Commons Sitting of 21 April 1936

Preamble
The House—after the Adjournment on 9th April for the Easter Recess—met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
NEW WRIT.
For the Borough of Camberwell (Peckham Division), in the room of David Field Beatty, esquire, commonly called Viscount Borodale (Chiltern Hundreds). —[Captain Margesson.]

PRIVATE BUSINESS.
Private Bills [Lords] (Standing Orders not previously inquired into complied with),
Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely,

East Lothian County Council Bill [Lords].

Rickmansworth and Uxbridge Valley Water Bill [Lords].

Rhymney Valley Sewerage Board Bill [Lords].

2

South Suburban Gas Bill [Lords].

North Metropolitan Electric Power Supply Bill [Lords].

Tring Gas Bill [Lords].

Bills to be read a Second time.
Private Bills (Petition for additional Provision) (Standing Orders not complied with),
Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the Petition for additional Provision in the following Bill the Standing Orders have not been complied with, namely,

London and North Eastern Railway (General Powers) Bill.

Report referred to the Select Committee on Standing Orders.

Gas Light and Coke Company (No. 1) Bill,

Read the Third time, and passed.

London Midland and Scottish Railway Bill (King's Consent signified),

Bill read the Third time, and passed.

North Wales Electric Power Bill,

Read the Third time, and passed.

Hereford Corporation Bill,

Uckfield Water Bill,

As amended, considered; to be read the Third time.

Epsom and Walton Downs Regulation Bill [Lords],

Second Reading deferred till Tomorrow.

3

Gravesend and Milton Waterworks Bill [Lords],

Royal National Pension Fund for Nurses Bill [Lords],

Yorkshire Electric Power Bill [Lords],

Read a Second time, and committed.

Coventry Corporation Bill (by Order),

As amended, considered; to be read the Third time.

Bognor Regis Urban District Council Bill [Lords] (by Order),

Second Reading deferred till Tomorrow.

Nottinghamshire and Derbyshire Traction Bill [Lords] (by Order),

Second Reading deferred till Thursday.

ORAL ANSWERS TO QUESTIONS.
  SCOTLAND.

    LIGHTING FACILITIES (WEST LOTHIAN).
    Mr. MATHERSasked the Secretary of State for Scotland whether he is aware that the village of Dechmont, West Lothian, is entirely without gas or electric-lighting facilities; and whether he will take such action as lies within his power to remedy this unsatisfactory state of affairs?
    The SECRETARY of STATE for SCOTLAND (Sir Godfrey Collins): The answer to the first part of the question is in the affirmative. The matter is one between electricity or gas supply undertakers and the inhabitants, and I have no power to take any action. I understand that the electricity supply company for the area requires a guarantee before introducing electric lighting facilities: and that when the question was considered in 1932, in connection with a proposal that the county council should form Dechmont into a special lighting district, the inhabitants did not wish to proceed on account of the cost which would fall upon them.
    Mr. MATHERS: Does not the Secretary of State think that to refrain from lighting this village, in view of the fact that power is within 100 yards of the place, is wrong; and will he use his influence with those responsible to cause them to light the village, which is on one of the main roads?
    Sir G. COLLINS: As my hon. Friend is no doubt aware, to or more electors in the area can apply for the formation of the area into a special lighting district. The matter is one for the county council.
    Mr. MATHERSasked the Secretary of State for Scotland whether he is aware of the dissatisfaction felt by tenants of holdings on the Houstoun mains scheme, Uphall, West Lothian, owing to the lack of electric light on the holdings; and whether he will take steps to remedy this grievance, in view of the impossibility of the tenants meeting the demand of the Scottish Midlands Supply Company in respect of repayment of the capital cost?
    Sir G. COLLINS: The answer to the first part of the question is in the affirmative. As regards the second part I am informed that the tenants have not been asked to repay the supply company's capital outlay but that the company require a guarantee of a minimum annual revenue before they will undertake to erect the necessary distributing lines. I have ascertained that the company's terms are considered by the Electricity Commission to be normal and reasonable.
    Mr. MATHERS: Does the right hon. Gentleman himself consider that terms which call for a return of 15 per cent. per annum on the capital outlay are reasonable?
    Sir G. COLLINS: My hon. Friend is under a misapprehension. The company do not ask for a 15 per cent. return on their capital. The 15 per cent. is to include certain payments for electricity, which reduce the 15 per cent to a normal figure.

    INDUSTRIAL DEVELOPMENT.
    Mr. JOHNSTONasked the Secretary of State for Scotland the source of the information which he communicated to the Scottish Economic Committee on the 6th instant that there has been in fact no drift southward of industry from Scotland; whether he has considered the statistics and history of such industries as calico printing and the cotton industries; and whether he is prepared to make available, in the Library of the Reuse of Commons or elsewhere, figures and facts dealing with the movement of industries to or from Scotland in the past 20 years?
    Sir G. COLLINS: My statement to the Scottish Economic Committee was based on the situation in the last few years as disclosed in the Board of Trade's Surveys on Industrial Development for 1932, 1933 and 1934, from which it would appear that there has been no large southward movement of industrial establishments. As regards the second part of the question, I am aware that the Reports of the Census of Production for 1924 and 1930 show that for calico printing the Scottish share of the total United Kingdom production declined considerably and that for finishing work on cotton piece goods it declined slightly, but that for the spinning and weaving sections there was no appreciable change. As regards the third part, much information bearing on the subject of the movement of industries has already been published in the Census of Production Volumes and in the Ministry of Labour Gazette; and the Scottish Economic Committee will, no doubt, give consideration to this subject.
    Mr. JOHNSTON: If the right hon. Gentleman is relying upon the Survey of Industrial Development for 1934, issued by the Board of Trade, is he aware that in that very document it is made perfectly clear that during the period in question five factories were closed in Scotland for every three new ones that were opened in England, while in the South of England the position is exactly the reverse?
    Sir G. COLLINS: No doubt the figures which the right hon. Gentleman quotes are accurate, but that does not mean to imply that factories are closed in Scotland and similar factories are opened in England. It is not due to factories being closed in Scotland and reopened in England.
    Mr. JOHNSTON: Do not the facts which the right hon. Gentleman now admits put an entirely different face on the statement which he is alleged to have made at the opening meeting of the Scottish Economic Advisory Committee?
    Sir G. COLLINS: No. The statement I made was made after great consideration, and I think it was an absolutely fair picture of the whole position.
    Sir ARCHIBALD SINCLAIR: In view of the great importance of this question to the economic life of Scotland, and of the great public interest taken in the right hon. Gentleman's statement, would he not consider publishing the information upon which his statement was based in the form of a White Paper, so that all the facts could be collated from the various sources which he has mentioned in his reply to the question on the Paper?
    Sir G. COLLINS: I should be very happy to take a suitable opportunity of informing my right hon. Friend and others of the real facts, but I do not think that a White Paper would be the proper course to pursue. I am, however, anxious that the facts should be known and that the public should be able to judge.
    Mr. JOHNSTON: What does the right hon. Gentleman mean by a suitable opportunity to make the facts clear?
    Sir G. COLLINS: No doubt such an opportunity will present itself in due course.
    Sir A. SINCLAIR: Can we be assured that the right hon. Gentleman will not dismiss from his mind the possibility of issuing a White Paper on this subject in some form in which the facts can be clearly explained to the people of Scotland?
    Sir G. COLLINS: Certainly.

    POLICE CELLS, GLASGOW.
    Mr. McGOVERNasked the Secretary of State for Scotland whether inquiry has taken place into the bad condition of police cells in Glasgow, as alleged by the hon. Member for Shettleston previously; and whether any changes are now proposed in the furnishing of these cells?
    Sir G. COLLINS: The police cells in Glasgow are regularly examined by His Majesty's Inspector of Constabulary in the course of his normal duties. As regards the second part of the question, early this year I issued a Circular, of which I am sending the hon. Member a copy, on the standard of accommodation in police cells and I understand that since then the Glasgow Police Committee have decided to make a number of additions to the furnishings for the use of prisoners in such cells.
    Mr. McGOVERN: In view of the fact that it has now been decided to furnish these cells, after the statement I previously made that the cells were not furnished, is it not the view of the right hon. Gentleman's Department that their statement was wrong and that I was right?

    COAL INDUSTRY (RELIEF FUNDS).
    Mr. McGOVERNasked the Secretary for Mines the number of relief funds in existence raised for mining disasters and the amount of money at present in existence for each separate disaster?
    The SECRETARY for MINES (Captain Crookshank): I would refer the hon. Member to the answer I gave to him on 17th March. The return is now in the press, and will be available very shortly.
    Mr. McGOVERN: What does the hon. Gentleman mean by "very shortly"?
    Captain CROOKSHANK: In the spring.
    Mr. McGOVERN: Will the hon. and gallant Gentleman say which spring?
    Sir VANSITTART BOWATER: Will my hon. and gallant Friend use his best endeavours to get these balances amalgamated and so save considerable expenditure in the dispersal of them?
    Captain CROOKSHANK: The question is about a return, not an amalgamation.

    ALBERTA (DEBT).
    Sir CYRIL COBBasked the Secretary of State for Dominion Affairs whether he will, in view of the position of United Kingdom holders of the province of Alberta obligations, ascertain from the Canadian Dominion authorities the circumstances in which the burden of debt complained of was incurred by the Alberta Government; and whether the province invited the loans of which the proceeds have been expended by the borrowers upon public purposes?
    The SECRETARY of STATE for DOMINION AFFAIRS (Mr. Malcolm MacDonald): I assume that my hon. Friend refers to the debt which matured on 1st April last. The published records show that $3,200,000 of 6 per cent.
    8
    Alberta Government Bonds were issued as from 1st April, 1921, of which $2,200,000 were for the Government telephone system, and $1,000,000 for general Government purposes. Tenders were asked for in the usual way.

    NEWFOUNDLAND.
    Mr. LUNNasked the Secretary of State for Dominion Affairs whether he has any statement to make on the position of affairs in Newfoundland?
    Mr. M. MacDONALD: A report by the Commission of Government on their work (Cmd. 5117) was recently presented to both Houses of Parliament. The effects of the bad fishing season in 1935 have been reflected during the winter in an increase in the numbers receiving relief, but the revenue of the country has on the whole borne up well, and I am glad to say that the 1936 season has opened with an excellent seal fishery. Conditions in the foreign markets for codfish continue disturbed, but plans are in hand for improved methods of production and marketing, and the Governor reports that the prospects generally are not unhopeful. I should like to take this opportunity of expressing my deep regret at the loss which the Commission have sustained through the death at, the end of February of Mr. Alderdice, the Vice-Chairman of the Commission and former Prime Minister.
    Mr. LUNN: Is it not a fact that the numbers on relief are larger than they have been at any time since the Commission was established and is not the economic position of the people worse than it has been at any time?
    Mr. MacDONALD: I have explained that the increase in the numbers on relief during the winter is due to a cause which I hope may be only temporary.
    Sir PATRICK HANNON: Is it not a fact that the administration of Newfoundland is far better than it has been for many years past?
    Mr. MacDONALD: I certainly agree that the administration is steadily improving all the time and, if hon. Members will be patient, we hope the due fruits of that administration will come to the Island.

    LATE VICE-ADMIRAL SOMERVILLE.
    Mr. STOURTONasked the Secretary of State for Dominion Affairs whether he has made inquiries as to the motive for the murder of Vice-Admiral Somerville, of County Cork, and whether any clue as to the identity of the assassins has been obtained?
    Mr. M. MacDONALD: My hon. Friend will realise that the detection and punishment of crime committed in the Irish Free State are matters for the Irish Free State Government. A statement was made on behalf of the Free State Government in the Dail on 26th March expressing sympathy with the relatives of the victim of this cowardly crime and its determination to take every possible step to bring those responsible to justice. I have no later information. I am sure that the House would wish to join in expressing its sympathy with the late Admiral Somerville's relatives.
    Mr. STOURTON: Is it not a fact that this was a particularly cowardly form of political murder?

    IMPERIAL CONFERENCE.
    Captain PETER MACDONALDasked the Secretary of State for Dominion Affairs whether the next Imperial Conference is to be held in London next year during the period of the Coronation ceremonies; and, if so, whether it will be held before or after such ceremonies?
    Mr. M. MacDONALD: I would refer the hon. Member to the reply given by my Noble Friend to the hon. Member for Devizes (Sir P. Hurd) on 8th April, to which I am not at present in a position to add anything.
    Captain MACDONALD: Are any conversations proceeding with Dominion Governments on the subject of the next Imperial Conference?
    Mr. MacDONALD: In the reply to which I have referred, my Noble Friend indicated that communications are proceeding with regard to this matter.

  TRADE AND COMMERCE.

    ARGENTINA.
    Mr. H. G. WILLIAMSasked the President of the Board of Trade whether
    10
    he proposes to denounce the trade agreement with the Argentine Republic on 7th May, 1936?
    Captain DOWERasked the President of the Board of Trade whether he intends to give the six months' notice to determine the Anglo-Argentine Trade Agreement on 6th May?
    The PRESIDENT of the BOARD of TRADE (Mr. Runciman): The revision of the Anglo-Argentine Trade Agreement is at present the subject of informal discussion with the Argentine Government, and I am, therefore, unable to make any statement in regard to its future.
    Mr. WILLIAMS: Is the right hon. Gentleman prepared, as a precaution, to give notice of denunciation on 7th May so that we shall be perfectly free six months later to do as we think fit?
    Mr. LEVY: Is the right hon. Gentleman aware that the balance of trade is definitely against this country under the agreement now in force, and would he not have very much better bargaining power if he denounced the treaty so as to get a free hand for the future?
    Mr. GEORGE GRIFFITHS: Is not the percentage of trade to the advantage of Britain?
    Captain DOWER: When will the right hon. Gentleman be in a position to tell the House whether notice to terminate the agreement will be given?
    Mr. RUNCIMAN: I cannot say at present. Informal discussions are proceeding now.
    Rear - Admiral Sir MURRAY SUETERasked the President of the Board of Trade whether he will, prior to the negotiations for an Anglo-Argentine trade agreement, make it clear to the Argentine authorities that proposals for the relaxation of the harsh treatment of British commercial investments in Argentina will be considered solely on their merits by His Majesty's Government and not as constituting a claim by Argentina for favoured treatment towards Argentine meat?
    Mr. RUNCIMAN: I will keep in mind the suggestion of my hon. and gallant Friend.
    Mr. BENSON: Will the right hon. Gentleman realise that the Argentine cannot possibly pay interest on our investments unless we allow their goods to come into this country?
    Captain DOWERasked the President of the Board of Trade whether he has any information to give the House with regard to our long-term livestock policy and the discussions with the Argentine Government on the proposals put forward by His Majesty's Government?
    Mr. RUNCIMAN: Informal discussions are now proceeding with representatives of the Argentine Government, but I am not at present in a position to make a statement.
    Captain DOWER: Is the right hon. Gentleman aware that the cattle industry considers that it was extremely badly treated in the last trade agreement, and can they he assured that their interests will have greater consideration in any new agreement?
    Mr. RUNCIMAN: There is constant consultation proceeding between the Minister of Agriculture and the Board of Trade on this and other cognate subjects.
    Captain DOWER: Can the right hon. Gentleman hold out any hope?
    Sir JOSEPH LAMB: Is the right hon. Gentleman aware that delay is causing untold injury to the whole industry?
    Mr. RUNCIMAN: We are proceeding according to programme.

    INDIA (OTTAWA AGREEMENT).
    Mr. H. G. WILLIAMSasked the President of the Board of Trade whether notice has been given by the Government of India for the termination of the agreement concluded at Ottawa in 1932?
    Mr. RUNCIMAN: No, Sir.
    Mr. LEWISasked the President of the Board of Trade whether he will get into touch with the Government of India forthwith with a view to ascertaining what alterations, if any, are contemplated by them with regard to preferential treatment for British goods in the Indian market when the Ottawa Agreement ceases to operate, in order that the British Government may have time to consider what alterations, if any, they may in consequence desire to introduce
    12
    with regard to the preferential treatment of Indian goods in the British market?
    Mr. RUNCIMAN: Notice of denunciation of the agreement has not been received. In any case, there are a number of matters affecting United Kingdom trade interests which His Majesty's Government will wish to raise in any negotiations which may ensue, including matters affecting the preferential treatment of Indian goods in this market.

    DENMARK.
    Mr. HALL-CAINEasked the President of the Board of Trade the nature of the understanding resulting from the Anglo-Danish trade conversations with regard to the Anglo-Danish Treaty expiring in June this year?
    Sir GEORGE MITCHESONasked the President of the Board of Trade whether he has any statement to make on the negotiations with Denmark in respect of the proposed new commercial agreement?
    Mr. RUNCIMAN: As regards the result of certain preliminary discussions, I would refer to the reply given on 8th April to the hon. Member for Lincoln (Mr. Liddall). Negotiations relating to the temporary extension of the Commercial Agreement of 1933 with Denmark will he opened on 11th May.
    Mr. GIBSON: In these negotiations will the right hon. Gentleman see to it that the textile industry has due consideration? It was entirely overlooked in the recent allocation of licences by the Danish Government.

  MERCANTILE MARINE.

    OIL POLLUTION (SEPARATORS).
    Mr. DAYasked the President of the Board of Trade -whether he will consider suggesting international action in order that all ships are fitted with separators to prevent the pollution by oil from ships of rivers and coastal waters, and so prevent the destruction of fish and bird life; and, failing that, will he introduce regulations that will extend the use of this apparatus on all British ships?
    Mr. RUNCIMAN: International action as to the pollution of the sea by oil has

    13
    been considered by the League of Nations, who have circulated to Governments for observations a report and a draft convention on the subject prepared by a committee of experts. The report states that a requirement making compulsory the fitting of separators on existing ships would not be acceptable to the chief maritime nations, and that it therefore cannot be included in any International Convention which can be adopted at the present time. It advocates, however, the inclusion in the final act of any convention of a recommendation by Governments to shipowners that separators should be fitted on new vessels wherever practicable. As regards the last part of the question, the answer is in the negative.
    Mr. DAY: How many British ships are fitted with separators?
    Mr. RUNCIMAN: I could not say without notice.

    PACIFIC TRADE.
    Captain P. MACDONALDasked the President of the Board of Trade whether he has now given further consideration to the possibility of providing Government assistance to British shipping in the Pacific; whether he has all the information which he requires with regard to this problem; and whether there are to be any discussions between the Government of this country and the Governments of Australia and New Zealand with the object of working out some joint plan of action in this respect?
    Mr. RUNCIMAN: I would refer my hon. and gallant Friend to the reply which was given on 8th April to a question on this subject by the hon. Member for Devizes (Sir P. Hurd).
    Captain MACDONALD: Is the right hon. Gentleman aware that since that time two British shipping companies have given notice to terminate their services in the Pacific owing to the fact that they cannot compete with the subsidised shipping of other countries, and will he in conjunction with the Dominion Governments take some action in the matter?
    Mr. RUNCIMAN: Discussions are proceeding between the Dominion Governments and ourselves on the subject now.
    Mr. H. G. WILLIAMS: Has the right hon. Gentleman considered the desirability of denouncing the agreement with the United States of America providing for most-favoured-nation treatment in order to impose repressive duties upon American goods until they stop this sort of thing?

    WORKING HOURS.
    Mr. LYONSasked the Minister of Labour whether he can state the progress of his conversations with industrial representatives with reference to a five-day week and work sharing in industry, and the date of the last of such conversations; whether he can agree to publish a statement of the non-confidential parts thereof; and whether, in view of the success of the five-day week in the factories of Messrs. Boots, Limited, and the report of Sir Richard Redmayne thereupon, he has met, or is proposing to meet, the introducers of that scheme in the course of his discussions?
    Mr. T. SMITHasked the Minister of Labour whether he has any further information to give the House regarding conversations with, employers of labour on the question of a reduction of working hours?
    The MINISTER of LABOUR (Mr. Ernest Brown): As the reply is very long, I will circulate it in the OFFICIAL REPORT.
    Mr. LYONS: May I ask my right hon. Friend whether, in view of what is the great public interest in this pressing matter and the desire of many Members of this House to have the opportunity of discussing what has taken place, he does not think an early statement can usefully be made; and also does he not think that those who pioneered this industrial development might well be taken into consultation in the matter?
    Mr. BROWN: Those are facts which I have had in mind. I have prepared a very full statement, and perhaps my hon. and learned Friend will read it, and then, if necessary, put down a question.
    Mr. G. GRIFFITHS: Will the Minister use his endeavours to see that there is no reduction of wages whatever?
    Mr. BROWN: We always take note of the possible effect on earnings.
    Following is the reply:
    In addition to meetings with the National Confederation of Employers' Organisations and the Trades Union Congress General Council, my predecessor and I have had meetings with the representatives of employers' organisations in 22 industries, the last meeting taking place on 30th July last. The hon. Members will see from the list of these industries which follows that they cover a substantial part of industrial employment. Since July there have been a number of informal discussions and arrangements have been made for further meetings during May with certain industries not previously covered. The main object of the meetings has been to stimulate the examination in the industries of all means by which employment may be increased. Among the questions to which attention has been specially directed have been the supply and availability of various classes of workers, the age distribution of workers, hours of work and overtime. As regards the reduction of the hours of work it has been made clear to me that any reduction which involved a reduction of earnings would not be acceptable to the workpeople and that, in the various industrial negotiations which have taken place during recent months, the aim has been the increase of earnings rather than the reduction of hours. The report on the action taken by Messrs. Boots to which the hon. Member for Leicester refers draws attention to the differences which exist in the various industries in regard to the cost of a reduction of hours of work and I regard it as a very valuable contribution to the discussion of this problem. Messrs. Boots have been in close touch with my Department and it is not necessary to arrange for a special meeting with them.
    The list of industries in which meetings with representatives of employers have already taken place is as follows:

    Engineering.

    Shipbuilding.

    Iron and Steel.

    Building.

    Public Works Contracting.

    Brick and Tile.

    Pottery.

    Chemicals.

    Glass and Glass Bottle.

    16

    Railway Service.

    Tobacco.

    Woollen and Worsted.

    Textile Bleaching, Dyeing and Finishing.

    Hosiery.

    Boot and Shoe.

    Electricity Supply.

    Gas Supply.

    Sugar Confectionery and Food Preserving.

    Tin Box.

    Licensed Hotel and Restaurant Service.

    Wholesale Clothing (Men's).

