put into operation as quickly as possible. I want to make brief reference to another side of these proposals not, so far, touched upon to-day. I want to suggest that in order to deal with the industry of this country properly we require something in the nature of a committee of national development, presided over by the Prime Minister, as the Committee of Imperial Defence is, making it a committee of the Privy Council, with all the most competent and experienced people in charge of it. Its object would be to formulate a consistent and comprehensive policy for the development of our national resources, and to co-ordinate the work of the different Departments of the Government engaged in it. This committee should have associated with it, in order to enable it to carry out its work properly, a board of national investment, to take over the task now performed by the National Debt Commissioners and other bodies. All the capital resources of the different Government Departments— and they are very considerable—should be pooled and placed at its disposal.

The board would survey the whole problem of national development, and see if such resources as are now at the disposal of the Government are used to the best advantage and not dealt with haphazardly as is inevitable under the present system. My hon. Friends who initiated this Debate consider that the main point of their proposal is that there should be an Industrial Advisory Committee. That is very similar to the Liberal proposal of 1928 of a Council of Industry. There is no doubt that the methods of the 19th century, which served so well at that time, have now become inadequate and that we are suffering as the result of our success. The extreme individualism which was developed is hampering progress. The organisation of industry is now static and rigid, and some collective action is needed to start things moving once more. When industry observes, as it does, what is being done for agriculture in the way of marketing boards, consumers' councils and the many other production schemes that have been brought forward, it gets rather hungry, and, so far As there is success in these agricultural schemes, you cannot be surprised if industry comes along and says: "Why should we not be given the same opportunities as are offered to the extreme individualists in agriculture in order to enable them to come together and be more effective?"

The proposals of my hon. Friends who started this Debate are, in a word, first of all, to get industrialists themselves to organise. If they do not show any inclination to organise, they should be invited by the advisory committee to do so. If they will not even do that, the advisory committee itself should take action and make proposals. We have an interesting precedent for this in the reorganisation committee in the coal mines which is dealing with that industry more or less on the same lines, but, unfortunately, not with a great deal of success up to the present time, although I hope success awaits their efforts in the future. I just want to refer to this subject, because I feel, when we 'are dealing with the reorganisation of industry, we must not think solely of the employing side. If it is to be made a success, you have to bring into your schemes the equally vital element of labour. I should like to see a threefold structure in industry in this country. First, a national industrial council for all industry, such as was agreed upon in the great industrial conference of 1919 presided over by the right hon. Member for Clay Cross (Mr. A. Henderson), and later abandoned, agreed upon later during the Mond-Turner discussions, and which could be set up without any legislation if good will existed on both sides.

I should very much like to see the Government taking the initiative in that direction and setting up a body representing employers and employed and certain Parliamentary and independent interests, with the threefold object of having a useful channel of communication between industry and the Government, a body which should investigate and survey all the legislative proposals dealing with industry brought before Parliament—in that way the time of the House would be greatly saved—and with the object of intervening in any threatened dispute that seemed likely to arise. The second part of the national structure is that you should have in each industry either a joint industrial council or a trade board, or where at the present time there is joint negotiating machinery of some other type, that statutory powers should be given to each industry and the right of self-government. You would find that one result would be that the trade unions, who are so much confined to dealing solely with the wages and hours side of the trade, would be able to play their constructive part in co-operating in the building up of industry which they can do very effectively indeed if given the opportunity.