    Shirt, Collar and Tie, etc.

    ROAD ACCIDENTS.
    Mr. SHORTasked the Minister of Transport whether he has concluded his consultation with the motor traders and manufacturers respecting the design of motor cars in relation to the cause of accidents, and, if so, with what result?
    The MINISTER of TRANSPORT (Mr. Hore-Belisha): I am glad to be able to tell the hon. Member that progress has been made in this matter, but the formulation of requirements, which may entail modifications in the design of motor vehicles, involves a considerable amount of preliminary work.
    Mr. PALING (for Mr. T. SMITH)asked the Minister of Transport whether, in view of the large number of persons that are not able to visit cinemas or other places of amusement, he will consider exhibiting the film "Death on the Road" at various centres and schools throughout the country free of charge?
    Mr. HORE-BELISHA: I am glad to say that the newspaper interests responsible for the production of this film have offered to supply 16 m.m. films to schools which are equipped with the necessary apparatus for projection.
    Captain Sir WILLIAM BRASS: Can the right hon. Gentleman say whether Members of this House will be allowed to see this film, and can he make arrangements for that purpose?
    Mr. HORE-BELISHA: Yes, Sir.

  UNEMPLOYMENT.

    REGULATIONS.
    Mr. STOURTONasked the Minister of Labour when it is proposed to introduce new unemployment Regulations in fulfilment of the pledge given at the General Election?
    Mr. E. BROWN: I would refer my hon. Friend to the statement which I made immediately before the Easter Recess.
    Sir W. BRASS: Can the right hon. Gentleman say whether, when he introduces the Regulations, they will entail legislation being passed by this House?
    Mr. BROWN: I cannot say yet.

    INSURANCE.
    Miss RATHBONEasked the Minister of Labour what have been the total amounts under unemployment insurance of the contributions paid and the benefits received by male and female contributors, respectively, during 1935 or for the last period of 12 months for which figures are available?
    Mr. E. BROWN: Separate accounts are not kept of the income and expenditure of the Unemployment Fund in respect of the various classes of contributors, but it is estimated that during the year ended 31st March, 1936, the contributions received (including the Exchequer contribution) and the benefit paid were approximately as follow:

    Males:

    £

    Contributions

    50,000,000

    Benefit (including dependants benefit)

    36,500,000

    Females:

    Contributions

    16,000,000

    Benefit (including dependants benefit)

    6,500,000

  INDIA.

    SITUATION.
    Mr. GRENFELLasked the Under-Secretary of State for India whether he has any statement to make on the present position in India?
    The UNDER-SECRETARY of STATE for INDIA (Mr. Butler): The situation
    18
    in India remains satisfactory and is substantially the same as when I answered a similar question by the hon. Member on 4th February.
    Mr. GRENFELL: Does the hon. Gentleman suggest that there have been no events worthy of note by the Government since the last question was answered?
    Mr. BUTLER: I am very glad to be able to say that the situation about which I was asked remains satisfactory, and that, I think, is the best answer to the general question which the hon. Gentleman has asked. If he desires information on specific points, I shall be glad to give him an answer, if he will put down a question.
    Sir P. HANNON: Would it not be better to leave questions of this kind seeing that the new Governor-General has only just gone into office?

    MR. SUBHAS BOSE.
    Mr. THURTLEasked the Under-Secretary of State for India (1) when Mr. Subhas C. Bose was first arrested in respect of the charge for which he is at present under detention;
    (2) if he can now say whether or not the Government of India intends to bring Mr. Subhas C. Bose to trial?
    Mr. BUTLER: Mr. Bose is detained, as he was in January, 1932, under Regulation III of 1818, a procedure which, as I stated in reply to the hon. Member on 6th April, does not involve trial on a definite charge or the formulation of such a charge.
    Mr. THURTLE: Is not the hon. Gentleman aware that this prolonged detention without trial is quite contrary to British standards of justice, and will he make strong representations to the Government of India to bring it to an end?
    Mr. BUTLER: Mr. Bose's activities, connected as they are and were with the Terrorist movement, are reasons which involve special methods such as are prescribed by this special Regulation.
    Mr. THURTLE: Does not the hon. Gentleman realise that if this man has committed a crime, it should be possible to prove it; and why is action not taken to prove the crime?
    Mr. BUTLER: The reason why this person was originally detained was referred to the scrutiny of two judges, who thoroughly investigated the case against him.
    Mr. MAXTON: Is Mr. Bose actually accused of terrorist activities?
    Mr. BUTLER: Mr. Bose was associated closely with one of the main terrorist parties, and this is the reason why he was detained.

    CAPITAL PUNISHMENT.
    Mr. DAYasked the Secretary of State for the Home Department whether the Government propose to take any action following the report of the Select Committee on Capital Punishment; is any amendment of the law in that connection contemplated; and will he give the House particulars?
    The SECRETARY of STATE for the HOME DEPARTMENT (Sir John Simon): I would refer to the reply which I gave to a question on this subject by the hon. Member for Wolverhampton East (Mr. Mander) on 19th December last.
    Mr. DAY: In view of the fact that the report was issued by the Select Committee in 1930, is it not high time that some action was taken?

    NATIONAL STUD.
    Mr. HALL-CAINEasked the Minister of Agriculture whether any progress has been made in reaching a decision as to the future policy of the Government with regard to the national stud and, in particular, as to whether any arrangements are to be made to transfer this organisation to Great Britain?
    The PARLIAMENTARY SECRETARY to the MINISTRY of AGRICULTURE (Mr. Ramsbotham): I am not in a position to add to the reply which my right hon. Friend gave to my hon. Friend on 5th December last.

    FAR EAST.
    Mr. GRENFELLasked the Secretary of State for Foreign Affairs whether he has any statement to make regarding affairs in the Far East?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Viscount Cranborne): As regards North China and Sino-Japanese relations generally, the situation has not altered materially since the answer given by my right hon. Friend on 4th February to questions put by my hon. Friend the Member for South-West St. Pancras (Mr. Mitcheson) and the hon. Member for Don Valley (Mr. T. Williams). Hon. Members will have observed that there has latterly been a recrudescence of incidents, involving in some cases loss of life, along the borders separating Manchuria from Outer Mongolia and the Soviet Far Eastern provinces respectively. My right hon. Friend understands that in both cases the institution of border commissions to deal with the situation is under consideration. The text of the protocol signed on 12th March between the Soviet Government and the Outer Mongolian authorities has been communicated by the Soviet Government to the Chinese Government, and has led to a protest from the latter who consider it to be incompatible with the Sino-Soviet Treaty of May, 1924, in which the sovereignty of the Chinese Republic over Outer Mongolia was recognised. The Soviet Government do not however admit the incompatibility. I might add that His Majesty's Government have noticed with pleasure that, in the course of a recent statement, the Siamese Minister for Foreign Affairs referred to Siam's friendship with this country and her fidelity to the League of Nations, as also to his own attachment to the policy of international co-operation in the cause of peace.

    ITALY AND ABYSSINIA.
    Mr. PALINGasked the Secretary of State for Foreign Affairs whether he has any statement to make on the Italo-Abyssinian war?
    Viscount CRANBORNE: As the hon. Member will be aware, my right hon. Friend has only returned to-day from Geneva, where the whole subject of the Italo-Abyssinian dispute has been under review. It is therefore not possible for me to make any statement on the subject this afternoon.
    Mr. PALING: Have not the League representatives just granted unto themselves a licence to help Abyssinia?
    Mr. COCKS: Will the Noble Lord say where the honour of the British Government is to be buried?
    Lieut. - Commander FLETCHERasked the Secretary of State for Foreign Affairs whether he has any statement to make regarding the application of oil sanctions to Italy?
    Viscount CRANBORNE: I am not in a position at present to add anything to what I said on this subject in the course of the Debate on 9th April.
    Mr. H. G. WILLIAMSasked the Chancellor of the Exchequer whether he can furnish an estimate of the cost to date of the naval, military and air precautions taken as a result of the Italo-A byssinian dispute?
    The FINANCIAL SECRETARY to the TREASURY (Mr. W. S. Morrison): The provision made in Supplementary Estimates to meet the cost to 31st March, 1936, of these precautions amounts to approximately £7,000,000.
    Mr. WILLIAMS: Is it proposed in the forthcoming Budget to impose a special tax on members of the League of Nations Union to pay this sum?

    EUROPEAN SITUATION.
    Mr. LEWISasked the Secretary of State for Foreign Affairs the result of the latest conversations that have taken place between the representatives of the Locarno Powers?
    Mr. MANDERasked the Secretary of State for Foreign Affairs the position with regard to conversations between the Locarno Powers concerning the recent proposals from Germany?
    Viscount CRANBORNE: I would refer the hon. Members to the terms of the communiqué issued by the representatives of the Locarno Powers at the conclusion of their meeting at Geneva on 10th April, the text of which was published in the Press the following day.
    Mr. PALING (for Mr. T. SMITH)asked the Secretary of State for Foreign Affairs whether he has any statement to make regarding European affairs?
    Viscount CRANBORNE: My right hon. Friend last dealt with the situation in Europe in the course of the
    22
    Debate on 6th April, and I do not think I can usefully add anything of a general nature to what he then said.
    Mr. MORGAN JONESasked the Secretary of State for Foreign Affairs whether he has any statement to make on the international situation?
    Viscount CRANBORNE: I cannot usefully add anything of a general nature at the present moment to the statements which my right hon. Friend has made in recent Debates on different aspects of the international situation.

    STAFF CONVERSATIONS.
    Captain DOWERasked the Secretary of State for Foreign Affairs whether he has any information to give the House with regard to the British, French, and Belgian Staff Conversations held in London?
    Mr. MANDERasked the Secretary of State for Foreign Affairs the present position with regard to the Staff Conversations between Great Britain, France, and Belgium, and how far they have proceeded?
    Lieut. - Commander FLETCHERasked the Prime Minister whether he has any statement to make regarding the Staff Conversations?
    The PRIME MINISTER (Mr. Baldwin): I would refer hon. Members to the communique issued by His Majesty's Government on 18th April, which has been published in the Press, and to which I have nothing to add.
    Mr. MANDER: May I ask the right hon. Gentleman whether these conversations have now been completed, and am I to assume that it is not proposed to resume them, as far as can be seen?
    The PRIME MINISTER: Perhaps the hon. Member will be good enough to put a question down on that point.

    INTERNATIONAL OBLIGATIONS.
    Mr. GARRO-JONESasked the Secretary of State for Foreign Affairs whether His Majesty's Government, in the study of their international obligations, draw any distinction between an act of aggression and an unprovoked act

    23
    of aggression; whether he can give any indication of the method by which provocation which has become reciprocal and progressive will be traced to its historical source; and whether, in the framing of any further pacts, he will endeavour to secure the omission of an adjective which is likely to cause more cavil than the term aggression unqualified?
    Viscount CRANBORNE: The answer to the first part of the question would depend upon the whole of the terms of the particular agreement under which the obligation arose. As regards the second part of the question, the point would, in the opinion of His Majesty's Government, have to be determined not by a priori rules, but in the light of the circumstances of each case and of the international instruments which might be applicable to it. As regards the third part, the foregoing considerations will doubtless not be overlooked.

    SECRETARIES OF STATE.
    Mr. TINKERasked the Prime Minister whether he is aware that the prevailing opinion is that all Secretaries of State should be in the House of Commons; and will he consider amending the statute that at present limits the number to six, so that in future all can occupy places in the House of Commons, where they will be able to answer for their Departments?
    The PRIME MINISTER: No, Sir. I am not aware of any disadvantage to the public service which arises from the existing law, and in my opinion there is ample representation of His Majesty's Government in this House.
    Mr. TINKER: Will the right hon. Gentleman be present when the Estimates or Bills of these Departments are being discussed, and then he can judge for himself the dissatisfaction in the House with the Junior Ministers replying?
    Sir A. SINCLAIR: Will the Prime Minister bear in mind that he said that he fully realised the importance of having the chiefs of the spending Departments present in the House, and in view of the importance of the prospective
    24
    Debates on Supplementary Estimates for national defence, will he see that the chiefs of the spending Departments who are going to spend these vast sums of money come to the House? Will he also see that Members of this House are appointed as heads of those Departments? Will the right hon. Gentleman answer the question, because he said the other day that he realised the importance of this matter?

    HIS MAJESTY'S CORONATION.
    Captain P. MACDONALDasked the Prime Minister whether he is now in a position to state what will be the precise date of the Coronation ceremony in May next year?
    The PRIME MINISTER: I can add nothing to the answer which I gave to my hon. and gallant Friend in reply to his question of 2nd April.

  NATIONAL FINANCE.

    SPIRIT DUTY.
    Mr. LEWISasked the Chancellor of the Exchequer the rate of excise duty charged, and the total revenue received, on home-made spirits for the years ending 31st March, 1921, 31st March, 1931, and 31st March, 1936, respectively?
    Mr. W. S. MORRISON: The basic rate of duty on home-made spirits per proof gallon was 50s. on 1st April, 1920, and since 20th April, 1920. has been 72s. 6d. The net receipts of duty from home-made spirits were £53,907,633 in the financial year 1920–21, in respect of Great Britain and the whole of Ireland. and £35,137,338 in 1930–31, in respect of Great Britain and Northern Ireland. My hon. Friend will find the corresponding figure for 1935–36 in the White Paper which will be circulated in connection with my right hon. Friend's Financial Statement this afternoon.
    Mr. LEWIS: Do not these figures show that the rate of duty has now reached a point at which the total amount of revenue diminishes?

    INCOME TAX CODIFICATION (COMMITTEE'S REPORT).
    Lieut.-Commander FLETCHERasked the Chancellor of the Exchequer

    25
    whether he has any statement to make regarding the Report of the Income Tax Codification Committee?
    Sir WILLIAM DAVISONasked the Chancellor of the Exchequer what are the proposals of the Government with reference to putting into effect the recommendations of the Committee on Income Tax Codification?
    Mr. W. S. MORRISON: My right hon. Friend will hardly be expected to have been able to devote much time as yet to the study of the Report of the Income Tax Codification Committee, for which we are all so greatly indebted to Lord Macmillan and his colleagues. It will be necessary to examine the proposals carefully from the point of view of the Exchequer and this examination has already been put in hand. My right hon. Friend has undertaken, in response to requests made in this House, to give consideration to recommendations which important representative bodies may wish to make on the proposals of the Committee. It is hope that the bodies concerned will lose no time in examining the Report and bringing to our notice any matters on which they feel it is necessary for them to make recommendations.

    NORTH ATLANTIC SHIPPING ACT, 1934.
    Mr. DAYasked the Chancellor of the Exchequer whether any proposals have been made by the Cunard-White Star or other shipping company, and are under consideration by the Government, for the construction of additional tonnage under the provisions of the North Atlantic Shipping Act, 1934; and will he give particulars of same?
    Mr. HALL-CAINEasked the Chancellor of the Exchequer whether the necessary permission will be given, or the necessary financial arrangements made, to enable the early commencement of the building of a sister ship to the "Queen Mary"?
    Mr. W. S. MORRISON: The position remains as stated in the reply given to the hon. Member for Southwark, Central (Mr. Day) on 31st March last.
    Mr. DAY: Is there no truth in the constant reports that a sister ship to the "Queen Mary" is to be built?
    Mr. MORRISON: I do not know what report the hon. Member has in mind, but the position is that no proposal has yet been made to the Government for construction of additional tonnage under the provisions of the North Atlantic Shipping Act, 1934.

    DOMINION AND COLONIAL LOANS.
    Sir NICHOLAS GRATTAN - DOYLEasked the Chancellor of the Exchequer whether he will request the committee on oversea issues to consider the position of United Kingdom holders of Canadian provincial government and municipal loans floated in London, with a view to restricting future issues of such loans in London to those guaranteed, both as to principal and interests, by the Canadian Dominion Government.
    Mr. W. S. MORRISON: I do not think it is advisable to adopt my hon. Friend's suggestion.
    Mr. LIDDALLasked the Chancellor of the Exchequer whether he will consider amending the Colonial Stock Acts, 1900 to 1934, for the purpose of refusing inclusion in the trustee list of securities of any further London issues of loans of any dominion or colony whose provincial government or municipal loans are in default?
    Mr. W. S. MORRISON: The answer is in the negative.

    NATIONAL HEALTH INSURANCE.
    Miss RATHBONEasked the Minister of Health what have been the total amounts under health insurance of the contributions paid and benefits received by male and female contributors, respectively, during 1935 or for the last period of 12 months for which figures are available?
    The MINISTER of HEALTH (Sir Kingsley Wood): As the answer contains a number of figures, I will, with the hon. Lady's permission, circulate it in the OFFCIAL REPORT.
    Following is the answer:
    The total amount of contributions received in the year 1934, the latest period in respect of which complete information is available, was £18,250,000 in

    27
    respect of men and £8,500,000 in respect of women. In the same period payments on account of benefits, including medical benefit, which can be definitely classified on a sex basis amounted to £17,700,000 for men and £10,100,000 for women. In addition a sum of £2,580,000 was expended on additional benefits not in the form of cash, the division of which between men and women is not available.

    CONTRIBUTORY PENSIONS.
    Miss RATHBONEasked the Minister of Health what have been the total amounts under the Widows' Pensions and Old Age Pensions Acts of the contributions paid and the benefits received by male and female contributors, respectively, during 1935 or for the last period of 12 months for which figures are available?
    Sir K. WOOD: As the answer contains a number of figures, I will, with the hon. Lady's permission, circulate it in the OFFICIAL REPORT.
    Following is the answer:
    The total amount of contributions paid in the year 1934–35, the latest period in respect of which complete figures are available, was £19,300,000 in respect of men and £4,600,000 in respect of women. As the hon. Lady will realise the recipient of benefit under these Acts is not necessarily the contributor but the expenditure on benefits chargeable to the Pensions Account in the same period was as follows:

    £

    Widows' Pensions

    22,700,000

    Orphans' Pensions

    376,000

    Old Age Pensions (65–70):

    Men

    11,870,000

    Women

    6,990,000

    The amounts shown for widows' and orphans' pensions include a total of £8,050,000 in respect of pensions which were not derived from contributions but were provided entirely by the Exchequer.

    REGENT'S PARK.
    Sir C. COBBasked the First Commissioner of Works whether, as part of the Queen Mary Garden in Regent's Park is used as a railed-off theatre and concert area for only 15 weeks of the year, and
    28
    as the public is thus deprived of enjoyment of this garden space for the other 37 weeks, he will, subject to existing obligations, transfer the theatre to some other site in Regent's Park, restore the railed-off area to the public, and use the turf and trees as a wilderness garden or design the turf into terraces, so that the public may have free access to the Queen Mary Garden all the year round?
    Commander SOUTHBY (Lord of the Treasury): I have been asked to reply. The answer is, No, Sir.

    DARDANELLES.
    Mr. ATTLEE (by Private Notice)asked the Secretary of State for Foreign Affairs whether he had any statement to make regarding the fortification of the Dardanelles?
    The SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Eden): On 11th April His Majesty's Government in the United Kingdom received, through the Turkish Embassy in London, a communication from the Turkish Government stating that owing to changed political and military circumstances Article 18 of the Convention relating to the regime of the Straits signed at Lausanne on 24th July, 1923, had ceased to be an effective guarantee of Turkish security. The Turkish Government declared themselves ready to embark on discussions with the Powers which had taken part in the negotiation of the Straits Convention, with a view to the early conclusion of agreements which should deal with the question of the Straits in such a manner as to secure the inviolability of Turkish territory and the constant development of commercial navigation between the Mediterranean and the Black Sea. His Majesty's Government in the United Kingdom replied to this communication on 16th April. Their reply began by taking note of an assurance recently given by the Turkish Minister for Foreign Affairs to His Majesty's Ambassador in Turkey that the revision which the Turkish proposal was designed to obtain related only to the military clauses of the Convention. The Turkish Government were informed that, owing to the fact that the Convention had been signed on behalf of the whole Empire, His Majesty's Government in the United Kingdom would need to consult His Majesty's

    29
    Governments in the Dominions before expressing detailed views. While compelled therefore to reserve their comments for the time being, His Majesty's Government nevertheless recognised that the Turkish Government's request for discussion was one which they were fully entitled to make, and they regarded it as a valuable proof of the fidelity of the Turkish Government to the principle that international treaties cannot be modified by unilateral action. The therefore declared their readiness to discuss the question which had been raised at such time and in such manner as might be found most convenient to all concerned.
    Mr. THORNE: Does the right hon. Gentleman not think that Turkey is very much concerned about the ambitions of Italy at the present time?
    Mr. COCKS: Is the right hon. Gentleman aware that British public opinion is strongly in favour of the request of Turkey, in order that somebody, at any rate, can stand up against the aggression of Italy?

    MEMBER SWORN.
    A Member took and subscribed the Oath.

BUSINESS OF THE HOUSE.
Ordered,
"That the Proceedings of the Committee of Ways and Means be exempted, at this clay's Sitting, from the provisions of the Standing Order (Sittings of the House)." —[The Prime Minister.]

ORDERS OF THE DAY.

  WAYS AND MEANS.
  Considered in Committee.
  [Sir DENNIS HERBERT in the Chair.]

  FINANCIAL STATEMENT.
  3.33 p.m.
  The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): I shall begin my statement this afternoon as usual by making a brief survey of the more salient features of the national finances of the past year. Perhaps the most remarkable, not to say astonishing, fact to be observed is the final surplus of nearly £3,000,000—to be exact, £2,941,000. The Committee will remember that last year after allowing for an estimated increase in the yield of Inland Revenue and Customs and Excise of some £14,000,000 and after distributing about £9,500,000 in various remissions of taxation and restoration of cuts, I expected to have a surplus of £500,000. I had allowed what seemed to me a sufficient provision for Supplementary Estimates of £4,000,000, but we live in times which recall:
  "The uncertain glory of an April day;
  Which now shows all the beauty of the sun,
  And by and by a cloud takes all away."
  The Supplementary clouds which obscured my sky in 1935 amounted to nearly £22,000,000. There were, of course, some savings on various Votes, but in the end, I had to find very nearly £14,000,000 more than I had expected for Supply services. After so disconcerting a drain upon our resources that we were able to finish up with a true surplus—including the margin available within the fixed debt charge for debt redemption—of nearly £15,500,000 is a really wonderful demonstration of the buoyancy of our revenue. Some of my hon. Friends will think it is a demonstration of something else, namely, the excessive and unnecessary caution of the Chancellor of the Exchequer in estimating the possibilities of revenue expansion. However that may be, I myself remain of the opinion that subsequent events have fully justified my convervatism. In my Budget Speech last year I warned the Committee that we
  38
  were approaching a period of fresh anxiety in Europe, which might have its repercussions on our finances. I do not think the Committee will quarrel with me when I say that we have every reason to congratulate ourselves upon the fact that we have been able, up to the present, to take comfortably in our stride these new and unexpected demands on our resources. The only other item on the expenditure side of last year's account which I need notice is the total for the Consolidated Fund services, which exceeded my estimate by about £2,400,000. That excess was due to the necessity for meeting certain liabilities under the Trade Facilities Acts, and I am still hopeful of recovering some part of this expenditure from the debtor companies at a later stage.

  REVIEW OF PAST YEAR.
  Coming now to the revenue for 1935–36 Customs and Excise yielded a total of £303,342,000. That is an excess over the estimate of £8,500,000 and over the yield for the year before of £13,750,000. This is partly due no doubt to the stimulating effect of the Jubilee celebrations, but mainly to the general recovery of trade. The surplus was distributed over a large number of items, but particularly noteworthy is the excess of £1,000,000 over my estimate of the yield of the duty on spirits, which some of my Scottish correspondents will be relieved to hear showed a rise in consumption for the first time for many years. Other surpluses were £800,000 on beer, nearly £2,700,000 on tobacco, and nearly £900,000 on oil. Tariffs did very well and gave us a surplus of £1,250,000 on the duties under the Import Duties Act, and £1,000,000 on the Ottawa Duties, while the Special Duties on imports from the Irish Free State gave us an excess of more than £400,000.
  Inland Revenue Duties gave us £404,899,000, an excess over the estimate of nearly £13,500,000, which was distributed between Death Duties, which had an excess of £8,000,000, and Income Tax, with an excess of £5,500,000. The Surtax, at just over £51,000,000, was within £500,000 of the amount which I had estimated from that duty. The Death Duties gave us almost £88,000,000, the highest yield that has ever been obtained from Death Duties since they began. On this occasion this large amount was not due

  39
  to exceptional receipts from very large estates. It is to be attributed rather to the general rise in capital values which itself is a result of a growth of confidence and the existence of cheap money, an impressive illustration of the many ways in which the revenue benefits by an increase of prosperity as one channel after another fills up and proceeds to discharge into the national purse.
  The Income Tax was swollen by a larger collection of arrears than I had anticipated and that again we must ascribe to the general increase in the wealth of the public. The current tax, the tax which is payable on 1st January and is collected in the last quarter of the financial year, was just about what I had expected, and therefore this excess of £5,500,000, which I was fortunate enough to get, is not to be considered as due to any underestimate on my part of the current tax. I do not think there is any other remark that I need make about the Inland Revenue, except that the excess of £800,000 over the estimates in the yield of Stamp Duties is another very welcome sign of the expansion of trade activity.
  The Post Office Net Receipt at £11,670,000 is slightly less than the estimate, but this result really masks the encouraging fact that the gross revenue of the Post Office exceeded the estimate by nearly £2,000,000, and that, notwithstanding the fact that during the year there was a further reduction of telephone charges which, of course, meant the relinquishment of a substantial amount of revenue. The reason why the Net Receipt is not greater is that this increase in gross revenue was offset by the effect of the restoration of cuts in pay and also by the additional expenditure due to the increasing business of the Post Office. Sundry Loans and Miscellaneous Revenue together fell short of my anticipation by £3,198,000. The remaining items, Crown Lands, and the Exchequer share of Motor Vehicle Duties reached almost exactly where I had expected.

  NATIONAL DEBT.
  I have a few observations to make about the National Debt. During the whole of the last year low interest rates continued to prevail, and the average of Treasury Bill borrowing was 11s. 6d. per
  40
  cent., which was actually one shilling per cent. below the extremely low average of the year before. As a result of the easy monetary conditions, I was able last December to effect an important consolidation of our short-term debt position by the issue of £200,000,000 of new long-term 2½ per cent. stock, and £100,000,000 of 1 per cent. Bonds both at a slight discount. I was able to raise sufficient cash to repay £150,000,000 of 2 per cent. Treasury Bonds on 2nd March, and £44,000,000, which was the total amount still outstanding, of the 3 per cent. Treasury Bonds on 15th April. I was also able to effect a substantial reduction in the volume of Treasury Bills which for some time past has been showing a tendency to increase. The issue of those two loans at a discount made an increase in the nominal amount of the debt of £6,500,000, and borrowing under the North Atlantic Shipping Act and the British Shipping Assistance Act, against both of which we have security, made a further increase of £2,000,000. But on balance, taking all the factors into account, the National Debt showed a reduction during the year of £4,500,000 and the Floating Debt was reduced by £51,250,000. I do not recollect to have heard recently any expressions of anxiety about the position of the Exchange Equalisation Account but all the same the Committee perhaps may be glad to know that that Account still continues to show a profit.

  EXPENDITURE, 1936–37.
  Now, I am ready to turn to the new year, and I think it will be convenient if I first make a survey of the position of revenue and expenditure as we find them to-day, and then go on afterwards to consider what supplementary provisions must be mad:, on either side of the account. I begin with the Fixed Debt Charge. That has remained during the last three years at the same figure of £224,000,000. During that period I have been able out of savings within that charge to make available for debt redemption £32,500,000. I must say again, as I have said before, that in normal times I should not consider such provision as adequate. But times have not been normal during these three years and they have not been normal during the past year; and much as I should like in this Budget to make an increased provision

  41
  for the redemption of debt, I do not feel justified in doing so in present circumstances. I therefore propose to maintain the Fixed Debt Charge at £224,000,000. If interest rates should remain somewhere about their present low level, I have no doubt that I shall be able to find within that sum a modest but useful amount of revenue to reduce the debt still further; but in the meantime, and by way of precaution, I propose to do as I did last year, and to take powers to borrow for the purposes of the contractual sinking funds. The other Consolidated Fund Services do not require any special comment. Northern Ireland will want £7,500,000; Miscellaneous Services, £3,200,000 and £600,000 will be required for the Post Office Fund.
  The Estimates for the Supply Services have already been published and hon. Members who have had an opportunity to study them are aware that they provide for the Civil Departments, £378,746,000, and for the Defence Services, £158,251,000, or a total of £536,997,000. We must now consider what provision will be necessary for Supplementary Estimates which will have to be laid for certain expenditure by the Civil Departments and also for the additional expenditure upon the Defence Forces which is foreshadowed in the White Paper recently presented to Parliament. Nothing has been provided in the Estimates, so far published, for the grants which are being paid to Public Assistance Authorities until the Second Appointed Day under the Unemployment Act of 1934. It will be necessary to pass legislation in order to continue those grants after 31st March, 1936. Accordingly, I have to provide a margin to meet this liability, which I put at £5,600,000.
  As to the Defence Forces, I have already made known in answer to a question that another £10,000,000 will be required for the Air Force. In addition to that, further sums will be wanted for the Army and Navy which I am not at this moment in a position exactly to specify, but which may well, together, be rather more than the sum which is to be allotted to the Air Force. On the other hand, taking the Estimates as a whole, past experience shows that at the end of the year, there always remain some items unspent. Taking into account all the possibilities and probabilities of the situation, I have decided to
  42
  set aside as a margin for the Supplementary Estimates for the Defence Services £20,000,000. That will bring up the total for the Supply Services to £562,597,000.
  Of the two self-balancing items, the Post Office and the Road Fund, the Post Office again shows a substantial increase and stands at £69,344,600. That is an increase over the actual expenditure of 1935 of £3,250,000 and that again is partly to be attributed to the full effect of the restoration of the cuts but mainly to the necessity for providing further working expenditure. I estimate the yield of Motor Vehicle Duties for the current year, after deducting the Exchequer share, at £26,500,000 and that will form the Road Fund for the year.
  I can summarise the expenditure for 1936, including Supplementary Estimates but omitting the self-balancing items as follows:

  £

  Fixed Debt Charge

  224,000,000

  Other Consolidated Fund Services

  11,300,000

  Supply Services

  562,597,000

  Total

  £797,897,000

  REVENUE, 1936–37.
  Let me now come to my estimate of the revenue for 1936 on the existing basis of taxation. I start with Customs and Excise. I have already drawn attention to the considerable expansion in the yield of Customs last year and provided that no untoward events occur which might check the purchasing power of the community, I anticipate that the new year will show, again, a considerable upward movement in the revenue from Customs and Excise which is peculiarly sensitive to changes in the spending disposition of the public. Accordingly, I am budgeting for increases, and in many cases substantial increases, in nearly all the items. To mention some of the larger figures, I expect increases in the Beer Duty of £1,900,000; in tobacco of more than £3,000,000; oil, nearly £3,000,000; silk, £400,000; duties under the Import Duties Act £1,400,000 and in the Ottawa Duties, £500,000. I expect only a small rise of £100,000 in the yield of the Sugar Duty, but that is because the effect of the sugar preferences is becoming increasingly costly to the Exchequer. By

  43
  way of exception to the general rule, I expect to receive from Entertainments Duty £400,000 less than last year, and a similar amount less from the Special Duties on the products of the Irish Free State. The reason for the lower expectation from Entertainments Duty is because, this year, we shall have the full effect of the remission of the duty last year, which only dated from 1st July, 1935, and, in the case of the Irish Free State, the reduction is due to the lowering of the duties on certain animals and meat which took place in connection with the renewal of the coal-cattle agreement last February. Further details will be available, in the White Paper, to hon. Members when I sit down. The total estimate from Customs and Excise on the existing basis of taxation is £314,000,000 or an excess of £10,500,000 over the actual revenue received in 1935.
  From Inland Revenue, at any rate from certain items of it, I expect also to obtain substantial increases. I take Income Tax at £248,000,000. That is £10,000,000 over the yield of 1935. Hon. Members must recollect that this year has to bear the full cost of the reliefs granted last year and, if you take like for like, my estimate really represents an excess of £15,000,000 over the yield for last year. That is a pretty big increase, but I put it forward with some confidence that it will prove to be correct, because it is founded upon information collected from a number of concerns which have been good enough to furnish me with forecasts of their trading results for 1935 and that, of course, is the basis for the assessment of Income Tax under Schedule D for 1936. In estimating that I shall get £54,500,000 from Surtax I am allowing for a growth this year of £3,500,000. It will be recollected that there was no growth last year. But hon. Members know that Surtax lags a year behind Income Tax, and in fact this year is the first year in which the receipts of Surtax should reflect the improvement in trade.
  Death Duties, as I have already said, gave us a very high yield in 1935, but as there is no reason to anticipate any serious alteration in the high level of security values, counting on that high yield of 1935 I expect that it will be maintained in 1936. Accordingly I have put down £89,000,000 for Death Duties. The Stamp Duties have been rapidly
  44
  recovering. The yield in 1935 was £25,800,000, which was a growth of about £1,750,000 over the year before; and as the steady expansion of business and improvement of trade is continuing, I think that the Stamp Duties, especially in view of the growth of Stock Exchange transactions, should give me a yield in 1936 of £27,000,000. The other Inland Revenue Duties I have put down at £1,500,000, and, adding together all the various items which I have enumerated, I get a total for Inland Revenue of £420,000,000.
  I put the Exchequer share of Motor Vehicle Duties at the same figure as last year, £5,000,000. Crown Lands revenue is £1,350,000. The Committee are aware that His Majesty, in his Gracious Message of 11th March, following the example of his predecessors, placed these revenues at the disposal of the House of Commons. Therefore, it is proper that I should take them into account now, although there has not yet been time to complete the arrangements by granting to His Majesty a suitable Civil List. Sundry loans I estimate at £5,000,000, and miscellaneous revenue at £20,000,000.
  I must say a word or two about the Post Office contribution to the Exchequer. The Post Office Fund has now existed for three years, and in accordance with the Finance Act of 1933 it becomes necessary to review the fixed contribution which under Section 34 of that Act was determined to be £10,750,000 for the first three years. For some time past the subject of the relations between the Exchequer and the Post Office has been under consideration by the two Departments. Up to the present we have not been able to accumulate sufficient data to enable us to determine a long-term policy. Accordingly, with the concurrence of my right hon. Friend the Postmaster-General, I propose to keep the Post Office contribution for another year at the same figure of £10,750,000. At the end of that time I think it ought to be possible to propose a fresh, and, I should hope, a lasting basis of settlement. Hon. Members are aware that the actual cash sum received by the Exchequer in any particular year by no means always is identical with the fixed contribution. There are services which are rendered by various Departments to the Post Office free of charge, and vice versa. and there are various other minor adjustments that

  45
  have to be made. I am proposing in the Finance Bill a small step which will have the effect of accelerating and simplifying this procedure, and, on that basis I estimate that the Exchequer receipts for 1936 will be £11,256,000, while the payment out of the Exchequer to the Post Office Fund will be £600,000.
  I can now summarise the total of my revenue from all sources on the present basis of taxation. Customs and Excise stands at £314,000,000; Inland Revenue, £420,060,000; Miscellaneous items, £42,606,000;making a total of £776,606,000. I have already given the Expenditure as £797,897,000, and I am, therefore, left with a deficit of £21,291,000.

  TAX AVOIDANCE.
  Those hon. Members who have heard many Budget statements will not be surprised when I say that at this point it is necessary to turn aside from the main course of my story and to deal with certain minor changes in the legislation which controls our taxation, which I shall have to propose in the Finance Bill. In the first place I want to call the attention of the Committee to a practice which is growing very rapidly among the public, of adopting one or more of various methods, all of them completely within the law, of avoiding Income Tax and Sur-tax. Of course, it is very natural that the higher you raise a tax the greater is the inducement to avoid it if you can. Smuggling becomes worth while just in proportion as the import duty is large enough to create a margin which will offer opportunities to make a profit. Total prohibition may evoke such effective methods of evasion as ultimately to bring about its own complete dissolution. In our direct taxation the burden at the present time is high enough to attract the attention of ingenious minds, and their discoveries and inventions have now proceeded to such a point that it is necessary to ask Parliament to intervene.
  In the time which I have at my disposal this afternoon it would not be possible for me to describe in detail all the various ways, no doubt extremely interesting to hon. Members, in which Income Tax and Sur-tax can be avoided. I shall confine myself, therefore, to just sufficient to explain the Resolutions which later on I shall have to ask the Committee to pass. The first proposal concerns the avoidance
  46
  of tax by an individual living in this country who transfers his property to persons abroad in such a way that, while he himself retains control over the property and himself enjoys the income from it, in the light of the Income Tax law as it stands at present he does not appear to be in receipt of the income. I am going to deal with that by providing that the income arising from property of this kind shall be taken as the measure of tax liability.
  The second proposal deals with what are known as one-man companies at home. The existing law contains provisions which are expressly designed to deal with avoidance of Sur-tax by manipulation of companies of this kind, but these provisions have been found to be defective, and I shall propose, therefore, to strengthen them in such a way that it will be possible to put a stop to certain devices which have been successfully employed for evading Sur-tax. As these two proposals I have mentioned both mainly deal with Sur-tax, and as the Sur-tax which is assessed as payable in the current year is the Sur-tax for the year 1935–36, I propose that this legislation shall operate as from that year. The financial effect of these two proposals is expected to give me £2,000,000 in the present year, and in a full year about £4,000,000.
  There is another practice which concerns both Income Tax and Sur-tax, to which I must draw the attention of the Committee. There has been a very rapid growth, especially recently, in a form of deed, which is, I believe, known as an educational trust. The procedure is of this kind: A parent signs a deed giving part of his income to his child. In his capacity as guardian of the child he receives that income from himself. He applies it to the maintenance and the education of his child. Of course, he is not doing anything more for the child than he would do anyhow, but by just signing that deed he relieves himself of the liability to Income Tax on that part of his income. The knowledge of that device is becoming exceedingly widespread. The other day I came across a printed document which I am told is being issued wholesale all over the country and which gives the most careful directions as to how Income Tax may be avoided by this method. It says, for instance:

  47
  "In our opinion you would meet technical requirements if you draw a cheque payable to Deed of Covenant or Bearer, and pay it into your own Bank Account as if it were a dividend Warrant. This constitutes a desirable contra entry in your Bank Book, but does not involve an out-of-pocket transaction."
  It concludes by saying:
  "Your friends will thank you for an introduction to our scheme, and I should he happy to send you a cheque for 10s. 6d. in respect of any new client introduced and accepted by us."
  It is easy to see what is happening. A householder in one of our suburbs receives this document one morning at breakfast and, seeing that it is about Income Tax, of course he reads it with interest, and with growing delight, as he finds that, with perfect safety to him self and in strict accordance with the law, he can substantially reduce his liability to Income Tax. Of course, as soon as he has assimilated this plan, he remembers the precept that you should do to others as you would be done by, and, not despising the half-guinea, he does an act of neighbourly kindness by passing the document over the fence. In due course his neighbour also makes himself acquainted with the plan and earns another 10s. 6d., and before long it has gone right through the street, and there is not a householder in the neighbourhood who has not been introduced to this philanthropic agent who has come to the assistance of the British taxpayer. But there is by no means a monopoly in this business. Agents and canvassers are busy hawking about schemes of this kind on behalf of various companies, and they are making them a means of getting insurance business. I have seen another document left by an insurance agent, which says:
  "We are going to save you money, and the only condition which I wish to make is that you regard this as confidential and apply every penny of the savings for the benefit of yourself, wife, and children on a Policy with my Company. This would be the only gain I should receive, and as this is my profession I depend upon your word not to divulge the scheme to any other insurance representative."
  I would not have the Committee suppose that every transaction by which a man parts with some of his income for the benefit of his child is done for the purpose of avoiding Income Tax, I have no doubt that there are many cases in
  48
  which the motive is perfectly proper and even laudable, but the effect is the same. The effect in all cases is that Income Tax is in fact avoided, and thus there is created a disparity between taxpayers who are otherwise situated in the same circumstances. Whether you ought to ask a man to pay Income. Tax upon that part of his income which he devotes to the education and maintenance of his children is a matter upon which opinions may differ, but I think everybody will agree that all parents ought, to be treated alike in this matter, and chat it is extremely unfair that, while some are obtaining relief in this way, others, either because they have scruples about employing methods of this kind or because they simply do not happen to know how to apply them, are not only getting no such relief themselves, but are actually having to pay more than their fair share of taxation in order to fill up the gap in the revenue.
  I propose to provide that the Income Tax liability of parents shall not be affected by these educational trusts, and the legislation will take the form of saying that the income of an infant and unmarried child which is in any way derived from the parent shall be aggregated for all purposes of Income Tax law with the income of the parent. Income, of course, falling to the child aid arising from other sources, such as earnings, or as a beneficiary of a settlement made upon it by some other person than the parent, will be completely unaffected by the change. I anticipate that in a full year the saving from dealing with these educational trusts will amount to £2,500,000.

  INCOME TAX ALLOWANCES.
  Last year, it may be remembered, I endeavoured, by making certain improvements in Income Tax allowances, which were so severely cut in 1931, to bring some relief to the Income Tax payers with small incomes who are bearing the responsibilities of a family. I should like to carry that process a little farther this year. I think there is still something owing to those people on that account, and the saving that I am going to secure by dealing with educational trusts gives me an opportunity of taking that money and distributing it equitably among all Income Tax payers who have children to maintain. Accordingly, I am proposing to increase the statutory allowance for

  49
  children from £50 per child to £60, at a cost of £1,000,000 this year and £2,000,000 in a full year, thus putting it up to a higher level than it has ever stood at before. Furthermore, in pursuance of the same idea, I am proposing to find the means to raise the general statutory allowance for married persons from £170, to which I raised it last year, up to £180. That will also cost £1,000,000 this year and £2,000,000 in a full year, and these two proposals together will do something to mitigate the effects of an alteration of a different character which I shall have to mention later in my speech.
  I have also a proposal to make relating to the avoidance of Estate Duty. Under the law as it stands at present Estate Duty is not chargeable on personalty abroad where it has been the subject of a gift, of a joint investment, or of a foreign settlement, and I have some reason to suppose that advantage is being taken of that state of things to place property outside the scope of charge. I am proposing, therefore, that personalty abroad shall be treated in the same way as personalty at home, and I have taken the effect of that change into account in my estimate of Death Duties for the year.
  In addition to the Resolutions which I shall have to submit dealing with the avoidance of taxation, there will also be two Resolutions dealing with amendments of the Income Tax law. The only one which I think I need explain now relates to the method of assessing Income Tax under Schedule A upon mills, factories, and other buildings in which machinery is installed. In the past quinquennium Schedule A Assessments have been made upon the same principle which is followed in rating, but there is no express provision of the Income Tax law as to how you are to compute annual value in the case of machinery installed in buildings, and the courts have lately held that certain machinery which is not taken into account in rating shall be taken into account in computing value for the purposes of Income Tax. I propose to provide that in future the rating principle shall be followed for the Income Tax, and therefore my proposal will merely maintain the position as it has been during the past five years.

  CUSTOMS AND EXCISE CHANGES.
  I have one or two small changes to make in the realm of Customs and Excise. The first of them is designed to give protection to a branch of British industry whose product has hitherto been associated almost exclusively with foreign countries. I refer to lager beer. I see no reason why the manufacture of lager beer in this country should be an exception to the general rule of protection for British industries, and accordingly I am proposing to achieve my purpose by imposing a surtax of £1 a barrel upon beer imported from non - Empire countries. There will be no change in the Customs Duty on beer imported from Empire countries. Then I shall have a Resolution to cover a Clause in the Finance Bill to continue a provision in the Finance Act, 1926, which stabilised the existing preference margins on certain Empire products. I shall have also to deal with a technical point on the polariscopic test of sugar.
  The Key Industry duties will expire this year, and in view of that fact a Committee was appointed last year to review these duties and to recommend whether they should be continued or amended. The report of the Committee has now been published, and they recommend a continuance of the duties for another 10 years, with certain additions and modifications and with a provision for variation of the duties in certain circumstances from time to time. I am able to announce that the Government have decided to adopt these recommendations. They will be embodied in the Finance Bill, and the necessary Resolutions are being tabled.
  Later there will be another Resolution to enable the Exchequer to receive the benefit of surplus income or capital appreciation arising from the investment under the guarantee of the Consolidated Fund, of what is known as suitors' cash, which is a small portion of the funds paid into or deposited with the High Court in accordance with various Acts of Parliament. The main question which arises is whether this surplus, which amounts to about £60,000 a year, should be paid into the Exchequer or whether it should remain as at present accumulating indefinitely without any adequate object. I think the Committee will appreciate that my view is that it should be paid

  51
  into the Exchequer, and I am proposing to take action accordingly, but I may say that that action will be in strict conformity with the recommendations of a Committee, known as the Committee on Dormant Funds, which was presided over by that very much lamented and distinguished Law Lord, the late Lord Tomlin.