The last part of the structure would be greatly to the interest of industry from the human and business side if you had associated—it can be done, if necessary, by voluntary action—with every factory a works council of an advisory type, where every element engaged in the factory would have the right to be representd and of being told what was going on. He should be given full knowledge of all the activities of the work. It would make the worker feel that he was regarded not simply as a weekly wage-earner, but as an essential element that has as much right as anybody else to play his part in the conduct and control of industry. There are just two points where I think the men should be given statutory rights: the right to decide and agree upon the rules to be enforced in any factory, and the right of appeal against any dismissal, an appeal to some joint tribunal associated with the works. If we had machinery of that kind, through the national scale, the scale of each industry and then to each factory, it would greatly assist the other schemes of reorganisation with which we have been dealing to-night I just want to touch shortly on one other point of some importance. In this Amendment reference is made to modern methods of production and distribution. It is a fact that many industries are feeling the necessity, as the result of competition, and in order to bring themselves up to date, to go in for rationalisation or reorganisation, which is the main basis of our discussion to-night. I want to submit to the Government that here a unique opportunity is given to industry — and I hope they will make an appeal to them on the subject— to put into operation the 40-hour week, or a reduction in hours of something like that, without any reduction of wages whatever. I appreciate that where there is no reorganisation taking place it is very difficult, short of an international agreement, to make a reduction of hours without some reduction of wages, but where you have reorganisation taking place in an industry it is perfectly practicable, and experience has shown it, that you can, if the two things are done concurrently, reduce the hours certainly without any reduction of wages, and, if you are fortunate in the particular industry, actually with an increase. I do not suggest that that is any solution of the unemployment problem, but it does mean that if you take these two actions concurrently you are keeping in employment a larger number of people than will otherwise be the case. I hope that the Government will listen carefully to what has been said to-night, that they will ponder over the almost unanimous views expressed in favour of thinking and planning ahead, and that they will definitely act. At one time we used to be proud of our way of muddling through in this country. You cannot muddle through under modern conditions, and I hope that, as a result of the united help of this House in an age of planning, it will be found that our plans will be the best.

8.16 p.m.


When my hon. Friend the Member for East Wolverhampton (Mr. Mander) described himself as groping, not in the dark but in the twilight, I think that he did himself rather an injustice, because I found much of what he said extremely illuminating, although perhaps some of the shafts from his spotlights fell a little obliquely on the subject. He has given the House the great advantage of listening to his own immediate experience in industry. I should like to stress the most excellent answer given by my hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan) to the hon. Member for Mansfield (Mr. C. Brown). He seemed to be surprised at the sentiments of the hon. Members for Doncaster (Mr. Molson) and Darlington (Mr. Peat) who respectively moved and seconded the Amendment before the House to-night. He expected them, as far as I could infer from what he said, to offer an unbending defence of the present economic system as though this economic system was something stationary and inflexible like, let us say, the Albert Memorial or Cleopatra's Needle. The economic system is no more stationary than are the hon. Member for Mansfield and the hon. and learned Member for East Bristol (Sir S. Cripps), who, I am sorry to see, is no longer in his place. You cannot live without growth, and no system can survive without perpetual modification.

Before I go on to make one or more constructive suggestions about dealing with the mass of unemployment, I wish to say that I am not at all blind to what the Government have done to improve the industrial position of the country. Like my hon. Friend the Member for Central Leeds (Mr. Denman), who has left the Chamber, I share with him to some extent the representation of a city which almost exactly mirrors and reflects the degree of our industrial prosperity. I cannot forget that the present volume of unemployment there is no more than two-thirds of what it was in August, 1931. It is quite clear that in that great industrial centre in particular, and in the country at large, we might be a very great deal worse off. Indeed, under the last retrogressive Labour administration we went tragically and progressively worse with every month that passed.

My hon. Friend the Member for Doncaster said at the beginning of his remarks, what is clear from the terms of the Amendment, that the Amendment is designed to attempt some solution of the volume of unemployment, and to reabsorb the mass of the unemployed. There are, I suggest, two avenues along which one could usefully approach this problem. The first is to discover means of contracting the supply of labour, and the second means of enlarging the demand for that labour.

Cursorily, and without going into any detail, I will just mention two fundamental and long-term proposals which, I think, must be implemented within measurable time to increase the demand for workers and to contract the supply of labour. The first is the shortening of the hours of the working week, and the second is the raising of the school-leaving age. I only wish to-night fleetingly to mention those two proposals, but I believe in them with the same kind of confidence as I believe in the rising of the sun to-morrow morning. Both are perfectly inevitable. I have no doubt that the official answer to the raising of the school-leaving age would be that it has been deemed necessary to use public funds for other and more necessary things. With that I might not agree, but I do not wish to go any further into that matter now, because I want to come to a no less controversial matter—the proposal which is now being made on all sides for utilising public works, to absorb a larger number of the unemployed.