  SPECIAL AREAS RECONSTRUCTION ASSOCIATION, LIMITED.
  I have another statement to make that is a little more interesting to the Committee than some of those I have had to make. As it is not quite so relevant to the Budget, I ought to ask permission, which I know will be readily given, to deal with it very shortly. It is a matter in connection with the Special Areas. There have been suggestions frequently made, particularly in the Report of the Commissioner for the Special Areas, that the development or the establishment of small businesses there was being hampered for the lack of the necessary finance. It was suggested that the difficulties in this connection ought to be surmounted by some special remedies or devices. On the other hand, it has been argued on good authority that if there is any difficulty about financing small businesses, it is not due to any backwardness on the part of financial interests, but rather to the difficulties that are inherent in the situation. It is said that there would be ample financial backing for any promising industrial enterprise even if it were situated in the most severely depressed area, and that if that financial assistance had not been forthcoming it was not because people were exaggerating the financial risks but because in fact the risk was greater than would be accepted in the ordinary course of business by financial concerns.
  Where there is such a conflict of opinion as that, it is not necessary for me to express my own view except to say that I think this is eminently a case where it is desirable to experiment. Accordingly, arrangements are being made for the formation of a company called the Special Areas Reconstruction Association, Limited, with a nominal capital of £1,000,000 and with the special function of financing small businesses, either existing or to be formed hereafter, in the Special Areas. It is intended that
  52
  the company shall work in the fullest co-operation with local and other authorities or institutions like development councils, banks, and insurance and finance companies. There will be in each area a local board and an office for the purpose of collecting applications and assisting in their examination. As the company is to be experimental in character, its life will be limited to 10 years, and as it is intended that it shall deal with small businesses, it is proposed that as a general rule advances will be limited to a maximum of £10,000 in the case of any one loan. No capital will be subscribed by the State, but State assistance will be given in the form of a contribution towards management expenses and of a guarantee against losses amounting roughly to 25 per cent. of the total loans which have been issued. Provision will be made for relending the capital over and over again so long as time permits and as long as there is a supply of suitable cases, so that it is not possible at this stage to estimate the total loss that might be sustained by the State, but in any case it cannot exceed £1,000,000.
  The purpose of this company will be to finance businesses where the risk is such as would not be undertaken at this stage by ordinary financial concerns, but, in spite of that, the profits of the company are to be limited. I hope that we may be allowed to submit a Resolution on this matter on Thursday after the Budget Resolutions have been dealt with. When the Resolution has been obtained, a separate Bill will have to be introduced to regulate the necessary relations between the Treasury and the new company, and if the Measure has, as I hope it will have, the good will of all parties in the House, it should be possible for it to be passed into law by Whitsuntide.

  NET RESULT OF MINOR CHANGES.
  The net result of the minor changes about which I have been speaking is to increase the revenue by £1,025,000, thus reducing the deficit to £20,266,000. I may say at once that I propose to cover that deficit out of the revenue of the year. In ordinary times and under normal conditions a statement like that would go without saying, but these are not ordinary times. In ordinary times

  53
  I might have been content to make provision for a gap, which is not of immoderate dimensions, in this Budget and to leave the finance of future years to be decided when conditions could be more accurately foreseen than they can he now. But we are already entering upon new commitments which, in the course of the next few years, are going to involve an expenditure of very great sums, and if now I were to remain silent as to the methods by which that cost might be financed, it seems to me very possible that the public might draw quite erroneous conclusions as to their effect upon the trade and industry of the country. Therefore, while anything I may say now cannot commit any future Government or, indeed, any individual who may hereafter hold the office I am occupying to-day, I think it is only right that I should give the Committee an outline of the ideas which, as it seems to me now, ought to govern the method of financing the future cost of the defence programme.
  Some of the figures which I have given to the Committee contain features which cannot but be gratifying to all classes of His Majesty's subjects. The buoyancy of the revenue has enabled me to provide not only for a substantial and a sustained increase in social services, but for the heavily increased cost of defence which in the last two years has risen by no less than £44,000,000. We have been able to pay this increased premium for our security without adding to our burdens which, indeed, have been considerably lightened in the course of those two years. All the same, if we had been able to keep the Estimates for the defence services at their previous level, we should have had available to-day a large sum of money for the relief of taxation. To that extent it may be said that the present generation of taxpayers is already shouldering its own liabilities at a very serious sacrifice to itself.
  In the Statement relating to Defence which was presented to Parliament in March the Government entered at some considerable length into the reasons for which they deemed it necessary to enter upon the largest programme of defence ever undertaken by this country in peace time. To put it in a single sentence, we had to fill the gaps which had been left
  54
  by the deliberate policy of successive Governments over a long period of years, and we had to prepare ourselves against new risks involved in its initial stages by the policy of collective security to which we have been looking to rid us ultimately of the spectre of war. It follows that the defence programme arises out of two causes: first, a gap, a legacy left from the past, which the past in its time was either unwilling or unable to bear; and, secondly, the development of a new policy the benefits of which we hope will inure to posterity but the initial cost of which will have to be met at once. Both of these circumstances are exceptional and both, in my judgment, are such as to make it inequitable that the whole cost of this great programme, which has to be carried through in a very short time, should fall upon the revenue which has to be extracted from the people in the course of a single five-year period.
  On the other hand, it also seems to me to be neither just nor in accordance with the sound principles of finance upon which the improvement in our fortunes has been built up that we should light-heartedly push off the whole of this burden on to the shoulders of those who are to come after us. Unless it is possible to come to some agreement upon a general scheme of disarmament, the cost of defence is going to rise swiftly during the next few years to a peak, and after that it will begin to descend. The important point to bear in mind is that it will not descend to the old level. As was stated in the concluding words of the White Paper, it must be anticipated that the annual cost of maintenance of the reorganised forces will in all likelihood substantially exceed the £158,000,000 which was provided for in the original Estimates of this year.
  It is clear that in each year we must find out of revenue this rising cost of maintenance. How much in addition to that we ought to find out of revenue for the emergency expenditure in any particular year, I am not now prepared to assess. It must depend upon conditions which cannot now be accurately stated. But in coming to a decision in the future it seems to me that it will be necessary to bear in mind that to raise taxation to a level which would seriously cripple the industry of this country would be to do a very ill service to posterity. I conclude, then, that in future years, a part of this emergency expenditure, the amount of

  55
  which must be determined from time to time in the light of the considerations I have put before the Committee, may properly be met out of loan. If in the meantime we have shown our readiness to bear our proper share of an exceptional burden by utilising for that purpose our expanding revenue and, perhaps, by submitting to some fresh sacrifices, then I am positive we will neither suffer loss of credit in the present nor incur the reproaches of our successors hereafter.

  ROAD FUND.
  Having said so much about the future, I must now come back to the problem which immediately confronts us. In considering how to overcome the difficulties arising from the emergency of a demand unprecedented in extent except in wartime, I come up at once against an anomaly in our national financial system. Surely when a Chancellor has to wrestle with a task so formidable as that in front of me he ought to be able not only to survey the whole field of expenditure but also all his sources of revenue, so that he can direct them where they are most needed. There is one exception to the general rule which gives him power to do so. The Motor Licence Duties, which now amount to £31,500,000, are out of my control; save for that small share which comes to the Exchequer they pass automatically into the Road Fund. In past years if they have not been sufficient to meet the needs of the Road Fund the Exchequer has had to lend the balance. At other times, when they have been more than sufficient and surpluses have piled up, steps have been taken to sweep them into the Exchequer.
  I have no intention of making any alterations in the functions of the Road Fund, nor have I changed my attitude to those road problems which my right hon. Friend the Minister of Transport has been attacking with so much courage and success. Nor do I propose in any way to curtail the five-year road programme to which the Government has set its hand. But I have represented to my right hon. Friend that this system of feeding the Road Fund by the varying produce of duties specifically assigned to it is an irregularity which ought to be corrected and replaced by the more normal method of allowing the House of Commons to assess its needs each year
  56
  and to satisfy those needs by Votes. I am proposing to make that change by legislation in the Finance Bill, but owing to technical reasons it cannot be made effective until next year; but in view of the alteration in procedure, and as I am assured that the current revenue of the fund is ample for its current needs, I am proposing to abstract for the benefit of the taxpayer the £5,250,000 which at the outset of this financial year stood to the credit of the fund.

  INCOME TAX.
  That reduces to £15,000,000 the amount which I have to find by new taxation. As the restoration of our defences is in the interests of all it is only right and fair that all should contribute towards it. I propose an increase in the standard rate of Income Tax of 3d. in the pound, which I estimate will give me this year £12,000,000.
  Mr. THORNE: Loud cheers.

  TEA DUTY.
  Mr. CHAMBERLAIN: I propose, also, to raise the duty on tea by 2d. a pound. That increase in the tea duty, which will operate as from tomorrow, will apply both to Empire and to foreign tea, thus preserving the existing preferential margin of 2d. a pound. I anticipate that the increased duty will give me this year £3, 500,000.

  FINAL BALANCE SHEET.
  I can, therefore, now strike the final balance sheet. The revenue will be £798,381,000, the expenditure £797,897,000, leaving a prospective surplus of £484,000. When I consider the magnitude of the effort which Parliament has decided is necessary in order to rebuild our defence forces, involving an expenditure on defence this year of more than £50,000,000 in excess of what was provided in the Budget of last year, I cannot think the new taxation which I have proposed will be considered unreasonable, nor do I think that it will seriously affect the improvement in trade and industry, nor that it will cause and undue hardship. The fact that we should be able to meet so large an increase in expenditure with so moderate an addition to our taxation is the best testimony we can have to the immense improvement in the financial and economic condition of the country during recent years.
  This is the fifth time in succession that I have presented a financial statement to the Committee, and perhaps, therefore, I may be pardoned if for a moment I look back and consider some of the changes that have taken place since I opened my first Budget in April, 1932. I do not claim that the financial policy I have followed has been solely responsible for the results which I shall quote, but I do believe that it has been the indispensable foundation upon which those results have been erected, and that it remains the best policy for the country and for the needs of the present time. The two main pillars of the policy have been the introduction of the tariff and the establishment of cheap money. The Committee will remember that when the tariff was established we had an adverse balance of payments of no less than £104,000,000 a year. The tariff has now converted that into a favourable balance of £37,000,000. Moreover, it has brought us a revenue which now amounts to over £34,000,000 a year, and by this means a valuable contribution to our national expenditure has been made without causing any perceptible rise in the cost of commodities to the consumer.
  The reduction of interest rates by something like 2 per cent. has meant a permanent saving in Budget charges of upwards of £40,000,000 a year, and a still larger temporary reduction. The benefits of cheap money have been extended to the Dominions, who are our best customers, to the local authorities and to industry, which is now progressively reaping the advantage of lower interest rates and is daily expanding its enterprise. The building of 1,250,000 houses during this period, an astonishing feat, has been achieved largely in consequence of the cheapness of money.
  Between them these two powerful financial engines have strengthened and developed both our industry and our agriculture, so that our agricultural output has increased by 14 per cent. and our industrial output by no less than 29 per cent. Our exports of manufactured goods have increased by more than £50,000,000 a year. The number of persons in employment has increased by more than 1,250,000. The percentage of unemployment has fallen from 22.4 to 14.4. Retail trade is now more active than it has
  58
  been for many years, and the record figures of holiday traffic show how the increase of purchasing power has spread through all sections of the people. Although wholesale prices in general have risen by 10 per cent., and the prices of primary commodities by upwards of 45 per cent., the cost of living to-day is actually slightly below what it was in 1932. Notes in circulation have increased by £50,000,000, and the deposits in the savings banks alone have gone up by no less than £150,000,000.
  The recovery of the country has been reflected in the rapid expansion of the revenue. Nearly £70,000,000 has been applied to the reduction of the National Debt out of savings in fixed debt charges and out of Budget surpluses. Increased expenditure on social services has been rendered possible. Take four major items: old age and widows' pensions, health insurance, housing and education. In 1932 we spent upon those four services a little less than £121,500,000, and in this year's Estimates we are providing for the same services nearly £138,000,000. Lastly, the present aggregate value of the tax remissions which were made in the various Budgets of 1932 to 1935 amounts to over £50,000,000 a year. At the outset of this new financial year, the prospects, apart from the complications of the international situation, appear to promise a full continuance of this tide of returning prosperity.
  I had hoped, and until quite recently I had had good reason to hope, that in this fifth Budget it might have been possible for me to reward the taxpayer for his long and patient endurance of his burdens by giving him a greater relief than anything which up to now I have been able to afford. That that hope should have to be deferred and that instead I should have to ask of him new sacrifices, moderate though they may be, has been a bitter disappointment to me as well as to the country. But no man hesitates to set his fire-fighting appliances in readiness when already he can feel the heat of the flames on his face. Our safety is more to us than our comfort, and I think the country which has applauded and approved the precautions we are taking will not grudge us the means of bringing them about in the shortest space of time that we can compass.

  TEA (CUSTOMS).
  Motion made and Question proposed,
  "That—
  (a)as from the twenty-second day of April, nineteen hundred and thirty-six, in lieu of the duties of customs theretofore chargeable on tea imported into the United Kingdom, there shall be chargeable duties of customs at the following increased rates, that is to say:—

  Tea not being an Empire product

  the 1b.

  6d.

  Tea being an Empire product

  the 1b.

  4d

  (b)the enactments relating to the allowances of drawback on blended tea prepared from teas on which customs duties have been paid shall extend to blended tea prepared from teas in respect of which either of the duties chargeable under this Resolution has been paid;
  (c)in this Resolution the expression "Empire product" has the same meaning as in Sub-section (1) of Section eight of the Finance Act, 1919, as amended by any subsequent enactment.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
  5.2 p.m.
  Mr. ATTLEE: To-day, as on several previous occasions, I rise after the Chancellor of the Exchequer to congratulate him on the manner in which he presents his Budgets. He has a, great gift of expression, and no one can make a clearer statement, when he wants to. In the earlier part of his statement the right hon. Gentleman gave an admirably concise and clear exposition, but in the later stages his clarity was somewhat less noticeable; when he came to deal with the question of providing for the Government's armaments policy he became extremely vague indeed. The right hon. Gentleman has also great power of selecting words and topics, and I should like to congratulate him on the way in which he made his statement of the achievements of the Government, and on the wise, from his point of view, selection of the points on which he thought emphasis was desirable. One would have gathered from his statement that the foreign situation was something with which the Government had nothing at all to do, and that it was an act of God or a blizzard; that the Government had suddenly walked into a situation which, in their judgment, compelled enormous expenditure in armaments.
  60
  As a matter of fact, the dangers which the Government have to face are the creation, to a very large extent of their own policy. The right hon. Gentleman cannot ride off by saying that we have to pay our insurance premium because we feel the flames heating in our faces. He should have thought of that when he did not take earlier action to stop the fire. The inflammable material which is lying around has been largely left there by the present Government. We shall have something to say in the course of the Budget discussions about the Government's armaments programme and the reasons for it, and about the somewhat surprising fallacies put up by the right hon. Gentleman. One point I would emphasise right-away is the extraordinary conception that there has been no expenditure on armaments generally until this danger suddenly arose. There has been increasing expenditure on armaments by this Government right through the four years, during which 28 per cent. additional cost was put upon the fighting Services. Now we are to have another enormous addition, which is to be met by 2d. on tea and 3d. increase upon the Income Tax. We shall have occasion to put before the House again our conclusions with regard to the Tea Duty, but we shall never hope to emulate the eloquence of the right hon. Gentleman the Member for Epping (Mr. Churchill) in his denunciation of that duty when it was taken off.
  The right hon. Gentleman made some remarkable statements with regard to the allocation of expenditure on defence between the present generation and posterity. One gathered that he was contemplating some kind of loan in the future for the defence Services. It would be more straightforward and honest if the Government would tell the country exactly on what they are going to spend the money, and how they propose to raise it. Is this Budget to be like the Estimates, fundamentally dishonest because they deal only with certain items and leave the rest wrapped in a mystery which is not revealed? The right hon. Gentleman did not give a fair statement of the position of the country, any more than his review of the past was a fair statement, because there were a good many items which he did not mention. He did not mention that a debt, the

  61
  American Debt, has been piling up all this time. We never hear it mentioned from the other side now, but it always had to be mentioned when the Labour Chancellor of the Exchequer was in office and when he had the Sinking Fund to meet. Now that we are in the new financial morality, the right hon. Gentleman is able to do nothing about it.
  We shall have an opportunity of examining more closely the claims of the right hon. Gentleman. I shall not depart from the usual custom of making only a few preliminary remarks at this stage, but we cannot accept the position in which the right hon. Gentleman says that trade is on the up-grade and everything is going well, but the whole of the benefit is to be thrown away upon armaments. We cannot accept that the right way to meet the situation is to put 2d. on tea.
  This Budget will cause no enthusiasm anywhere. It does not mark the success of the Government, but their failure. It marks their complete failure to deal with foreign affairs, and it marks also that the Government are resolved to enter upon a course of expansion in armaments which, so far from rising to a peak a few years hence, is more likely to land us into the abyss a few years hence, following the course which, in the years prior to the Great War, did not lead to a peak and then to a cessation on armaments, but went on to the crescendo which ended in the final catastrophe. That is where the policy of this Government is leading us. I intend to say no more this afternoon. My colleagues will, no doubt, in the coming fortnight examine the Chancellor's proposals. The one thing about this Budget, apart from small and comparatively unimportant items, is that it is a Budget which will ultimately lead us to war.
  5.9 p.m.
  Sir ARCHIBALD SINCLAIR: The Chancellor of the Exchequer has opened his Budget this afternoon with a characteristically clear, compact and revealing statement. The superlatives which hon. and right hon. Gentlemen have rightly applied to the successive Budget statements of the right hon. Gentleman during the last five years have grown almost stale by repetition; it therefore remains to me to offer only an unadorned, but no less sincere, tribute
  62
  of admiration to the Chancellor of the Exchequer for his statement this afternoon. In the past, the tributes of respect to the Chancellor of the Exchequer have been suffused with the warmer glow of gratitude for favours received and of expectation of favours to come, but no such emotions can stir us to-day. The most enthusiastic supporters of the Government can say only that the Budget might have been worse. None can deny that the financial outlook to-day is graver than it has been at any time since the War, except in 1931.
  The proposals which the right hon. Gentleman has laid before us are indeed formidable. The expenditure is swelling to £797,000,000 on the one hand, and there is an addition to the Tea Duty which must, at the present level of price of tea, impose a considerable hardship upon the consuming masses of the people. The present level in the price of tea makes me doubtful whether the Chancellor will realise the estimate which he has made of the yield of this addition to the duty. On the other hand, there is no Sinking Fund. The Chancellor of the Exchequer tells us that these are not normal times. He told us two years ago that we ought to have a Sinking Fund, and he warned the House about it, although he thought he had better leave it until times got a little better and recovery had proceeded a little further. Last year he reminded us of the warning of the year before, but he still thought he should allow recovery to proceed a little further until times were a little better. Now he tells us that the times are still not normal. When are they likely to become normal? So far as we can see from the Chancellor's statement to-day, we may well ask when are the times likely to become normal in the sense that the conditions will be favourable for making substantial payments to a Sinking Fund?
  The Chancellor said that we are already shouldering our liabilities at a cost of very serious sacrifices. We are not repaying our debts, and that is a very important liability and one which it is the duty of this House to look to. When are we to begin to do so The Chancellor of the Exchequer has said that expenditure on armaments will be rising swiftly to a peak for five years. Does that mean that for five years we are to have, instead of redemption of debt,

  63
  additions to debt, year by year after the present year? The Chancellor of the Exchequer described his Budget of three years ago as a Budget of great expectations, but this is a Budget of shattered hopes. I do not wish to be controversial. There will be adequate opportunities this week and in succeeding weeks, for discussing these important issues of policy. I would like to offer a word of thanks to the Chancellor for what seems an admirable arrangement in regard to the, I do not say illegitimate, but unauthorised educational trusts, whereby the money derived from closing this means of escape from Income Tax will be used in relief of the small Income Tax payer who has family responsibilities. I would end by thanking the Chancellor of the Exchequer for a diagnosis of the financial situation in which the qualities of courage, candour and dexterity were admirably blended.
  5.15 p.m.
  Mr. MAXTON: On these occasions I have usually been the briefest, of those who have dared to speak on this day. I have been brief because the Leaders of the two Oppositions have usually spoken at somewhat greater length than has been the case to-day, and I have always been anxious to allow the Chancellor to withdraw from the House at the earliest possible moment for a much needed cup of tea. To-day the Leaders of the Opposition have been excessively brief, and I too have the feeling that this is a kind of Budget about which those who speak to-morrow will have a better opportunity of saying things than those who venture in to-day; and I also feel that there is not the same reason for releasing the Chancellor for his cup of tea, for I should imagine, after the announcement he has made to-day, that he will be ashamed ever to look a cup of tea in the face again.
  That is the one personal shock that comes to me from the present Budget. I was just smiling widely—though I thought the Chancellor was a bit cruel in the way he presented it to the Committee—at the extra 3d. on the Income Tax, and the gloomy faces of hon. and right hon. Gentlemen opposite; but I had not got my smile properly expanded when the extra 2d. on tea knocked it off my face at one fell blow, because it struck me in my most tender part. It is a terrible thing,
  64
  when a man has only one or two vices, to find that they are the most heavily taxed vices in the whole community, although the least noxious of all. I think the outstanding thing about the Chancellor's statement to-day is that it reveals what is to me an altogether unpleasant healthiness about the capitalist system. My political theorisings have led me to the conclusion that this system cannot continue very much longer without complete collapse, but I have to admit that during this last year, and on the Chancellor's prophecies for the coming year, it is going fairly strong so far as the internal aspect of its affairs is concerned. Unfortunately for capitalism, however, when it is going reasonably well on the internal side, externally it goes all up in the air, and any advantages that might have been gained for its relief from the prosperity during 1935–36 are going to be dissipated through external considerations during 1936–37.
  I regret very much that, in a Budget statement where provision is being made for very large extensions in our armament expenditure, there has not been made some slight provision for improvement in some of the social services. If capitalism is, as the right hon. Gentleman indicated, a strong, healthy, economic system, surely, when we are making such tremendous provision for the defence of the country, we should make some slightly better provision for the defence of the individual homes of the country. On the statement which the Chancellor made of the financial position of the country, wages ought to have been jumping up all over the place, but will those who watch wages movements tell me of any substantial increases that have been gained by any section of industry in the country? The one substantial section of the working class who have had an increase in wages during this very prosperous year are the miners of this country, who were on a sweated wage, and the increases they have got are of such a trivial amount that they are still on a sweated wage, with the sweating, perhaps, a little less intense than it was. In practically no other industry—
  Mr. RADFORD: The engineers have received an increase of 2s. a week during the last two months.
  Mr. MAXTON: The hon. Member would not think much of that amount as