In this matter it is possible—and I hope that my hon. Friend the Parliamentary Secretary to the Board of Trade will agree with me—to divide these public works into two categories or classifications, first the unproductive but the necessary type, and secondly the productive and perhaps not so necessary type. I will, first of all, briefly deal with the figures that concern and illustrate the unproductive type. We have heard from an almost unimpeachable authority, the Chancellor of the Exchequer, that to keep a total of 4,000 men in work for a single year it is necessary to expend a sum of no less than £1,000,000, and that at the end of that period of 12 months you will need another sum of £1,000,000 to keep that same body of 4,000 men in work. That is to say, according to his figure, you need no less than £250 per man per year. There is another great economic authority whose economic predictions have been carried out by history, Mr. J. M. Keynes, who puts the figure much more optimistically at a lower level. He says, I believe, that it requires no more than £150 per man per year. But even if you take the lower figure, and if you attack the vast body of unemployment by that kind of unproductive public works, you will see that if you are to put 1,000,000 men into industry, you will need no less than £150,000,000 for a single year. If you take the Chancellor of the Exchequer's figure, you need not less than the astronomic figure of £250,000,000. That is clearly impossible when you consider that the type of public works contemplated would not yield any rent. Again, the capital sum would one day have to be repaid. When we hear of these ambitious public works it seems constantly to be forgotten that the capital sum has some day to be repaid and the bill must be footed.

But that criticism, as I say, is only applicable to the strictly unproductive type, under which heading, I suppose, can be held to fall the removal of level crossings, the building of non-tollpaying bridges, of roads, of reservoirs, and such capital expenditure. Several of these types of work, I submit to the House, are absolute necessities, and should be pursued without too close regard to cost. Particularly may that be argued of reservoirs up and down the country, because I am informed there is a danger this year of even more serious drought than that which occurred last year, and then caused such great and widespread anxiety. But there are other kinds falling under this unproductive head which, I think, should be set in hand. Every day that I come to this House and go on to the Terrace I see a perfect example. It is only necessary to look eastwards from the Terrace to see that hideous, that monstrous structure of Charing Cross Bridge defacing the grandest sight in the whole Kingdom. Some day that blot will go. There wilt be no Charing Cross Railway Bridge, and no Charing Cross station, north of the river. They will be replaced by a road bridge, and that road bridge will help to solve the traffic problem at the west end of the Strand. I cannot understand why the Government cannot do for the Southern Railway what they recently did for the Cunard-White Star Line in the building of the "Queen Mary." This is, I suggest, on every ground, economic, public, aesthetic, expenditure which is absolutely necessary. The millions of pounds involved. in the reconstruction of the Charing Cross site would send, I believe, an electric current through all the arteries of our national industries. You would need thousands of tons of

steel and thousands of tons of concrete. We are promised a nocturnal view of London by floodlighting in the next few months. I hope that the illuminations will not be confined to the noble monuments which somewhat absent-mindedly distinguish our Metropolis. Let a hundred searchlights be concentrated on Charing Cross Bridge so that public odium may be focussed on this ghastly medley of steel zigzags. That is an instance of public expenditure upon something which could not be expected to yield any immediate return in the form of rent.