  65
  a tip to a waiter who served him with a decent meal. I was saying that, on these indications, one would have expected substantial increases of wages all over the country. I cited the miners as having had a miserable increase, and, before I could complete my survey, the hon. Gentleman came in to applaud a miserable 2s. increase to the engineers.
  Mr. RADFORD: I did not applaud at all; I was only endeavouring to answer a question that the hon. Member put. I think, however, that he is entirely wrong, because not only have the men who were in employment had this increase, but also those who were not in employment before but are now.
  Mr. MAXTON: Undoubtedly that is something, and I always try to play fair, but I am saying that, if the industries of this country are in such a good position as is shown by the Chancellor's figures, if trade is so buoyant and on the up-grade as to allow him to anticipate substantial increases next year, surely we might have expected that something would be done to give the masses of the people, who are outwith Income Tax and Super-tax, a substantial all-round rise in their standard of life. I regret very much that the Chancellor has not seen fit to make any such provision. Imagine the old age pensioner being asked to contribute, out of her 10s., an extra 2d. on tea to defend the country, and, incidentally, to defend the kind of home she can maintain on 10s. a week. Twopence on tea is a bit heavy for the old person with 10s. a week as her total income, and I regret very much that something could not have been done in that direction. It seems to me that the orphans, widows, and all the others who have served the community, are on a miserably low level, and it would be a shocking thing if, in the attempt to provide defence services which in the past have never been a defence for the mass of the people, a large proportion of the homes of the nation have to continue to exist on this miserable pittance.
  I have been led to make more in the way of a speech than I had intended to make. The Chancellor has congratulated himself, and, judged by his standard, he was entitled to congratulate himself, on the different position financially as between 1932 and 1936, although I have the feeling, and I said so at the time, that the economic crisis of 1931 was largely an imaginary crisis created by the right hon.
  66
  Gentleman and his friends when they sat on these benches. I admit that they had carried on their propaganda about the crisis, bankruptcy, the profligate Government and so on, to such an extent that they had almost come to believe it, and certainly had made interested parties in other parts of the world believe it too, but essentially it was an imaginary crisis. The right hon. Gentleman is to be congratulated on having dissipated the imaginary crisis that he himself created when he was sitting in Opposition, and to that extent he deserves the congratulations. He has done his job as Chancellor of the Exchequer of the National Government in a capitalist system of society. I understand from the newspapers that greater distinctions are in very early store for him. I am told that drastic changes are going to be made in the personnel of the National Government, and the Chancellor will receive the promotion which he has so rightly earned, while other people will go into the rest and quiet which they also have so thoroughly earned. Whether that may be so or not, the Chancellor may congratulate himself to-day, if this is to be his last Budget, on having brought it forward and manipulated the country's finances in a most dextrous fashion.
  5.27 p.m.
  Lieut.-Colonel Sir WILLIAM ALLEN: As a back-bencher I would like to congratulate the Chancellor of the Exchequer on the clearness of his statement, which I think was understood by every Member of the House. I am sure the country will receive with great disappointment the announcement of an additional 3d. on the Income Tax. It may seem strange, to those who have the opportunity of taking advantage of the additional allowances for children and married people, if, on the remainder of their income, they have to pay 3d. extra in the £. It looks very much like taking money out of one pocket and putting it into another. Again, I can never understand why successive Governments from time to time take the capital of the country and use it for ordinary expenditure. The Chancellor stated to-day that lie viewed with pleasure, as I suppose we all do, the increase in the capital value of the country which is shown by the amount of Income Tax that it produces, and also by the increase in Estate Duties. Surely

  67
  these two items are taken largely out of the capital of the country, but nevertheless the Government from time to time have not hesitated to use this money for ordinary expenditure. I trust that some future Chancellor will think it right to use the capital of the country, as represented by Income Tax, Surtax and Estate Duties, for the purpose of redeeming the debt of the country. With regard to the Tea Duty, probably many people will be disappointed at the increase of 2d., but somehow or other I always think that the Tea Duty, particularly when the amount is so small, will be so manipulated that we shall have to pay very little extra. The Sinking Fund is one of those things which every Chancellor ought to set himself to increase by some small amount every year.
  There is no surplus, unfortunately, and we must provide for armaments. We have been wrong in our policy with regard to reduction in the hope that other nations would follow our example, but that has not been done and the Chancellor is in that difficulty. In very extraordinary and very difficult circumstances lie has done the best he could and, while he is to be congratulated, I think we must also congratulate the people of the country most heartily, for during the last five years they have been raised from a state of financial poverty and morass almost inconceivable to a position which compares favourably with any other country in the world, and at the end of the year we may hope to find ourselves in a better position even than now. I should like to see the poor man who smokes a pipe of tobacco getting it a little cheaper, but in the circumstances I do not see how it was possible for the Chancellor to do more than he has done.
  5.33 p.m.
  Mr. TINKER: It is usual for the House to rise early on Budget Day. I have never agreed with that policy. It is a glorious opportunity for back-bench Members to get their say in, for during the next few days we shall have all the so-called big men pegging out their claims and taking the best part of the time, with the back-benchers looking out for any slight opportunity that may come. We have had a very interesting statement and, looking at it as a capitalist Budget, I do not think we could have
  68
  had a better one. The right hon. Gentleman has closed several gaps by which evasion was taking place and I give him credit for that, and also for giving the increased children's allowance. I am not a married man, but the nation is dependent on its children, and those with families are entitled to as much relief as can be given. I also welcome the increased married men's allowance. I recognise that married people have a greater burden to bear and all possible relief should be given them. We recognise that in our trade unions and give similar benefits in respect of wives and children. I do not, however, agree with the increased Tea Duty. An article that is largely used in the ordinary working man's household ought not to be taxed at a time like this.
  With regard to the Income Tax, I should not cavil at an increase of 6d., because that would provide money for some of the points that I wish to put forward. I agree with the hon. Member for Bridgeton (Mr. Maxton) that something might have been done for some of the social services. I think the time has come to give a higher rate of pension to our elderly people. I do not think that 10s. is enough and I am looking forward to the time when something more will be given. I also advocate a lowering of the pensionable age. A third point, which I think would be welcomed by most Members, is in reference to the anomalous position where the insured contributor's wife is younger than her husband and they get only one 10s. until she attains the age of 65. The point has been raised several times and it was answered by the Financial Secretary to the Treasury only about a fortnight ago, when he told the House that, it would involve in the first year an extra £6,500,000 and, following on that, £8,000,000 per annum. I have a number of letters from people asking that this should be dealt with. One typical letter starts:
  "Some time ago during a speech you made in the House of Commons you mentioned that upon a moan attaining pensionable age his wife should be included though she had not reached the age of 65. That just fits my case and, no doubt, thousands besides. I am 68, have been married 30 years and brought up a family as well as I could afford and have been working nearer 60 than 50 years and am beginning to feel that I could do with a little rest. What can such as we do, give up work and apply for public assistance?"

  69
  He goes on to say that he will have to keep on working until his wife attains 65. I have another letter on similar lines:
  "Some 40 years ago, when I was 31 years of age, I married my wife, who was then 20 years of age—11 years my junior. I am now 71 years of age and my wife is short of 60. I have received a pension since I was 65 and my wife has still over five years to go. I am getting really too old to do much work and I should be glad if an extra 10s. could be given so that I might have a chance to give up."
  These are typical of thousands of cases. We are a prosperous nation and have a Budget of £800,000,000. We speak of the defence of our shores, but it would be a good kind of defence to look after our people more adequately, and it could be done.
  In almost the first sentence of his speech the right hon. Gentleman said that in previous Budgets we had been restoring the cuts and he felt that we had arrived at a time when we might look for some relief of taxation. Would anyone say that all the cuts had been restored in full? I find in the financial statement that the amount given for transitional payment and unemployment benefit has been reduced by some £5,000,000. That reduction has taken place because of the means test. If all the cuts had been restored, as they ought to be, the means test would have been taken away and the unemployed would have got greater benefits than they are getting now. It is not right at a time like this to ignore the social services, but we are obsessed with the idea of defence and all the money must go for that purpose. I admit that certain things will have to be done in that direction but, while doing them, I claim that something should be done along the lines that I have mentioned. I have said many times that a person who pays Income Tax is much better off than one who does not. He is always sure of a decent standard of life before he is called upon to pay tax at all. I should never cavil at an increase in the Income Tax so long as there are people requiring more help.
  Another point that I want to deal with concerns what might be termed the safety services. There is something seriously wrong with our mines. It is said that the safety point is not as it ought to be. The Mines Department costs £196,744
  70
  and there are 112 inspectors, who take out of that sum just over £68,000. Judging from what is happening in the mines, there is something lacking in the examination, and the question to my mind is whether we have enough inspectors. More money ought to be provided for this purpose. Safety measures in the mines must be continued, and the State must provide money for increasing the inspectorate. It is difficult to raise these points at an appropriate time in the House of Commons, but I think that the most appropriate time is when the financial statement is before the House, because this would mean the provision of extra money. I urge the Chancellor of the Exchequer to attend to this matter. I maintain that it would be a saving to the nation to provide additional inspectors to see to the safety of the mine workers. There would be less loss of life. I am satisfied that more inspectors are required, and that the present staff is overworked. The employers know that also; they know that when an inspector has paid a visit to their mine it will probably be months before he pays another visit.
  The DEPUTY-CHAIRMAN (Captain Bourne): The hon. Member has said that this question should be raised at the appropriate time. I think that the appropriate time would be on the occasion of the Estimates of the Mines Department.
  Mr. TINKER: I have followed this question closely because I did not want to get at cross purposes with the Chair. I maintain that this matter should be brought forward when the financial statement of the country is before us. However, Captain Bourne, you are always fair to the Committee, and I have had my say and will not pursue the matter further. I urge upon the Chancellor of the Exchequer and upon the Government that all the attention ought not to be directed to the question of the rich people. There are a vast volume of people below the borderline of a decent standard of life, and if the Government pride themselves upon what they have done during the last three or four years, they ought to recognise the need for doing something along the lines I have indicated. They should increase the old age pension, lower the pensionable age, remove the anomaly with regard to the pensioner's wife who is younger than her husband,

  71
  and remove the means test. If this capitalist Government can do that, they are likely to last a little longer than otherwise will be the case. Unless they do it, the collapse of the present system is not very far off.
  5.49 p.m.
  Sir ERNEST SHEPPERSON: I sincerely add my congratulations to those already given to my right hon. Friend the Chancellor of the Exchequer for his excellent Budget speech. I have merely risen to put one point of view. I am bound to admit that the end of his speech caused me considerable disappointment. My hopes had led me to expect some remission of taxation. A month or two ago the Chancellor of the Exchequer and his righthon. Friend the President of the Board of Trade deliberately threw away some tens of thousands of pounds by the remission of duty upon imported potatoes. With that example in front of us, we agriculturists were led to believe that we should have a Budget possibly containing some remission of taxation. I would suggest to the Chancellor of the Exchequer a source of income. There is coming into this country thousands of hundredweights of bacon, meat, butter and eggs, which are being dealt with by his right hon. Friend the Minister of Agriculture by quantitative regulation of imports, which raises the price of the commodity to the exporter. I respectfully suggest to the Chancellor that a better means would be for the imports of these commodities to be dealt with by the straightforward and honest method of tariffs. It would be better for British agriculture, and it would give him an income instead of raising the price to the foreign exporter. I have a greater interest in my own country than in the country that exports its commodities to this country. The Chancellor of the Exchequer should take an opportunity of increasing the revenue of this country and at the same time helping British agriculture by putting a duty upon many of these imported agricultural commodities.
  5.51 p.m.
  Mr. GALLACHER: I wish to protest against any attempt to have this Budget presented as a defence Budget or against the central part of it being concerned with defence policy. The Chancellor of the Exchequer said towards the con-
  72
  clusion of his speech that defence covered all people and that all would have to contribute towards defence, and I wish to take exception to that view. The people of this country want peace and are prepared to make all the sacrifices necessary to ensure the maintenance of peace. The people this country also want defence of a particular character. When we talk of defence there must always be a qualification. The mothers of this country want defence against the scourge of maternal mortality, and the allowances in this Budget for building big guns and manufacturing bombs will not bring us healthy mothers and happy children, which is a matter with which every Member of this Committee should be concerned. The defence for which they call is defence against the terrible scourge of maternal mortality with regard to the stopping of which nothing has been done in the past few years. I do not know whether Members of this Committee have read the Press reports of what Sir John Orr had to say on starvation and malnutrition in this country. There are millions, men, women and especially children, crying out for defence against malnutrition. Is that provided for in this Budget? Is the amount set aside for social services going to be sufficient to defend these children? The Chancellor of the Exchequer knows that it is not.
  An hon. Member here has referred to the means test. What is it against which the unemployed want defence? Is it against Germany or any of the other armed nations of Europe? The unemployed want defence against the means test. It is that which is destroying their homes and their If we are to have defence, let it be real defence. Reference has been made to old age pensions of 10s. at 65. These old people do not know whether they are living or whether they are dead on 10s. a week. There is no allowance in the Budget for, say, £1 per week at 60. Old people who have finished work cannot look forward to a few years of quiet and enjoyment on 10s. a week. Is there no defence against that sort of thing? An ex-Civil Lord of the Admiralty in one of the debates said that there was more loot in London than there is in Addis Ababa. This Budget is a Budget for the defence of loot, and not for the defence of the people of this country. Is not the duty on tea, tobacco and beer in defence of loot? Why

  73
  should we defend that sort of thing? I would ask the Chancellor of the Exchequer how, if there were no money provided for Defence Forces, the Army, the Navy and the Air Force, it could affect those engaged in work? I can see how it would affect the great landowners and financiers if there was not the bludgeon and the bayonet to protect them. All this talk of defence is defence of loot. All right, let the looters pay.
  I ask the Chancellor of the Exchequer to consider the question of defence from the point of view of protecting the teeming masses from poverty and hunger, and from the terrible maladies and diseases which follow, and which are rife in every industrial district in the country. Hon. Members may smile and think that it is all very funny. Let them go round the industrial and derelict areas. All the Chancellor can say is, "We will encourage small businesses" instead of providing for great work schemes of social value in order to provide employment. Millions of money are to be provided for manufacturing big guns and erecting factories for the manufacture of bombs and poison gas, and yet there are people all around suffering unnecessarily and undeservedly, and hon. Members opposite know it. If they do not know it, I am prepared to take them out to see it. I want defence of the people. Yes, hon. Members may smile, but, is it not a tragic thing to have people in derelict areas starving when you have millions being handed to the Chancellor of the Exchequer which ought to be given to them? There is nothing in the Budget to alleviate their suffering. If there is to be any question of defence, it should be defence of the people against hunger and want and the diseases which follow this condition. When it comes to a question of the supply of armaments and of armament factories to build guns and all the rest of it, it is the defence of loot —wealth stolen from the workers of this country and from the Colonial slaves. It is that with which you are concerned, and not the defences of the people of this country.
  Question put, and agreed to.

  BEER (CUSTOMS).
  Resolved,
  "That—

  (a) as from the twenty-second day of April, nineteen hundred and thirty-six, there shall be charged in respect of beer
  74
  imported into the United Kingdom a duty of customs of one pound for every thirty-six gallons, in addition to any other duty of customs for the time being chargeable thereon;

  (b) on the exportation from the United Kingdom (whether as merchandise or for use as ships' stores) of beer in respect of which the additional duty chargeable under this Resolution has been paid, there shall be allowed a customs drawback equal to the amount of the additional duty so paid, in addition to any other customs drawback for the time being allowed thereon;

  (c) this Resolution shall not apply to—

  (i) beer being an Empire product within the meaning of Sub-section (1) of Section eight of the Finance Act, 1919, as amended by any subsequent enactment; or

  (ii)beer of any description specified in Sub-section (1) of Section two of the Finance Act, 1930.

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  SUGAR (REDUCTION OF POLARISATION).
  Resolved,
  "That, as from the twenty-second day of April, nineteen hundred and thirty-six, any sugar chargeable with a duty of customs or excise the polarisation whereof has at any time been reduced, either as the result of the sugar having been treated (whether by the addition of invert sugar or otherwise) or as the result of the development of invert sugar or other substance in the sugar, shall be chargeable with the duty as if it were of a polarisation exceeding ninety-nine degrees.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  IMPERIAL PREFERENCE (EXTENSION OF PERIOD OF STABILISATION).
  Resolved,
  "That Section seven of the Finance Act, 1926 (which stabilised for a period expiring on the thirtieth day of June, nineteen hundred and thirty-six, the preferential reductions of customs duties allowed in the case of certain Empire products) shall, as amended by any subsequent enactment, have effect as if the said period were extended until the nineteenth day of August, nineteen hundred and thirty-seven, and for the purpose of that Section the preferential rates chargeable by virtue of Section four of the Finance Act, 1928, in the case of Empire products being sugar, glucose, molasses and saccharin, shall be deemed to have been in force immediately before the first day of July, nineteen hundred and twenty-six:

  75
  Provided that nothing in this Resolution shall affect the provisions of Sub-section (1) of Section four of the Ottawa Agreements Act, 1932 (which stabilised the said preferential reductions in the case of tobacco until the nineteenth day of August, nineteen hundred and forty-two).
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  CONTINUANCE AND AMENDMENT OF SECTION ONE OF THE SAFEGUARDING OF INDUS- TRIES ACT, 1921.
  Resolved,
  "That—

  (a)the duties of customs imposed by Section one of the Safeguarding of Industries Act, 1921, for a period expiring on the nineteenth day of August, nineteen hundred and thirty-six, shall continue to be charged for a further period of ten years from the said day;

  (b)the Import Duties Advisory Committee and the Treasury shall respectively have the same power to recommend and to order the imposition of an additional duty on any goods for the time being chargeable with duty under the said Section one as they have to recommend and to order the imposition of an additional duty on goods chargeable with the general ad valorem duty, and Section nineteen of the Import Duties Act, 1932, shall apply accordingly;

  (c)in the case of any composite goods on which, by virtue of Section eight of the Import Duties Act, 1932, the general ad valorem duty would be chargeable only up to the amount, if any, by which it exceeds the duty chargeable on the goods under the said Section one, the general ad valorem duty shall, instead of being so chargeable, be chargeable up to the full amount thereof and the duty under the said Section one shall not be charged except in so far as the amount thereof exceeds the amount of the general ad valorem duty;

  (d)in this Resolution references to the said Section one shall be construed as references to that Section as amended by an enactment for the time being in force."

  CUSTOMS DUTIES ON ACTIVATED AND DECOLOURISING CARBONS.
  Resolved,
  "That, as from the twenty-second day of April, nineteen hundred and thirty-six, the duties of customs chargeable on activated carbons and decolourising carbons, not being of animal origin, shall, instead of being charged under Part I of the Import Duties Act, 1932, be charged under Section one of the Safeguarding of Industries Act, 1921, as amended by any subsequent enactment, and shall be duties equal to one-third of the value of the goods.
  76
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  CUSTOMS DUTY ON PARTS OF ARC-LAMP CARBONS.
  Resolved,
  "That as from the twenty-second day of April, nineteen hundred and thirty-six, the duty of customs chargeable on parts of arc-lamp carbons, whether such parts are finished or not) shall, instead of being charged under Part I of the Import Duties Act, 1932, be charged under Section one of the Safeguarding of Industries Act, 1921, as amended by any subsequent enactment, and shall be a duty at the rate of seven shillings and six pence per pound weight.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  CUSTOMS DUTIES ON PARTS OF WIRELESS VALVES, ETC.
  Resolved,
  "That, as from the twenty-second day of April, nineteen hundred and thirty-six, the duties of customs chargeable on parts of wireless valves and similar rectifiers and parts of vacuum tubes (whether such parts are finished or not) shall, instead of being charged under Part I of the Import Duties Act, 1932, be charged under Section one of the Safeguarding of Industries Act, 1921, as amended by any subsequent enactment, and shall be duties equal to one-third of the value of the goods.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  CUSTOMS DUTIES ON FERRO-TITANIUM, MANGANESE METAL AND CHROMIUM METAL.
  Resolved,
  "That, as from the twenty-second day of April, nineteen hundred and thirty-six, the duties of customs chargeable on ferrotitanium, manganese metal, and chromium metal shall, instead of being charged under Part I of the Import Duties Act, 1932, be charged under Section one of the Safeguarding of Industries Act, 1921, as amended by any subsequent enactment, and shall be duties equal to one-third of the value of the goods:
  Provided that this Resolution shall not apply to ferro-titanium containing more than two per cent. of carbon, or to manganese metal containing more than one per cent. of carbon.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  CHARGE OF TAX.
  Resolved,
  "That—

  (a)Income Tax for the year 1936–37 shall be charged at the standard rate of four shillings and ninepence in the pound, and, in the case of an individual whose total income exceeds two thousand pounds, at such higher rates in respect of the excess over two thousand pounds as Parliament may hereafter determine;

  (b)all such enactments as had effect with respect to the Income Tax charged for the, year 1935–36 shall have effect with respect to the Income Tax charged for the year 1936–37.

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  HIGHER RATES OF INCOME TAX FOR 1935–36.
  Resolved,
  "That Income Tax for the year 1935–36 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess over two thousand pounds as were charged for the year 1934–35.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

  PREVENTION OF AVOIDANCE OF INCOME TAX BY TRANSFER OF INCOME ABROAD.
  Resolved,
  "That—

  (a)where any individual has by means of any transfer of assets, either alone or in conjunction with associated operations within the meaning of any enactment for giving effect to this Resolution, acquired any rights by virtue of which he has (within the meaning of the said enactment) power to enjoy, whether forthwith or in the future, any income of a person resident or domiciled out of the United Kingdom, that income shall, whether it would or would not have been otherwise chargeable to income tax, he deemed to be the income of that individual for all the purposes of the Income Tax Acts;

  (b)for the purpose of this Resolution references to an individual shall include the wife or husband of the individual, and references to income of a person resident or domiciled out of the United Kingdom shall include income apportioned to such a person under Section twenty-one of the Finance Act, 1922, as amended by any subsequent enactment;

  (c)there may be included in any Act of the present Session relating to finance such provisions as to income tax in re-
  78
  lation to any such transfer of assets or associated operations (being provisions which it is necessary or expedient to include for the purpose of giving effect to or supplementing the foregoing provisions of this Resolution) as Parliament may determine;

  (d) the provisions of this Resolution and the provisions included in any such Act as aforesaid shall apply for the purposes of assessment to income tax for the year 1935–36 and subsequent years, and shall apply in relation to transfers of assets and associated operations whether carried out before or after the date of this Resolution."

  AMENDMENTS AS TO SURTAX ON UNDISTRI- BUTED INCOME OF CERTAIN COMPANIES.
  Resolved,
  "That there may be included in any Act of the present Session relating to finance such amendments of Section twenty-one of the Finance Act, 1922 (which relates to surtax on the undistributed income of certain companies), and of the enactments relating to or amending that section, as Parliament may determine, and any such Act may provide that the said amendments shall have effect for the purpose of assessment to surtax for the year 1935–36 and subsequent years."

  SETTLEMENTS ON CHILDREN.
  Resolved,
  "That there may be included in any Act of the present Session relating to finance such provisions as to income tax as Parliament may determine in relation to settlements, dispositions, trusts, covenants, agreements, arrangements and transfers of assets made or entered into directly or indirectly, whether before or after the date of this Resolution, by any person in favour of any of his children (including stepchildren, adopted children and illegitimate children)."

  EXCLUSION OF CERTAIN MACHINERY FROM VALUATION FOR SCHEDULE A, ETC.
  Resolved,
  "That—

  (1) no account shall be taken of the value of non-rateable machinery in ascertaining the annual value—

  (a)of any property in Great Britain according to the general rule of No. 1 of Schedule A; or

  (b)of any property whatsoever for the purpose of Rule 5 of the rules applicable to Cases I and II of Schedule D, or for the purpose of Section eighteen of the Finance Act, 1919;

  (2) the profits arising to any person from the letting of any machinery the value of which is not taken into account for the purpose of assessment to Income Tax under Schedule A shall be deemed to be profits chargeable to Income Tax under Case VI of Schedule D;

  79

  (3) in this Resolution—

  (a)the expression 'property' means lands, tenements, hereditaments and heritages;

  (b)the expression 'machinery' includes plant, machines, tools and appliances;

  (c)the expression 'non-rateable machinery' means—

  (i) in relation to property in England or outside the United Kingdom, machinery of any description the value whereof is not taken into account for the purposes of rating under paragraph (b) of Sub-section (1) of Section twenty-four of the Rating and Valuation Act, 1925, or would not be so taken into account if that Sub-section had effect with respect to the valuation of the property;

  (ii) in relation to property in Scotland or Northern Ireland, machinery of any description the value whereof is not taken into account for the purposes of rating under any enactment providing for the exclusion of certain machinery from valuations in Scotland or Northern Ireland, as the case may be, or would not be so taken into account if that enactment had effect with respect to the valuation of the property.

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the Provisions of the Provisional Collection of Taxes Act, 1913."

  AMENDMENTS AS TO SCHEDULES A AND B IN NORTHERN IRELAND.
  Resolved,
  "That there may be included in any Act of the present Session relating to finance such Amendments of the law as Parliament may determine as respects Income Tax under Schedules A and B in the case of hereditaments in Northern Ireland affected by certain provisions of an Act of the Parliament of Northern Ireland known as the Valuation Acts Amendment Act (Northern Ireland), 1932."

  MISCELLANEOUS AND GENERAL.

    ESTATE DUTY IN RESPECT OF PROPERTY ABROAD.
    Resolved,
    "That the exemption from estate duty which exists by virtue of Sub-section (2) of Section two of the Finance Act, 1894, in the case of certain property situate out of Great Britain shall cease so far as it relates to any such property passing on the death of a person dying domiciled in some part of Great Britain."

    STAMP DUTY ON CERTAIN STOCK AND SECURITIES ISSUED BY GOVERNMENTS OF INDIA AND BURMA.
    Resolved,
    "That—

    (a)the exemption front stamp duty in respect of Indian Government loans conferred by Section two of the Indian Securities Act, 1860, shall not apply to any stock or marketable securities to which this Resolution applies, but any such stock or securities shall be treated for the purposes of stamp duty as if they were respectively colonial stock and colonial government securities;

    (b)this Resolution applies to all stock and marketable securities issued by or on behalf of the Federation of India or the Governor-General of India in Council or the Governor of Burma, except stock or marketable securities issued by the said Governor-General in Council or Governor on behalf of the Secretary of State in Council or issued on behalf of the said Governor-General in Council by the Secretary of State."

    TRANSFER TO EXCHEQUER OF SURPLUS DIVI- DENDS ON SUPREME COURT FUND SECURITIES.
    Resolved,
    "That so much of the dividends received by the National Debt Commissioners on securities held by them for the purpose of Part VI of the Supreme Court of Judicature (Consolidation) Act, 1923, as in the opinion of the Treasury is not required for paying the sums payable by the Commissioners under that part of that Act and for providing against depreciation in the value of those securities shall be paid into the Exchequer from time to time as the Treasury may direct."

    AMENDMENT OF LAW.
    Motion made, and Question proposed,
    "That it is expedient to amend the law relating to the National Debt, Customs and Inland Revenue (including Excise) and to make further provision in connection with finance."
    Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.— [Captain Margesson]
    Resolutions to be reported To-morrow. Committee also report Progress; to sit again To-morrow.
    The remaining Orders were read, and postponed.

    INTERNATIONAL SITUATION.
    Motion made, and Question proposed, "That this House do now adjourn."—[Captain Margesson.]
    6.17 p.m.
    Mr. WISE: A matter which is seriously agitating a large number of people in this country at the moment is the question of the possible recession of territories held by His Majesty's Government under mandate in various parts of the world and it is with the hope of getting a clear and unequivocal statement from the Government that I am raising this question. Up to the present we have had but cold comfort. We had a very disquieting speech by the late Minister without Portfolio almost as soon as he had left office, in which he told us that we must learn to look upon the British Empire in an entirely new light. He made that speech coming fresh from the Cabinet and presumably in their confidence. Other propositions made by Members of the Government were not sufficiently definite or comforting. The Chancellor of the Exchequer, it is true, said that the Government never contemplated that these Mandates should be handed back to the country which originally owned these territories, but he did not say that it would not be contemplated while the present Government were in office, and we are entitled to ask for a pledge that as long as the Government remain in office they will not consider the recession of any of these territories. It is impossible to ask them to pledge subsequent administrations but at least they can do this for their own period of office.
    There is no benefit in leaving the question in abeyance. The Secretary of State for the Colonies has in the past made perfectly clear statements about the Crown Colonies, but no statement has yet been made regarding the mandated territories. The one particular Mandate which is in everybody's mind when any question of recession arises is Tanganyika. All the others worth having are outside the jurisdiction of this House. What was German South-West Africa was ceded to the Union of South Africa and that Government has been perfectly clear on the subject that it will not hand the territories back in any circumstances whatever. Australia and New Zealand have been equally clear about the
    82
    Mandates which were handed to them, and Belgium has also been equally clear about the Mandate entrusted to her. Surely with this consensus of opinion outside it is within the power of the Government of Great Britain to make an equally clear and definite statement.
    We cannot possibly justify any bartering of the British Empire as if it were real estate, for any benefit real or imaginary. What benefit, what price, could be obtained which would make such a recession worth while? Take the most extreme possibility of asking Germany to destroy her fleet for the return of Tanganyika; and not build another fleet. The recession would be permanent but the destruction of the fleet would be only temporary, as was the last destruction of her fleet. There is nothing which would justify handing over these territories, and there is no price which would justify our handing over the peoples of these territories to a Government which we know is unlikely to live up to the standards which these peoples have been enjoying. There is no possibility of consulting their views on the subject because the bulk of these populations are illiterate; and many of them do not even know what German administration is like.
    It is 18 years since we took over these territories and that is a generation in native life; they are more short-lived on the whole than we are. There is, therefore, a generation which knows nothing about German administration. But we know perfectly well what would be the fate of these people if they were transferred back to the Power which once had these territories. We are not ignorant of the means by which Tanganyika was originally annexed. While Britain went into British East Africa without fighting, practically without bloodshed at all, a peaceful and quiet annexation, there was a slaughter of over 70,000 Africans when Germany annexed Tanganyika, a quite unnecessary slaughter; and there is nothing to make us believe that the Nazi regime would be any milder than the old Imperial rule of Germany. The odds are that it would be less mild. And we have our duty to these peoples to consider, and our duty to our own race when dealing with the question of these Mandates.
    A bribe if offered and taken will not purchase that which is desired. We

    83
    should learn from our own history of King Ethelred that it does not pay to pay danegeld. It does not pay to-day to leave it in any doubt as to whether we are ready to pay or not. I hope for the sake of this country's pride in itself that we shall inform the world that we are still an Imperial race and still consider the defence of our own possessions. Our trans-African rule is already likely to be seriously imperilled because the foreign policy of His Majesty's Government has placed a hostile Power to the north of our East African territories, and it would be more seriously imperilled if there is any possibility of placing another hostile Power to the south. I hope the Secretary of State will be able to give a specific answer to this one question: Do His Majesty's Government intend at any time during their period of office to consider the question of the readjustment of mandated territories?
    6.26 p.m.
    Mr. AMERY: I am glad that the hon. Member for Smethwick (Mr. Wise) has raised this transcendently important issue before the House on the first opportunity open to him. I am not sure that it would have been necessary for him to do so if the only statement of Government policy had been the answer of the Colonial Secretary a little time ago, an answer entirely consonant with his general attitude towards Imperial policy. But since then we have had statements in another place and in this House which are only calculated to create grave disquiet in our minds. We had from the Chancellor of the Exchequer just before the Easter Recess an elaborate and, if I may say so, a somewhat embarrassed and circumlocutory statement, the gist of which was that while we should never hand over purely British territory there was a difference so great between British Colonies and Protectorates and Mandated territories that somehow or other the inference was left in our minds that as regards the latter we had an open and an uncertain mind. I admit that there are important distinctions between our position in Tanganyika and that in Kenya and any British colony, but whatever the distinctions are they are entirely irrelevant to the question as to whether we are justified, either in policy or in morals, in handing over territories which we occupy
    84
    as a right, and, what is far more vital, handing over peoples who live happily and contentedly under the British flag, and who have become accustomed to our rule —neglecting the peculiar and solemn obligations which we, have undertaken under the Mandate—to a rule which nobody is going to suggest is likely to be more beneficial or more disinterested than Our Own.
    There is a widespread notion that these are territories over which Germany has some sort of residual right, territories temporarily transferred to the League, which has temporarily assigned them to other Powers, who are tenants at will of the League, and that, therefore, it is a perfectly natural proceeding to put an end to this temporary situation and revive Germany's latent claim. There is not a shadow of justification for that proposition. These territories were not in the first instance surrendered by Germany to the League; they were ceded by Germany outright to the major Allied and Associated Powers who then proceeded to distribute them among themselves. The word "distribute" was used in rather a peculiar sense, since the territories were distributed to those who had actually conquered them, and it may be a matter for lawyers to say whether the distribution was final and final sovereignty rests with those who hold the territories, or whether there is still a latent claim on the part of other major Allied and Associated Powers to them. All I would say in that connection is that if any question of a transfer could arise, the other Allied and Associated Powers, such as Italy and Japan, would have a much prior claim to any Power that was neither an ally nor associate, nor is to-day a Member of the League of Nations.
    Obviously, we distributed the territories subject to a very important condition—the condition that we should govern them on principles laid down and defined by the League, and for which the League is guarantor. It is in that respect, and in that respect only, that the League comes into the picture. That certainly does give the League, not a power to suggest and still less to order transfer on our part, but to sustain a very weighty objection to any suggestion on our part that we should transfer them for purely political motives, in an attempt to conciliate those who demand them. The League would be fully entitled to

    85
    object to our doing any such thing unless it was clearly shown that the change would be to the advantage of the people concerned.
    My hon. Friend has pointed out that every other Power concerned has given a straight and direct answer and has said it is not going to consider handing over territory. Why should we hand over territory? After all, every one of our Allies on the Continent gained some major object for which it entered the War. We alone, for all our sacrifices of men and money, have taken over responsibilities which have certainly not been a profit to us so far, but which have at any rate the ultimate advantage that they have given us a measure of strategic security. To have eliminated Germany from East Africa and from the Indian Ocean is a, very vital matter. To have secured territorial continuity between the great Dominion of the Union of South Africa and our territories further North, and our whole position in the Middle East, is something.
    I know there is another argument, which was suggested originally in a speech of my right hon. Friend the Member for Chelsea (Sir S. Hoare) at Geneva. It is the argument of the suffocated nation which has no access to raw materials. A precious lot of nonsense talk of that nature is! I wonder who these suffocated nations are? I notice that the most prosperous nation in the whole of Europe to-day is perhaps Sweden, which has not one square inch of colonial territory, but which has pursued a prudent and successful economic and financial policy. On the other hand, Holland, which has an immense Empire, as a result of pursuing a somewhat different monetary policy is perhaps in greater difficulties than any country in Europe. And what of Germany? Germany had a great Colonial Empire once. Did that affect her suffocation or non-suffocation? Did it afford a great outlet for her teeming millions? Before the War one two-hundredth part of Germany's imports came from her colonies and just over one two-hundredth part of her exports went to those colonies. And what of her migration? Of the total of German migration in the ten years before the War, one German emigrant out of 800 went to a German colony to settle, and of the total increase in Germany's
    86
    population during those ten years, one out of every 20,000 went to her colonies. At the outbreak of the War the total German population of the German colonies, including 3,000 military police, was under 20,000.
    What is the good of suggesting that the return of some or even of all of her colonies will make a material difference to an economic situation which has resulted from quite different causes? It is a situation which is the result of her monetary policy, the result of a policy of internal inflation and external deflation. There is a shortage of imports of foodstuffs, such as butter, perhaps, but that is because so much of German credit is required for raw materials for very different purposes—required for the purpose of asking us to hand back colonies, required for the purpose, now avowed, that in spite of the War which she provoked and lost, Germany is to be put back, at the expense of everybody else, in the position in which she stood before the Great War. To yield one inch to that claim will not promote the cause of peace in Europe. It is in the interests of peace that I hope my right hon. Friend will give that clear statement for which my hon. Friend has asked.
    In conclusion, let the Government make no mistake as to the temper of the country on a question such as this. If you begin to touch the question of handing over people who live under our Flag, you are touching one of those primal instincts which are far stronger than any Government can control through its majority. My right hon. Friend will remember that when, in order to promote a settlement in Abyssinia, there was suggested the cession of a little strip of sandy desert and a few thousand nomads who might or might not have been under our protection, the temper of the House and of the country was unmistakable. It would be far different if there were any question of handing over great territories where millions of natives live happily under British rule, where men of our own race have taken up land and industries and committed their whole future in the belief that our rule was permanent. I believe that any question of that sort would sweep away any Government. Therefore, I do ask my right hon. Friend to give to us now and at once that unequivocal and straightforward

    87
    assurance which I know his whole instinct and nature would bid him give.
    6.40 p.m.
    Captain F. E. GUEST: I wish to take part in this discussion for a few minutes for two reasons. One is that I am personally very much concerned with the fate of this territory, having spent two very hot years of the War in it trying to help in a small way to get it. The second reason is that I have acquired property in the territory. It is, therefore, obvious that my comments will be limited, although they will be very sincere. It is, however, not only my personal point of view that I put forward. I have a great many British friends who have invested a great deal of money in Tanganyika Territory. [Interruption.] It does not seem to me that there is any harm in that. They were colonists in the true sense of the word. They went out to the new mandated territory, which was placed under British control, and settled there, and they invested a great deal of money in coffee, sisal and various other products. As I know these people and to some extent represent them in this House, I am bound to press the request to the Colonial Secretary, which has been so ably put forward and so ably supported, that a definite answer should be given as to what is the Government's policy in this connection.
    There is one other side of this question on which nobody could speak better than my hon. Friend the Member for Altrincham (Sir E. Grigg), who held the great position of Governor of a neighbouring territory. It is that the problem of Tanganyika and that of Kenya are interwoven and are becoming one. My hon. Friend knows as well as I do that during the last ten years the interlocking of these two territories by means of railways, Customs and the Post Office has led to their becoming a single problem. I think that when the Minister replies he must take great care that he does not undo all the work of those who have administered these territories for him with great success.
    I shall never rest until I get an answer from the Colonial Secretary. To-day is not the occasion for raising the matter in great detail, but it would not be difficult for those of us who know the country to detain the House for a very long time on the details. I hope the Colonial
    88
    Secretary will realise that there are Members in this House who will not be put off with references to the Mandate being a Mandate in the colloquial sense. I do not know what that means, but it must mean something. Thai expression was used only a few weeks ago by a responsible Minister for the Crown when referring to the Mandate.
    I believe we are being bluffed by Germany all along the line. We are being bluffed in Europe, and we shall be bluffed if we do not take care in our Colonial Empire. I take the view that this is the time to put up a bold front. Britain should not give way. She should keep to her tenets and to her agreements—the word alliances is one which perhaps cannot be used—but in no circumstances should she give way before the storm which has been created and which is sweeping Europe to-day.
    6.43 p.m.
    Mr. DAVID GRENFELL: I rise only for a few moments to say, on behalf of my colleagues on this side of the House, that we deprecate the means by which a subject as important as this has been brought before the House. A Motion on the Adjournment on a day such as this is not the occasion for discussing this very important question. The hon. Member for Smethwick (Mr. Wise) has some responsibility, and he has expressed what he described as the apprehensions of the people of this country as a result of some answers given to the House in speeches made from the Government benches. If this is really a matter of great public and national concern, ought not the stage to be set for a Debate under more statesmanlike auspices than is the case to-night?
    Mr. CHURCHILL: Will the hon. Gentleman give us some promise, so far as the Opposition is concerned, that an opportunity will be found on a Supply Day for a full discussion on this matter?
    Mr. GRENFELL: The right hon. Gentleman ought not to ask for favours from this side of the House. After all, this is a matter for the Government, and the supporters of the Government ought to make a demand to the Government concerning it. I have heard the hon. Member for Smethwick speak more convincingly and with much more conviction on other occasions, and I think that this

    89
    evening he was talking with his tongue in his cheek and that his purpose was to irritate the right hon. Gentleman the Colonial Secretary. I am not defending the right hon. Gentleman, but I hope the House will agree with me that to-night we are trying to approach by a short cut a problem which is much too large to be disposed of in this kind of extempore discussion. This is a vital world question, affecting the international situation, and it is no use trying to rush through a discussion of this kind and to get a hurried reply from the Colonial Secretary and then to think that the Government have been tied down to something definite by that means.
    The hon. Member who opened the discussion did not help his case by many of his arguments. He said that a trust had been reposed in us in respect of these Mandated territories and that we had willingly accepted that trust, which imposed upon us a duty to the peoples in those territories. He said that our duty was to remain there and to give those people the benefit of good government. That sounds very well, and the hon. Member tried to put the best appearance on his case, but he then went on to say that the people of Tanganyika had been won over to allegiance to this country by gentle means and without bloodshed. He was not then giving us the history of the transference, as it was given by the right hon. and gallant Gentleman who spoke afterwards and who said he had fought in that place.
    Mr. WISE: I was referring to Kenya Colony, which we occupied in the most peaceful possible way. The Tanganyika Territory was occupied by Germany and the subsequent War, to which my right hon. and gallant Friend the Member for the Drake Division of Plymouth (Captain Guest) referred, was between England and Germany and not between England and the native population.
    Mr. GRENFELL: Tanganyika was not won over by peaceful means. There was very heavy fighting and loss of life there and coloured peoples in that part of the world fought against each other.
    Captain GUEST: The hon. Gentleman will perhaps permit me to interrupt. I was there and he was not there, and he will allow me to tell him that the territory of Tanganyika was eventually
    90
    occupied by British and South Africans, assisted to a certain extent by black East African troops.
    Mr. GRENFELL: And they fought against black East African troops under German officers. The right hon. and gallant Gentleman commanded one set of native people who fought against another set of native people commanded by Germans. It was a conquest by one set of native levies fighting against another set of native levies. What have those people gained after all the fighting? They have been transferred from government by Germany to government by Britain, but the interests of the people themselves seems to be entirely neglected and forgotten by some Members of this House.
    The right hon. Gentleman the Member for Sparkbrook (Mr. Amery) seizes every opportunity for the expression of Imperialistic opinion, and it was not surprising to find him in his place and on his feet this evening. He voiced the British claim to these lands and made a strong plea for the perpetuation of our authority over them. He said that there was no shadow of justification for the argument that Germany had any right to the return of Tanganyika, and that Germany had ceded the territory willingly in the post-war period. That may be the right hon. Gentleman's version, it may be the English version, but it is not the German version of the transaction. The Germans say that they signed the Treaty of Versailles under duress, and as a conquered nation were compelled to give up Alsace-Lorraine and other territories and their colonies. That is a position which must not be ignored.
    The right hon. Gentleman takes pride in the expansion of the British Empire. He is built that way and has lived in that kind of atmosphere, and one would not expect him to speak in any other way, but do not let him forget that the same type of mind exists in Germany and that people in Germany are just as prone to speak in that way as people in this country. But then an astounding statement was made, a statement which will not make for peace or international understanding. The right hon. Gentleman asked, "Why should not we keep Tanganyika, since every one of the Allies gained some major object for which they had entered the War?" Why