But the inquiry is quite different when you approach productive public works. There are large classes of works where the Government could successfully guarantee a loan and be certain that the rent or yield from what they construct would provide the necessary interest. Hon. Members will have present in their minds the type of works I mean, unsubsidised or slenderly subsidised housing, telephones, possibly the Cunarder, anything indeed which restores what has been expended upon it. Recently on two occasions I have had the adventurous experience of passing along the Mersey Tunnel and I was one in a continuous chain of motor traffic. Tolls are paid. Quite soon, far sooner than was originally anticipated, this brilliant and useful feat of engineering will have paid for itself hand over fist. I wish seriously to ask the Government whether they will not at this stage reconsider the building of the Channel Tunnel. I have on two or three occasions asked by question in the House what is the Government's policy with regard to this possibility of vast and productive public expenditure. The Victorians proved that it was a scheme which is geologically possible, and the aeroplane has reduced to a final absurdity any strategic objections which may have been valid in the past. Everyone will assent that aircraft is not going to supersede the transport of heavy goods or earth-bound passengers. Here I suggest is a means of productive expenditure involving the expenditure of millions of pounds and the inevitable employment of thousands of men.

Mr. DEPUTY-SPEAKER (Captain Bourne)

The Channel Tunnel also involves legislation.


If that is so, then clearly I am out of order, and I submit to your Ruling. I was merely trying to adduce this as an example of one of those public works which could conveniently and profitably be embarked upon by the Government. I think it falls within the classification of useful and inevitable public works, and in these days of wireless, television and aircraft, we ought not to shrink from making a highway to the continent. I will not pursue that matter any further. All I wish to submit to the Government is, that with a little more vision and venturesomeness we might, by capital expenditure, put not merely thousands and tens of thousands of men into work, but hundreds of thousands. We do not want any voyages on the uncharted seas of Socialism. All that the Government should do now is to concentrate upon the achievement of the inevitable. It can only be delayed by stubborn procrastination. If the Government will look round the country they will see excellent opportunities for spending money on necessary objectives, and also upon objectives which will yield a profit, rent and interest. I hope that during the next 12 or 15 months the Government will not merely consider implementing a number of these plans. Are they going in the immediate future to concentrate upon their own future policy, or are they going always to turn their eyes backwards upon their own excellent record, a record which, unfortunately, the electors forget—and perhaps are entitled to forget—because they can only live in the present and in the future

8.32 p.m.


It is rather difficult to know exactly where to begin when you have listened to such an interesting discussion as we have had to-day, in which so many hon. Members have joined who are, obviously—they will pardon me—amateurs at the work. Many statements have been made which, if one had the opportunity, could be shown to be incorrect. I should like to suggest to the President of the Board of Trade that one way in which the Department can help the smaller industries is actually to prepare their case for submission to the Advisory Committee. This is, of course, unnecessary in the case of the large industries, but there are many small industries which are totally inexperienced, and do not realise the changed state of affairs, and I suggest that the Board of Trade could help them in preparing their case. There is, for instance, the Japanese competition in the shirt trade and the number of people thrown out of employment as a consequence. It has been said that our only hope of recovery is the return of our overseas trade, the interchange of trade between nations.

No doubt many people have heard of Professor Bergius, who invented the hydrogenation of coal. In their search in Germany for other possible changes they are now dealing with food, and Professor Bergius has succeeded in producing food from wood; you can get quite a considerable output of sugar from wood. A few days ago he said that he did not see an early return to inter-trade between nations because the nations themselves were able to produce all their own stuff. That is to say, that the raw material, for which we have been dependent upon other countries, can now be produced by these various ingenious processes and that the necessity for this inter-trade will not exist. That is one of the ways in which Germany is working at the present time. Industry is being put right by German doctors. The re-organisation of industry, about which we have heard so much, was taking place when I was a lad and manager of some works. We had then a scientific management, and one of the first steps in the edifice of our scientific management was to set up a planning department. That was long ago. I was one of the first to set up such a department in engineering in this country. We had nobody to put into it, but I took workmen from the machines and started the department. The man in charge was a man who had been working a shaping machine. In the end it was a success, although there was some trouble at first. I met this man the other day, and he reminded me of what was done on this occasion and of the measure of our success. The firm in which that was introduced is still one of the leading firms of the country. So possibly we began in the right way all those years ago.