    91
    should not we, he asked, gain some major object? Did this country enter the War with any major or minor object of taking German territory?
    Mr. AMERY: I mentioned it not as a major object at all, but as some partial compensation for all our sacrifice in life and money during the War and as a matter of security.
    Mr. GRENFELL: If the right hon. Gentleman reads his speech to-morrow he will see that it is a mass of inconsistencies. He asked, why should we not get a reward for the part we played in the War? In the next breath he said it was a fallacy to argue that Germany was suffocated by lack of room to expand and pointed out that Sweden, one of the most prosperous countries in Europe, had no colonies. The right hon. Gentleman cannot have it both ways. Does he value the colonial possessions of this country? Does he think that they are of economic advantage to this country or that they are an advantage to us as an outlet for surplus population? If so, let him say so. But once he makes that contention he is compelled to the conclusion that 'colonies would be of equal value to Germany. If they are an advantage at all they would be an advantage to Germany as well as to this country. If Sweden can prosper without foreign possessions, why should not this country deliver up part of our foreign possessions and especially some part of that monopoly and exclusive right that we possess in regard to territories which we have acquired?
    Mr. MANDER: Would the hon. Gentleman be willing to hand over to the German Nazi Government any people now under British control?
    Mr. GRENFELL: I shall say exactly what I think on that point before I conclude. I am no friend of the Nazi Government, and I have said so on every occasion when I have spoken on the matter in this Housse. I do not want to hand any body of people over to German, French or Italian domination. I think there is a much larger view to be taken of this problem and that a larger responsibility faces Britain and Germany and all the other great nations of the world to-day. The right hon. Gentleman the Member for Sparkbrook also said that
    92
    Germany had had colonies before the War while Sweden had not, and that Sweden was prosperous to-day, in 1936, without any colonies. Then, he asked why was Germany not prosperous in 1936? He argued that when Germany had possession of these very territories, they did not provide any outlet for her surplus population, and that the German people did not emigrate to them but went elsewhere. He asked why should not Germany, within her own domestic frontiers, rebuild her economic organisation, and said that we must not concede anything to Germany in this matter and that in the interest of world peace we could not begin to compromise on this question. The right hon. Gentleman became almost passionate at that point. Any German listening to him would be driven into a mood very different from the peaceful mood which the right hon. Gentleman apparently wishes to inculcate. A German would be driven at once to resentment by that speech. It would engender in the German mind the most determined hostility. A German would at once want to go to war if he thought that all the people in this country were imbued with the sentiments of the right hon. Gentleman.
    The right hon. Gentleman did not do himself or the cause of Imperialism justice. I can claim that I am a better Imperialist than he because I am not so narrow-minded, so selfish or so unwilling to recognise that Britain is not the only country in the world, and that these possessions are not strictly ours by prescriptive right, but are a responsibility which has been accepted by us. We have inherited certain responsibilities which we are bound to discharge for the benefit of the people concerned as well as of ourselves. But I think the most fatal argument that could be used in the circumstances of to-day is the argument of the soldier-politician which we heard from the right hon. and gallant Member for the Drake Division (Captain Guest). He spoke, as a soldier, in terms of conquest and coercion, and not one suggestion did he make regarding the finer ideals of Imperialism of which we hear from time to time. We, on this side, hold a view of Imperialism which recognises the facts. It is not the people who are in this House to-day, it is not the right hon. Gentleman the Member for Derby (Mr. J. H. Thomas) and his

    93
    colleagues who are responsible for the building up of the Colonial system. The right hon. Gentleman has a passing responsibility which may not last very long. I hope he will be discharged of his trust very soon. But he or someone in his place must discharge that trust for the time being. There are possessions scattered over five Continents, the relations of which to this country and to the rest of the world present a problem which must be solved by some accepted and amicable understanding among all the nations vitally concerned. That is the new idea of Imperialism, and I think it is the idea that we on this side hold.
    There was some value in Imperialism in the old days. I do not think our Imperial system was built up with that idea, but there was some value in the idea of extending the area of administration and control over a wider variety of natural products, of extending the area of markets, of extending the area for purposes of defence and mutual strength. To-day we have all these possessions and we have Imperial responsibilities, and we on this side would like to interpret those responsibilities in the light of the twentieth century and not in the light of the seventeenth century, as the right hon. Gentleman the Member for Sparkbrook does. The main value of Colonial possessions may be indicated under four heads. First they provide an outlet for the surplus population of the colonising country. The increasing populations of Japan, Germany, Italy and Britain can find scope in less densely populated countries. There is some advantage in extending your authority over unpopulated areas capable of development where your own people can be set to work to produce commodities which are not obtainable at home. All these territories in different parts of the world vary greatly in climate and soil, in conditions, in mineral resources and so forth, and that there is some advantage in going as far afield as you can in order that people may obtain employment and produce the complementary commodities which a higher standard of living requires.
    That is one side of the question but in the argument that the right hon. Gentleman the Member for Sparkbrook used that case has broken down in its application to Germany. It has broken down in its application to Japan and
    94
    in instance after instance. The second reason is that of access to raw materials and primary products. The tropical products of Africa are necessities in the colder climates of Europe and North America. Northern and southern countries can exchange their products when there is that connection which colonising gives between one part of the world and another. The third reason is scope for the investment of surplus capital. The hon. and gallant Member referred to a friend of his who had taken his money to Tanganyika because he hoped to get there more favourable conditions than he could get at home. The fourth reason—and this is the vital one at present—is the provision of an outlet for the surplus population and surplus manufactured goods of the colonising eoun, tries.
    We believe that all these four aims can be achieved without the idea of conquest, or rivalry between State and State. I am not one who believes that Europe is over-populated. Germany is not nearly as thickly populated as Belgium or as this country. Countries are not prosperous because of the conditions of population. They are prosperous because they have effective machinery for production and effective systems for the marketing and exchange of goods. The kind of Imperialism which is championed so sturdily by the right hon. Member for Sparkbrook has gone. Insistence on that kind of Imperialism means war. We shall be very fortunate if in Europe we are able to avert a war in the next few years. A crisis is impending, and one of the causes is the mistaken idea of the value of colonies. The German people are taught by false propaganda to believe that they are suffering because of want of room to expand. Right hon. Gentlemen here are insisting that we cannot part with one square inch of territory, regardless of the fact that we administer 25 per cent. of the world and that 27 per cent. of the people of the world are under the British flag. That kind of assertion will lead to intensity of rivalry and certainty of war.
    All these four legitimate aims of expansion can be fulfilled by expansion by agreement, and I suggest that it is now time that this Government, or whoever is responsible for speaking for this country, with its vast possessions, should

    95
    support the hint given by the Chancellor of the Exchequer in a recent speech. I will give the House an instance in my own experience as a Britisher who is very proud of his country. I had occasion to go to Austria in March, 1934, and there was an exhibition in Vienna. I went into that exhibition and saw the section run under the auspices of the British Government. I was invited to see tableau after tableau showing happy and contented natives enjoying life under British rule. I saw them gathering cocoa beans and picking cotton. I discovered from these advertisements of the British Colonial Office, in poor, miserable, starving Vienna, that 60 per cent. of the cotton of the world was grown under the British flag, that 45 per cent. of the rubber, 90 per cent. of the nickel, 40 per cent. of the lead, and 40 per cent. of the copper of the world were produced under the British flag—a monopoly of world commodities under British administration in British possessions. I said, "This is stupid propaganda." I imagined the Austrian subjects seeing this propaganda of the great power and might of the British Empire, and I thought that it was the kind of propaganda that made us unpopular and presented us in a selfish light to the world.
    That is the wrong kind of propaganda. The time has come when the Government of this country should tell the world that these territories to which we have access should be equally free of access to everybody else. [HON. MEMBERS: "They are."] They were, but they are not now. There is no open door now. Ottawa and other agreements have changed all that. We should say to these people that they are welcome to go to these territories on the same terms as ourselves, that they have equal right of access to raw materials as we have, that they are equally free to invest their surplus capital if they have any. We should say, "You have the same right of marketing in these territories as we have." [HON. MEMBERS: "They have."] They have not. We warn the Government that we shall come back to this question and take a definite stand on it. We urge on the Colonial Secretary not to give way to a policy of rabid, stupid Imperialism which must make trouble for the rest of the world.
    7.9 p.m.
    The SECRETARY of STATE for the COLONIES (Mr. J. H. Thomas): I would warn my hon. Friend at the outset that if the Opposition had their way I would be no longer responsible for this policy. He concluded by warning me that the Opposition will take the earliest opportunity of raising certain issues that he has defined. I want to urge the Opposition, not because they are the Opposition but because of the impression that will be created in certain countries I shall mention, of the ignorance of the existing state of affairs as just displayed by the hon. Member. It does not matter what may be said in this country as between the Government and the Opposition, but it does matter, and it is vital in the interests of justice and fairplay, that no foreign country should misunderstand, misinterpret and deliberately use statements made in this House by alleged responsible people—
    Mr. GRENFELL: On which side?
    Mr. THOMAS: On your side. My hon. Friend has stated something to-night that could be proclaimed in Germany tomorrow as representing the British Labour party, the alternative government and indicated as a statement of things uttered to this House as facts that are an absolute travesty of facts. It is necessary that Germany should be under no misapprehension. First, the statement on migration and the assumption of my hon. Friend that the Mandated Territories, so far as Germany is concerned, were looked upon by then; as an avenue for colonial expansion. A more ludicrous statement on the Mandated Territories was never made. Germany never so looked upon them, or used them or took advantage of her opportunity so to use them. As a matter of fact, it is only an infinitesimal percentage of the German population that has ever been in the Mandated Territories, except officials.
    Mr. GRENFELL: Has the right hon. Gentleman listened to any speeches or read any newspapers in Germany for the last six months?
    Mr. THOMAS: This is a new argument. Am I called upon as representing the Government to state my case on the basis of Nazi propaganda? Would the hon. Member have me do that?
    Mr. GRENFELL: No.
    Mr. THOMAS: Exactly, The hon. Member would have me deal with the facts, and I am dealing with the facts and not with what has appeared in any newspaper. Therefore, I repeat what I have said about this talk of Germany looking upon the Colonies as merely an expansion for her people. Previous to the War all experience proves that Germany had not looked upon them in that light. Secondly, my hon. Friend says "I am putting myself in the German mind; I want to view this question from the German standpoint." But he hastened to add, "Not from the Nazi point of view." Does he not take the German standpoint as the Nazi view? He said, "Look at your raw materials." Well, look at them. Can anyone challenge me when I say that, so far as Germany or any other foreign country is concerned, there is not one particle of raw material of any sort or kind that she could obtain prior to the territories being handed over to mandates now administered by us that she cannot obtain to-day. If that cannot be challenged, is it not dangerous for my hon. Friend to speak as he has done? It is my duty, as representing the Government, not only to make that clear to this country, but to make it quite clear abroad, and I repeat that any raw materials of any sort or kind that Germany wanted since the mandate was taken over by us she was not only free and at liberty to obtain, but she could obtain them on precisely the same terms as ourselves.
    Then my hon. Friend mentioned Ottawa. He ought to have remembered that he must not mix things up, and he must not allow the Germans to trade on any of his statements by conveying that the Ottawa provisions had anything to do with mandated territories. They had not, and not only so, but they could not. Therefore, I am correcting him for the purpose of the Opposition not being misrepresented in Germany, as they may well be, by emphasising, first—and it is necessary to make it clear beyond a shadow of doubt—that if anyone alleges that Germany is suffering from a lack of raw materials from any of her previous Colonies now under mandate to us, it is not true. If she had wanted any of those raw materials, she could have got them on precisely the same terms as we could. If she prefers to spend her money in other directions, it is her business, but we are
    98
    not to blame for it. Therefore, I hope I have cleared away those two misapprehensions.
    Then I come to a third aspect of the question, which I feel that those who are raising the issue were entitled to raise. We are not dealing in this matter with a mere commodity like cattle. We are dealing with human beings, we are dealing with men and women and children, of all classes and all creeds, and you have no right, in dealing with human beings, to assume that you can deal with them merely on the basis of a commodity. That is why my hon. Friend was entitled to point out that there ought to be no doubt in the mind of anybody with regard to this matter, and it is fair also that I should say that there is doubt. I have received within the past three days communications from responsible firms. It is no good the Opposition saying these are capitalist concerns. Do not let us forget, so far as Tanganyika is concerned —I am using that as one simple illustration—that there has been more development, more prosperity, and more hope given to Tanganyika since the mandate than in any previous history, even when it was under Germany. Over £9,000,000 has been spent in development, and we must not assume that that is merely a development for the benefit of the capitalist alone. They are an expenditure and a development that have brought prosperity to that particular territory, and you have no right to assume that you can simply ignore that investment and that interest.
    There is a large number of people who believe that there is a great future for Tanganyika, and they have written to me in this spirit and have said, "Under the mandate we were prepared to invest in, and to recommend the development of, Tanganyika, but if there is any doubt or ambiguity in this matter, we hesitate to do it." That is a natural and obvious apprehension, and I have had to take it into consideration. I have replied within the last two days to a specific request made by a responsible company who contemplate even at this moment a further investment of £1,000,000 new capital in Tanganyika, and I have told them, while they must be the best judges of their own particular business, that so far as the political situation is concerned, I had no reason to believe for one moment that

    99
    there was anything to warrant my saying it was inadvisable for them to go on. I said that not only on my own responsibility, but I said it with the concurrence of the Treasury as well.
    I emphasise that for this reason, that the real problem put to me at this moment is, What is the exact position? I answered a few weeks ago by saying that the Government had not considered, and were not considering, the question of handing over these territories. There was some doubt at the moment as to whether I intended that statement to apply, not only to Crown Colonies, but to mandated territories as well. The answer that I give to-night is that when I made that statement, it was made with the full authority of the Government, and it applied to the mandated territories equally as well as to the Crown Colonies. My right hon. Friend the Chancellor of the Exchequer would not have been called upon to supplement that statement in any way, had not a specific question been put to him. So far as the Government are concerned, the statement that I made I made with the full responsibility of the Government. I made it with the authority of the Cabinet, and so far as the Government were concerned, that was the position, and had not the question been raised again, there would have been no need for the Chancellor of the Exchequer to have said anything.
    Captain GUEST: What about the future?
    Mr. THOMAS: My statement was clear and definite, but a specific question was put by my right hon. Friend to the Chancellor of the Exchequer, who, in his reply, referred to my statement as being the policy of the Government, but he went on to explain the difference between Crown Colonies and mandated territories, and I think he used the phrase "speaking in a colloquial sense." My right hon. Friend the Member for Sparkbrook (Mr. Amery) will perhaps remember that the Chancellor of the Exchequer borrowed his phrase, because on the very first occasion that these words, "colloquial sense," were used, they were used by my right hon. Friend in trying to define the same difference. The Chancellor borrowed the words of my right hon. Friend, and he used them in
    100
    precisely the same sense as my right hon. Friend used them.
    I hope I have conveyed to the House and to the world, first, this clear statement, that if any foreign country, Germany or any other, makes any claim that so far as the mandated territories are concerned they do not enjoy all the advantages and privileges that we enjoy, it will not be a statement of fact. If any Member of the Opposition uses the same words as my hon. Friend used, he will be using words that are not true, and I want Germany and every other foreign country to understand that clearly. Secondly, I say that we have administered our trust fairly and equitably, and I go beyond that and say that those natives for whom we are now responsible welcome our administration.
    Thirdly, I say that when the question of transferring any mandate arises, if it ever arises—up to now it has not arisen and I want to emphasise that it certainly will not be raised by us, but if, on the other hand, the question is raised—it will be a question not for us alone to determine. Please remember that Australia has a mandate, that New Zealand has a mandate, and that South Africa has a mandate, and so far as the British Governments are concerned, they certainly will not consider handing over any of their mandates unless the whole question, so far as Empire mandates are concerned, is also reviewed. But beyond that it is not only a question of the Empire itself; there are also foreign mandates, held by France and Belgium. Therefore, I hope the House will not look upon this as merely a bartering point, but will keep in mind that there is a great human problem. The inhabitants must be consulted, and the inhabitants' interests must be considered. The Chancellor of the Exchequer had that clearly in mind when he said that the interests of the inhabitants would always be safeguarded, and I only hope that tie House will not expect me to commit this or any, other Government to saying that we will not do this, that, or the other. All I will say is that the Government's policy is as I have stated We have not considered and we are not considering this question, but if it is raised by any other people it will be our duty to consider the circumstances again, but not attempt to bind anyone.
    7.30 p.m.
    Mr. CHURCHILL: When my right hon. Friend the Colonial Secretary had got about three-quarters through his speech, I was feeling very exhilarated by his breezy style. It was a great satisfaction to hear him expose the many very patent errors which bulked largely in the impromptu extempore speech, as he called it, of the hon. Member for Gower (Mr. Grenfell). Indeed, so successful was my right hon. Friend in flinging the arguments back across the Table, and so robust were the sentiments he expressed on many topics, one really felt that in these days when they talk about the retirement of a Prime Minister, if the Conservative party had to look for a champion he was, at that stage in his speech, at any rate, not disqualifying himself from that position. As my right hon. Friend approached the latter part of his speech—the last lap, I might say—he flagged terribly. It was quite evident that while he was dealing with the attacks of his old friends across the way he was very much master of the situation, but when he came to give the assurances which have been asked for by Members on this side of the House, we saw the spectacle of a good man wrestling with adversity. My right hon. Friend floundered about from one side to the other and he did what one is often forced to do in these circumstances—he tried to have the best of both worlds.
    What was the impression which my right hon. Friend gave? It was certainly that this was not a closed question. I very much regret that that was the impression left upon my mind. That is exactly why this Debate has been raised, and I think we owe a debt to my hon. Friend the Member for Smethwick (Mr. Wise) for having taken advantage of this opportunity. I do not at all agree with the hon. Gentleman opposite that this is not a fitting occasion to raise this matter. Parliamentary time is much congested, and here we had an opportunity which might not easily recur. The Leader of the Opposition and the Leader of the Liberal party have the disposition of 20 Supply days, and very often, I am glad to say, they consider the general wishes of the House in exercising that power. They also have the opportunity of Votes of Censure and opportunities of practically guiding the discussions on going into Committee of Supply, and on
    102
    other questions. Many Members who sit on this side, however, have no means whatever of bringing forward questions. Sometimes they may number as many as the Labour party, and yet they have no means of bringing them forward. Therefore, they are not only justified but bound to take advantage of what otherwise would have been a wasted evening from six o'clock onwards to inaugurate a discussion which has been of considerable interest and of real importance, and which has been attended by a large number of earnest Members of the House. Therefore, I am very grateful to my hon. Friend for having done it.
    What is the anxiety that is in our minds? It is the very anxiety which the last five minutes of the Colonial Secretary's speech emphasised: the question is not a closed question. It ought to be. If there were any question about which the Government should have a clear, definite, resolute conviction, it is this particular question. A door should be either open or shut. It should not be flapping to and fro to see whether there is anyone pushing or whether he is pushing hard enough. We could have no greater danger at this time than the excitement of all kinds of hopes and expectations in the breasts of powerful people abroad, and then, when they come and propose their plans, as they may do very soon, and quote all you have said, you will perhaps be forced by Parliamentary pressure to give the plain answer which ought to be given now. Then the matter will have got into a much more serious condition, and you will have reached a stage when something in the nature of an affront may take the place of what at the present time can be a very reasonable, simple and easy diplomatic negation. Therefore, I very much regret the last part of my right hon. Friend's speech. Not only does it justify this Debate, but it makes it clear that the matter cannot stop here. Some of my hon. and right hon. Friends who take a great interest in this matter will do their utmost to clarify this issue.
    I am sure that my right hon. Friend has his heart in the right place on this subject, and I trust that he will do his utmost to represent to his colleagues what has passed in this Debate. What is the use of telling us, with regard to

    103
    some person who is to invest money in Tanganyika, that the right hon. Gentleman was able to say, "On the whole, you may go ahead; you need not be worried"? Nobody supposes that if this colony were transferred the actual investments of British subjects would be at once expropriated. The mere fact that this matter has been discussed in these terms shows how extremely uncertain the position is. I was disappointed in the answer of the Chancellor of the Exchequer the other night. I do not read into it more than it meant. With a great deal of that answer I agree. I thought that my right hon. Friend marshalled in a very calm and effective manner a large number of defensive positions and set up a great number of conditions which would have to be satisfied before it was possible that any transfer could take place. But, believe me, you will do far better to say that you are not going to have any transfers. That is the path of safety. If you go dangling these things about you will have many a strong hand reaching out to clutch them from you.
    We have succeeded to some extent this evening, but let it be merely a preliminary debate which the fortunes of the afternoon have given us. This subject must be pressed forward on every occasion and by all the opportunities that the procedure of the House permits. I thank the right hon. Gentleman for some of the statements he has made, and I earnestly hope that we may have his continued aid and assistance in this matter, but I must not leave him under the impression that the words he used in the latter part of his speech leave anything but a feeling of grave anxiety on the part of many Members.
    7.37 p.m.
    Mr. MANDER: Before I pass to the subject which I have given notice to raise, that of Abyssinia, I should like to say a word about the question we have been debating. I was one of those who heard with great alarm the statement made by the Chancellor of the Exchequer the other night, because it seemed to imply that under certain conditions at a certain time the Government might be prepared to hand over Tanganyika and other territories to Germany. I do not often find myself in association with
    104
    some of my hon. Friends on the other side, but the point where I join with them very strongly on this question is that it is absolutely unthinkable that we should hand over any human beings of whom we have the care or guardianship or trusteeship to the care of the present Nazi Government with their cruel, ruthless and inhuman methods of treating other human beings. It would be a most shameful thing to do. It would be far better if the Government were to say openly, "We are not, going to do it; do not let us discuss it or talk about it any more. It is a closed question."
    At the risk of receiving a rebuff from the Labour Front Bench I am going to venture to continue the Debate to-night on a matter of at least as great importance as the one we have been discussing. It seems to me that this is an admirable opportunity for Back Benchers, very often crowded out of foreign affairs Debates by Front Benchers, who naturally speak at considerable length. This is a good occasion for back benchers to express the strong feelings that exist in different part of the country about the position in Abyssinia. I have no desire to embarrass the Government, but I want to encourage them to go along on the line they are at present attempting to pursue. We are seeing enacted in the world one of the most monstrous crimes that has ever been perpetrated. The whole future of civilisation is at stake in what is happening in Abyssinia. I do not want to refer to the past or to any mistakes that have been made, but I would like to quote a passage used by the Prime Minister in his speech at Worcester on Saturday, when he said:
    "Collective security will never work unless all the nations that take part in it are prepared simultaneously to threaten with sanctions and to fight if necessary an aggressor."
    One cannot help feeling very disappointed that it has only just dawned on the Prime Minister that that is the situation. It was perfectly obvious from the beginning that that was the position, and that if we were not prepared to use force, if it were necessary, we should never have started on the path of sanctions at all. Nothing has done more harm to the working of the collective system in the last few months than the known policy of the British Government that they were not prepared to take any action which might