Industry does not depend only upon itself, upon its internal organisation; it depends on the facilities that are given to it in the area where it has to carry on its work. There is a tremendous amount to be done in this country in re-equipping the country so as to make each industry more efficient to carry out its work. That is a part of the subject which has been little touched upon to-day. It is rather disappointing that it has been overlooked, because it brings with it, if properly done, an immense amount of employment. In my opinion it is the first way in which industry should be helped. What is meant by that? It means that every public utility, everything that in general we apply to our ordinary life, shall be made as efficient as it possibly can be made. To-day the public utilities of the country are in the main run by local authorities or by companies, and we have an illustration of a widespread organisation in the electrical industry and in the rate which allows them to supply the country.

The great success of the electrical industry was touched upon by the President of the Board of Trade. That success is largely the result of the good technical education that was applied throughout that industry almost earlier than in any of the other industries. electricity there is water. I suppose you could spend £50,000,000, nay £100,000,000, on water in this country, and get a return for it. Why cannot we do it? Possibly because the authorities who now have charge of water think they can carry on as they are doing now. There are many industries which require water. We have the example of the rayon industry. Instead of being in Lancashire it is to be in Somerset, and it has asked for a large supply of water. There is enough water that comes down from above, though we do not collect it in the right way. Given sufficient water an industry can go anywhere. The same holds good of gas. There is a gas grid in Belgium. The whole country is covered with a gas supply by an English company. There is a gas grid in the Rhine Valley, that is to say in the industrial area of Germany, from Hanover to Essen; and also from Berlin to Silesia. With extended gas supplies there would be demands for labour based on something from which there would be a return.

But of course all these things depend upon highly skilled and highly technical training to guide them. Suppose that you were to follow the policy of aiding industry by improving everything of this nature, transport being perhaps one of the biggest things. I may say in regard to transport that when I was in Germany I found that improved transport was one of the principal things to which they were looking for employment. They had an immense railway programme. What is the difficulty in dealing with the whole of the public utilities and general need supplies of this country? One difficulty is that they are in different hands. Gas is under the Board of Trade, electricity is under the Ministry of Transport, water is under the Ministry of Health, and land drainage under the Ministry of Agriculture. How is it possible, if you are to equip the country as a first-class industry would be equipped, when these main services are controlled by four different departments? It is not possible.

Therefore you are led, when you consider this problem, to setting up some sort of co-ordinating committee, which I believe should be a technical committee. I cannot say that, with the difficulties of this job, it would be possible to co-ordinate the working of these departments with a technically trained council. We have had many councils and committees mentioned today. I do not want to suggest things which are in any way impracticable, but I do want to draw attention to this fact You cannot do work of this nature efficiently unless a majority of the people who constitute that board are technically trained. I do not want to hold Germany up as an example, but in a certain sense, in regard to technically trained people, there are many points to be picked up from Germany. Those who travel there know that the boards of control in most of their industries are technically trained people. That is so with the biggest concern, such as Siemens.

How can this particular aid to industry be applied? Let me refer to the industrial district of South Lancashire. You have 5,000,000 people around Manchester. There the various public services might be brought into proper correlation. The towns themselves might go on performing their ordinary functions, but the general services could be reorganised and made more efficient. I mention this area because there is a dense population there and a close net-work of railways. Here is an oppor- tunity for putting transport into the very best possible condition. The Rhineland is to be entirely redeveloped by the Germans. They are going to make it possible to run high speed trains and to give the greatest facilities for transport. It is to cost 1,000,000,000 reichs-marks. That area is equivalent to the Lancashire area. To electrify the Lancashire area would cost an immense amount of money, probably;£100,000,000, or at any rate three-quarters of that. But it would mean immense employment and 'would leave the district so well equipped that industry would stay there and new industries go there.

It is not safe to proceed with the industries of this country and their equipment on the assumption that everything will come straight in time. The shortest way to make sure of success in future is to make the equipment of the country itself as good as or better than that in the best factories. A regional council could deal with an area such as I have mentioned, and other regions could be dealt with in a similar manner. We have such a system to a certain extent at present in the regional councils for town planning but their powers are limited. The time has arrived when, all these services should be combined under one authority, and in drawing them together in the various towns in a district of this kind we could provide against redundancies which have been occurring in towns where industry is affected.

Before I conclude I want to make a reference to what is I think, the biggest change at present contemplated in Germany. German industrial organisation to-day is very much on the lines of our own to this extent, that the industries are grouped in certain big towns and the people who work in the industries live in those towns or on the immediate outskirts. They have in Germany to-day a policy of establishing settlement towns which is on such an immense scale that, I am told, out of 10,000,000 workers 5,000,000 are going to be moved out of the present towns into the country. The country is being planned out and the most suitable places are being allocated to small towns devoted to definite industries which are also being moved out from the present towns. There is a special organisation working out that scheme at present. I have spent some time in trying to follow up these developments, and of all the schemes for providing employment and changing industry in Germany that is the biggest one. It is indeed on a colossal scale. Apart from that proposal, they are taking steps in Germany to aid industry by way of relief. Little has been said to-day about the subject of relief but the German method of encouraging development is to grant various reliefs as for instance to a man who puts in new machinery. That is having the effect of encouraging the re-equipment of works, and has provided employment in those concerns which are engaged in the making of the machinery and plant. I cannot tell how the financial balance of that scheme is worked out, and whether these are grants from local authorities or not—


I think that to carry out such proposals in this country would require legislation.


I was only trying to illustrate the effect of the steps that are being taken in Germany to secure employment and help industry generally. I was really addressing myself to the industrial side of the question, but I do not wish to carry the illustration any further. I would again direct serious attention to the help which could be given to industry generally by improving the facilities in the country, providing re-equipment and bringing the various services up to date in every way. It seems to me that, apart from the more contentious question of the statutory control of industry, of which we have heard so much to-day, there is a great chance to get on with big works of the kind I have indicated which would provide more employment than any of the other propositions brought forward to-day.

8.50 p.m.


My hon. Friend the Member for Platting (Mr. Chorlton) will excuse me if I do not follow him in his most interesting and stimulating speech which contained a mass of instructive ideas. More especially, I do not propose to follow him for the very good reason that both he and other previous speakers have been informed by you, Captain Bourne, that they were discussing matters involving legislation. I shall do my utmost to avoid falling into the same mistake. In general, I am in sympathy with the idea behind what is called national planning as it has been put forward here to-day, but I am not sure that I am in favour of the actual plans which have been suggested to us. I feel great sympathy with the general idea that at the present time we must look ahead and plan ahead but whether or not we should plan exactly on the methods which have been indicated to us to-day is an open question. This feeling of hesitation on my part is reinforced by certain claims made by those who advocate this policy.

My hon. Friend the Member for Darlington (Mr. Peat) claimed that if industry were organised in huge national combines it would be an instrument for international peace. I suggest that the two countries in the world which have their industries organised nationally in the most efficient manner are Japan and Germany and I have yet to hear that they are to be regarded as foremost among the pacific nations of the world. There is another doubt which I have in mind, and in expressing these views, I would ask my hon. Friend the Member for Doncaster to believe that I am not putting forward these points as criticisms. I am trying to get elucidation. I am led to fear by speeches which I have heard and books which I have read on the subject that planning is too often regarded as the planning of production in order to meet effective demand. I am afraid of that because that kind of thing has led to the destruction of good foodstuffs all over the world—a result which has undoubtedly shocked the conscience of the world. I feel that it is necessary, above all, to plan consumption, that is to say to plan a market which will be effective to meet potential production.

In the most attractive book which I have yet read upon the value of planning, namely, that by Sir Basil Blackett, the author states that national planning will be useless unless it includes the planning of the money system. The Noble Lord the Member for Hastings (Lord E. Percy) said that the only alternative to the subsidisation of the consumer by the creation of currency was the lowering of the cost of production, and my hon. Friend the Member for Doncaster said that a sound policy would be to bring down the costs of production until they were in harmony with prices. But sup- pose prices are not in harmony with the whole economic structure of this country or the world. Suppose prices fall so low, as they have done in most countries, that the burden of debt becomes insupportable and the whole economic balance is destroyed. Are we then to pursue a policy of forcing down costs so as to bring them into relation with prices, even when we realise that existing prices have made the burden of debt intolerable on industry and on the nation? That is surely what has been happening all over the world by the last three years, and it is recognised by the revaluation of currency and by the leaving of the gold standard. Prices have fallen to such a level as to destroy the industry and commerce of the world.

I feel that that policy is dangerous in the extreme, and when I hear the Noble Lord the Member for Hastings saying that the only alternative to this lowering of the costs of production is the subsidisation of the consumer by the creation of currency, I confess to some astonishment. I feel that it is essential so to organise our money and our price equilibrium as to increase the purchasing power of the people, but I feel that we may, in our usual British way, already have stumbled on the right road and that, by going off gold and keeping the pound stable in terms of purchasing power for four years, we may have, as we so often do in our history, stumbled into a solution of our difficulties. I would suggest that if it were possible to stabilise money on the purchasing power in the sterling area and to have fixed exchanges, not on gold, certain results would follow. One result would be that you would get rid of booms and slumps, and it would allow the automatic expansion of Government capital works when prices were falling. It would have the exact reverse of the effect of the gold standard. Under the gold standard, when there is a slump coming on and prices are falling, you have increased taxation and the stoppage of Government capital expenditure, and by such a means as I suggest exactly the reverse would take place. You would increase Government capital expenditure and decrease taxation, and it appears to me that it would, in a rough and ready way, give constantly increased purchasing power equal to constantly increasing production, and national productive power is constantly increasing.

Another criticism that I suggest in a tentative way to this policy of planning is, Will these vast organisations encourage or tend to stifle inventions Is it not possible that, if an invention is brought out which causes an enormous increase of unemployment, these combines would deliberately stifle it? There is, I believe, an invention in existence to-day in the spinning industry which would throw out of employment 75 per cent. of those engaged, and for this reason it is held up. Any economic improvement which we are working on must allow for and must welcome the fullest possible use of labour-saving machinery. The third criticism that I put forward is that I am not quite satisfied, in spite of the speeches this afternoon, that this policy will not crush out the small man. I think the hon. Member for Darlington said the small man could go to the board and would probably get compensation. Another speaker, I think it was the hon. Member for Stockton-on-Tees (Mr. Macmillan), said that the small man could become a new entrant into one of these great national industries. But could he? Take the Hops Board to-day. It is very difficult for a new entrant to go in unless he buys the right from an existing holder. The result might be to accentuate what is really an evil feature in our modern life— the concentration of power and of wealth in fewer and fewer hands. That evil has been drawn attention to in the following words It is patent that in our days not alone is wealth accumulated, but immense power and despotic economic domination is concentrated in the hands of a few, and those few frequently not the owners, but only the directors of invested funds who administer them at their own pleasure. The final point that I want to put forward is this: Would planning make for unduly increasing the authority of the State? If it did, it would be entering into the territory of the authoritarian State, and we get the authoritarian State to-day in so many different forms— in the forms of the Socialist, the Nationalist and the Fascist States. There, I think, is the real division in politics to-day. The great division in politics to-day is between those who believe that by the increase of State authority and the control of the individual you will achieve happiness for mankind. There are those who believe that the fixed ideal of the State can be attained in a few years and that once it is attained you get stability. Against that you get the other mental attitude of those who believe that progress can only be attained by liberty and that liberty involves the right to experiment, the method of trial and error, and that this involves the liberty of the individual to fail. I feel that that is the one thing that is worth working for in political life— absolute freedom, freedom to experiment and even to fail. By that means alone, I believe, can we ensure human progress.


In view of the reply of the right hon. Gentleman the President of the Board of Trade, I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Main Question again proposed.