    105
    involve them in having to reply to a military attack by Italy. It is no use pretending that you can have effective sanctions unless you are prepared in the long run to stand up and hit back if you are struck by a bully.
    What can we do to retrieve the terrible position in which the world finds itself? What can we do now? There are infinite difficulties, but I do not admit that the situation is hopeless. I agree that it largely depends on the personality of the Secretary of State for Foreign Affairs. I believe that we have in the present Foreign Secretary a man who passionately believes in the collective system and who will do everything in his power to make it succeed. Is not the position this, that if Italy now defeats the League she defeats Great Britain—a most humiliating position for this great country? We are not in the habit of being defeated and we are certainly not in the habit of being defeated by Italy. The time has now come when we cannot shirk the issue any more.
    If civilisation is to be saved, a heroic effort must now be made, to use a colloquial term, to get a "show down" in the next few weeks. I realise that until the French elections are over it is not possible to take any definite action. We have to get over that period. [HON. MEMBERS: "Oh!"] There are obvious practical difficulties. It is exasperating to have to wait a day, but it is clear that we are in such a position now that we have to get those elections over. But there should be no delay afterwards. I realise to the full that the attitude of the French during the last few months has been exasperating in the extreme, and that they have driven the vast majority of the people of this country into violent opposition to the French people and the French Government. It is difficult to get, them to show any sympathy or willingness to co-operate in present conditions. But in fairness to France we have to ask ourselves, "Have we always been so clear and so definite in our statements about our willingness to carry out our obligations under the Covenant of the League as to make the French feel they could rely on us in all circumstances, and throw aside the friendship of Italy, which was a very real thing to them?" In justice to France we have to bear that point in
    106
    mind, because I believe that in the long run our interests are rather with France than with any other country on the Continent.
    I suggest that at the first Council meeting to be held at Geneva, at the beginning of May, the British Government should state clearly and openly before the world that we are prepared to carry out definitely and clearly and precisely all our obligations under the Covenant of the League, to resist aggression by Germany not only against France, but any country that she may attack. We should leave no doubt about that and do it, supporting it with Staff Conversations, if you like. Then, after having made our position absolutely clear, we ought to say to France, "We will act in that way if you, on your part, will come in with us and take whatever action is necessary to defeat the aggressor in Abyssinia, join with us and all the other nations in applying whatever sanctions may now be necessary." They would have to be fairly drastic sanctions if they are to do any good, whether it be a question of oil, or shipping or ports, or the prevention of Italian ships with poison gas and munitions and troops going through the Suez Canal—an action which, in my opinion, ought to have been taken six months ago. If it had been taken the whole trouble would now be over and Hitler would never have gone into the Rhineland. Some hon. Members will probably say, "Sanctions mean war." [An HON. MEMBER: "Hear, hear!"] Yes, I thought so. I venture to say that the precise opposite really represents the position. It is the belief that sanctions will not be applied or that they will be applied ineffectually or half-heartedly—that means war. The knowledge of the certainty that they will be applied effectually means peace, because nobody is going to stand up against the certainty of the application of sanctions.
    One could not have a better illustration of it than this. Why did not Mussolini, when he wanted territory in Africa, go to Kenya instead of Abyssinia? Kenya would have been as valuable and as useful to him. He did not go there because he knew that the moment he did so the automatic, immediate, simultaneous sanctions of the whole might of the British Empire would be employed. There is a very real, practical illustration of the working of automatic sanctions, limited, in this case,

    107
    to the British Empire. The next step, I venture to suggest would be this: If, after we had made our position clear on those lines, France still says, "No, we are not interested in Abyssinia, we are going to give that up; Abyssinia must make the best terms she can and be sacrificed," we ought to give two years' notice to leave the League of Nations. It would have become a mockery and a sham, the collective system. The League of Nations would have brought not security, but disaster, to a country that relied absolutely on it and played the game in every way.
    There would be an interval of two years, and I dare say that during those two years many countries in Europe would have cause to reconsider their position; but it is no good to go on pretending that we are joining in a great collective system if it has turned out to be a sham and other countries are not willing to take their part with us. If we really did go out of the League it would mean that we should have to turn to a. policy, a terrible policy, I think, of the maximum amount of isolation that is possible in the circumstances. It would, of course, be armed isolation. It would be futile in the long run, but it would be the best alternative to the League that would be available. If the League fails there can be no doubt that another world war will come rapidly towards us. The Chancellor of the Exchequer was talking to-day about placing some of the burdens upon posterity, but there is not going to be any posterity unless we are able to make the League effective, and thereby prevent war breaking out.
    The right policy for us is to take the risk now, the risk to which the Prime Minister alluded in his speech at Worcester the other day, and do our utmost for the only thing in the world worth while, the League of Nations. It is the only institution that the people of this country will ever back in a political sense. If the League fails now we shall have to come back to it, we shall have to return to the only true path that exists for salvation in the world, and the only question is: Have we learned the lesson yet? Was the sacrifice of 10,000,000 lives sufficient, or have we to go through it all over again and have another 5,000,000 or 10,000,000 people slaughtered before we come back, inevitably, to the only pos-
    108
    sible method? I hope that the Foreign Secretary will do his utmost and persevere nobly, as I believe he does, to carry out his policy and the policy of the Government, and stake all on making the League effective now in our day.
    7.57 p.m.
    Mr. A. HENDERSON: I am sure that hon. Members on this side of the House will agree with a great deal of what the hon. Member for East Wolverhampton (Mr. Mander) has just said. Since we raised this issue just before the Easter holiday it has become increasingly evident that within a, very short time the Italan Army will be in more or less complete occupation of Abyssinia. It is no use people in this country or in any other country taking the view that Abyssinia's troubles concern merely Abyssinia. The question was first raised at Geneva as far back as January, 1935. The Emperor of Abyssinia reported to the League Council that Italy had committed an act of aggression against his State and asked for the application of Article 11 of the Covenant of the League. Subsequently the League established a Committee of Conciliation, and on several occasions we have been told, in effect, by the Noble Lord the Under-Secretary of State for Foreign Affairs that time must be given to allow the machinery of conciliation to operate. On a former occasion he referred me to the resolutions of 1921, and suggested that sanctions had to be imposed stage by stage, progressively as he termed it. No one on this side of the House would object to the settlement of this terrible dispute by conciliation, although I personally have never been able to understand how conciliation would be likely to succeed, because it must mean satisfying both Italy and Abyssinia. How it would be possible to maintain the integrity of the Covenant and at the same time satisfy the country which has been declared the aggressor, and a country which has broken all the pledges it has made, seems to me to be beyond understanding.
    Even so, it would have been a fair proposition to say, "We will try the method of conciliation provided that Italy marks time, so to speak." There have been objections to an intensification of sanctions, because that might impede this policy of conciliation, but there has been no cessation of military activity on the part of Italy. We are told there must

    109
    be no intensification of economic pressure, but all the time there has been an intensification of military pressure against Abyssinia. The result to-day, 15 months after Abyssinia first complained to the League Council, is that all that has happened is the imposition of four sanctions, imposed as far back as October, and six months after the first imposition of economic sanctions we find the Italian armies within a few miles of the capital of Abyssinia. It has been suggested, it was suggested yesterday—
    Notice taken that 40 Members were not present; House counted, and 40 Members being present—
    8 p.m.
    Mr. HENDERSON: I was dealing with the question of conciliation and I was pointing out that there was no cessation of the attempt on the part of Italy to secure a victory over the Abyssinian armies. I was also pointing out that the economic sanctions which had been imposed had in no way been strengthened by the League Council since they were first imposed in October last year. I have called the attention of the Noble Lord on previous occasions, to the fact that, under Article 16, a good deal more could be done by the League if it had desired. There is no reason why Ambassadors should not be withdrawn or why there should not be a complete embargo upon all exports from League countries into Italy. If I am told that that requires collective action, I will agree that the more countries adopting that policy the more effective the policy will be. I have been unable to understand what has gone wrong with the machinery of the League. Why has it slowed down during the past few months? Who is responsible for slowing it down? Has the League realised its impotence in the face of a powerful nation like Italy? Is it that some countries are loth to carry out their obligations under the Covenant or are all the nations waiting for one another to take the lead?
    The Noble Lord knows that immediately one country has been declared the aggressor under the Covenant that act of aggression constitutes an act of war against all the other members of the League. I do not attach too much importance to the efficacy of sanctions by
    110
    one nation alone, but I would rather see our own country accepting her obligations under the Covenant and carrying out, or seeking to carry out, those obligations, even though that meant unilateral action. When we talk about sanctions we are told that sanctions mean war. Why should they? Economic sanctions merely mean that there shall be withheld from the aggressor country commodities which can be supplied by the country imposing the sanctions, and all that it would mean would be that our country would refuse to supply Italy with the oil, coal, iron or steel commodities which she requires for war purposes. Merely to withhold the supply of oil does not, according to the rules of international law, constitute an act of war, and whether Italy would be prepared to take action and use military force to attack the possessions of this country, or of any other country which withheld supplies, is another matter. I hope that this country, even though the League be not prepared to extend the scope of its sanctions policy, will refuse to have anything to do with the supplying of oil or of any other war commodities to Italy until she ceases to attack the Abyssinian nation.
    If I am told that that will lead to war, I would agree with the hon. Gentleman who spoke before me that it is far better to face the realities of the situation. If we take the view that the League is a sham and a mockery, let us be frank with the world and say so, but if, on the other hand, we take the view that things have gone wrong because some nations are not prepared to accept their obligations, let us separate the sheep from the goats and find out which nations are prepared to honour their obligations under the Covenant and which are not prepared to do so. Those nations who are prepared to honour their bond should be prepared to take the consequences. The position cannot be any worse than it would be if no League of Nations were in existence. I realise that the argument which I have advanced will be open to criticism on the ground that Great Britain would be having to pull the chestnuts out of the fire for the other nations, but we should have the consolation of knowing that our action was evidence to the whole civilised world that, after the pledges we gave when we signed the Covenant of the League of Nations, this country is not prepared to dishonour its bond and re-

    111
    pudiate its obligations, but is prepared to take risks in order to further the ideals of peace.
    It may be that the world is not yet ready for the system that we term collective security. It may be that, in this country and in other countries, merely lip service has been paid to the League of Nations, but now is the time to apply the test. The Abyssinian nation are entitled to the protection and support of every Member State of the League of Nations. It is no use saying that we cannot move unless France moves with us. If France is the stumbling block, let the world be told, and if France be not prepared to honour her obligations under the Covenant so far as Abyssinia is concerned, she may be faced with similar results when she expects other nations to take action in regard to the Locarno Treaties. Locarno is part of, and is contained within, the Covenant of the League of Nations. I would say to the French nation that if they destroy the Covenant of the League of Nations as the result of leaving Abyssinia to its fate, she will destroy the sanctity of all treaties, pacts and obligations as well as the rule of international law.
    Our civilisation has come to the parting of the ways. Either we go straight ahead, taking all the risks in a determination to safeguard the peace of the world, even at the expense and the risk of trouble in the immediate future—it is far better to have trouble in the immediate future and to make it clear beyond doubt that the nations of the world will not allow one nation to attack another—or we return to the insecurity that we experienced before the outbreak of the Great War, with the system of alliances, the balance of power, the policy of isolation, large armaments and the eventual clash of forces, of policies and national aspirations which will, sooner or later, bring us back to where we were prior to the Armageddon of 1914.
    8.10 p.m.
    Mr. LEES-SMITH: I intervene for a few moments only in order that the hon. Member for East Wolverhampton (Mr. Mander) may realise that we are sympathetic to the proposal that he has put forward. This is a subject of some magnitude which must be debated with proper preparation, but I would point out
    112
    to the Under-Secretary that the fact that the subject has been raised on this very unusual occasion is an indication that British foreign policy at this moment stands in a position of greater humiliation than I can recall. Looking back upon the last 12 months we cannot say that the position is due to the action of a series of nations over whom we have no control because, as a matter of fact, the situation has arisen out of the volition and the initiative of the British Government. It was the British Government whose Foreign Secretary made the historic speech at Geneva in December of last year and started the present phase of the sanctions issue. It was the National Government who insisted upon having the General Election on this subject, as a result of which many hon. Members would not hold their seats if any other issue had been put forward. The position we have reached is not due to our having to accept the views of other countries. Having started this issue in such a manner and on our own account, we should have taken a far more decisive action from September onwards than any that we have adopted.
    The doctrine which was repeated only yesterday—that is why I rise, because the doctrine was repeated yesterday—that Great Britain would act, but only pari passu with all other countries and just on the same level, means that we would take no particular initiative but would act just as other countries were acting and in the same way. In that doctrine we give the leadership to other countries and, as a matter of fact, it is actually giving the leadership to France. The report of the experts committee on the oil sanction was a very melancholy document to read. It told us that in 3½ months it would have been effective, and therefore if it had been imposed at the same time as the other sanctions the war would have been over, instead of this most humiliating discussion taking place.
    There is another point to be taken into account in relation to the melancholy plight in which the people of Abyssinia now find themselves. I have read the best military appreciation upon the position and it is by no means yet certain that Italy has conquered the whole of Abyssinia or that there will not be a long-drawn-out resistance in the West of Abyssinia, as in the case of other peoples

    113
    who have been up against Spain or France and when their main armies have been conquered and their capitals invested. Under those conditions, I venture to say from internal evidence that Italy would have to keep her army, hundreds of thousands of men, in the country. There is plenty of internal evidence that Italy is not in a position to wage a long-drawn-out conflict in Abyssinia or anywhere else. It. is strange that British passengers are travelling in Italian ships, and water is coming to Italy from British possessions. Somaliland is very prosperous on account of its exports for the assistance of Italy in Abyssinia. There is no reason why that should continue. That is why I do not like the phrase used yesterday by the Foreign Secretary:
    "His Majesty's Government are ready and willing to consider, together with their fellow members of the League, the imposition of any further economic and financial sanctions that may be considered necessary."
    That is the attitude which has given the leadership to other countries. Let His Majesty's Government, at the next meeting of the League, make proposals themselves, and put them forward with whatever authority they still have left.
    8.17 p.m.
    Mr. RAIKES: I agree with the hon. Member for East Wolverhampton (Mr. Mander) on one point, and on one point alone. That is that we have reached a stage at which the issue in regard to our position in the League and in regard to Abyssinia cannot be shirked. But the view that I desire to put before the Government is entirely opposite to the views which have been expressed from the Labour benches and by the hon. Member for East Wolverhampton. One thing is certain, and that is that economic sanctions of the type which the League is prepared to put on have failed utterly, and I think it is our duty, when we are looking at the future, to consider why they have failed. It has been said that there is no reason why sanctions should mean war if all the nations joined in dealing with the question, but from the very-start of this problem in Abyssinia we have been faced by the fact that only half a League would come in. A number of the great nations of the world are outside the League, and, if sanctions come down to brute force, you cannot measure their advantage by the number of small nations without armaments that
    114
    could be induced to support the League; it has to be measured by the extent to which the great nations of Europe and of the world could be got to play their part in these sanctions.
    It took all the efforts and eloquence of our present Foreign Secretary and our late Foreign Secretary to get the League as a whole, and to get France—and France, after all, is the only other great Mediterranean Power with whom we could deal with Italy—even to move in regard to those comparatively minor economic sanctions that were put on. I grant that, supposing there had been a war that was likely to extend over a number of years, financial and economic sanctions of that character might in the long run have played a considerable part, but in a quick war they have been shown to be completely ineffective. After all these months it has been impossible to get one step beyond the sanctions that were put on in the first two months, and, now that Italy has practically won the war, is there the slightest likelihood or possibility that the League of Nations as a whole will consider further economic sanctions, or will be prepared to consider backing them with military sanctions? The only way to put Italy out of Abyssinia to-day would be by force, and there is not one nation in Europe or in the world that is prepared to face that issue.
    Mr. COCKS: They have never been asked to do so.
    Mr. RAIKES: No, but it has already been pointed out by France herself how unwilling she has been even to adopt these minor sanctions. At the present time great nations like Germany and Japan are outside the League. Do hon. Members opposite suggest that Great Britain, Uruguay, Paraguay and Bolivia should advance in a solemn cohort against Italy—
    Mr. COCKS: There are Yugoslavia and Russia.
    Mr. RAIKES: —and possibly we should find ourselves marching against Turkey, and against Germany, and against—
    Mr. COCKS: With Turkey.
    Mr. RAIKES: I agree that we might get Yugoslavia and Turkey, but, if various nations one after another were

    115
    to start unilateral action, Germany or Japan might be found slipping in on the other side, and the League of Nations, instead of being an instrument of peace, would create a first-class war—possibly the last war that this civilisation would know. I should be prepared to agree if we had a League that was capable of working and contained the whole of the great Powers of the world, but we have not such a League, and to talk to-day about increasing sanctions and making further gestures is to beat the air, because, so far as complete collective security is concerned, the League has shown, over this Abyssinian issue, that collective security does not exist to-day.
    We are left with two alternatives. It is no use buoying ourselves up with the idea that we can make gestures. So far as Abyssinia is concerned, we have in a way been a worse friend to her than we might have been an enemy, because Abyssinia, in the early stages of this war, believed that the League could and would take effective action in her support; but it became more and more evident that the League was not prepared to work, and, indeed, could not work, on those lines. When the late Foreign Secretary had to resign his office last December, he was at any rate working for terms which were far more favourable to Abyssinia than Abyssinia will ever get with all the moral platitudes of the League behind her. I was very much struck by one remark that the right hon. Gentleman made in the course of his speech in December. He said that so often in the past had some small nation been encouraged, by realising that the moral spirit of Britain was on its side, to carry on, hoping for greater and still greater support, only to find that its last state was worse than its first. From the point of view of Abyssinia, a settlement last December, humiliating as it might have been to the League of Nations, would have been far better than the settlement she will have to face now.
    I do not believe, however, that, because the machinery of the League has broken down in this instance, the League need of necessity fail completely for the future, but I believe that one lesson which this country and the world will learn will be that the League Covenant must be revised before the League can really mean anything at all. What is
    116
    everybody's business in the League is nobody's business. We have seen that exemplified in the discussions at Geneva. We have seen that the nations of the world as a whole are not prepared to "go the whole hog" and, it may be, risk a war and their own lies, in support of some principle which does not really directly touch them. Until we have faced that issue, any talk about collective security is very largely "bunkum." On the other hand it may, indeed, be possible, if we learn our lesson from Abyssinia, by realising the League Covenant, that is to say, by giving limited responsibility to nations instead of unlimited responsibility collectively, to get nations prepared to take part in regional pacts within their own zones and within their own interests and prepared to take a part in keeping the peace if there is aggression within their area. Otherwise, drift on as we are drifting to-day, and every nation in Europe will tear up any treat or covenant it likes and it will know that the present League machiner is not applicable, is not suitable, and cannot work to maintain peace by force. For that reason I have put a view which is not often heard in the House but which, I believe, is going to grow in intensity in the next few months, that a revised League Covenant, with responsibilities definitely limited, is the only way in which the League can survive and Europe can be saved from chaos or from a complete breaking of all treaties at all times.
    8.26 p.m.
    Mr. VYVYAN ADAMS: Whatever the official Opposition may think about important questions being raised on an occasion like this, I am very grateful to the hon. Member for East Wolverhampton (Mr. Mander) because this is the first occasion since the General Election that I have succeeded in catching Mr. Speaker's eye to speak on the matter of Italy and Abyssinian or Germany; if I have tried once I have tried at least 10 times. However, I think the House should be congratulated on having been hitherto spared my unfortunate and worthless remarks. I was interested in listening to the hon. Member for South-East Essex (Mr. Raikes) and I conjectured, as I listened, why he continued to support a Government which states constantly that it has founded and is founding its foreign policy on the Covenant of

    117
    the League of Nations in its present form. I agree with him that the League of Nations will not be deserving of respect if it cannot sustain the reign of law. However, I do not know how any system of law can be sustained without rules, and without sanctions to sustain those rules; and surely the coercion of Italy was hardly promoted by the scandalous Hoare-Laval proposals which arrested those very oil sanctions which would admittedly have been effective to stop the bloodshed and the warfare.
    The two questions that have been raised to-night are intimately germane and closely interwoven. I think the problem in foreign affairs might be expressed in this single sentence, that Germany—that is to say, the Nazi Government, because the two things have now, unfortunately, become identical—may try to repeat within measurable time what seems likely to be Italy's successful example of brutal and ruthless aggression. I should like to quote what I think should be the guiding policy of the Government in the words of the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) delivered in this honourable House on 11th July last. I listened to them with a feeling of intense exaltation, and so too apparently did the whole of the House of Commons if cheers are any indication of its collective feeling. Towards the end of his, speech the right hon. Gentleman said:
    "We are coming very near to what may be a test case for the League as to whether it does mean collective security, whether it does mean anything for anyone or nothing for anyone. It is not to be supposed that the League may be flouted under the eyes of Europe, that League methods can be repudiated, a policy of force and conflict engaged in, and that the League can pass all that by because it happens to occur in Africa and not in Europe without thereby destroying the value of collective security, not for Africa only but for Europe. I take an example."
    Then my right hon. Friend spoke of Austria. Further on he said:
    "The value of the Covenant to Austria, and to the Powers that are interested in Austria, is exactly the value that the League can secure for it when Abyssinia comes to plead at the Council, and it is idle to suppose that what is at stake in this matter is merely a quarrel between Abyssinia and Italy—a quarrel which might or might not affect our interests. What is at stake is the system of collective security."
    118
    And this was the peroration of the speech:
    "In the last resort we have to take our decision at the Council table at Geneva. We have to take the risk of saying we are prepared to fulfil our obligations under the Covenant if others will do the same. We ought to say that openly to the Council even at the risk that others may refuse. Even if we have to use that language, and others are offended by it, and we come home empty-handed, that much we owe to the honour of the British name and to the efforts that our successive Governments have made to make the League of Nations a real force in international life in the interests of peace and security for us all." —[OFFICIAL REPORT, 11th July, 1935; col. 568, Vol. 304.]
    If the Ethiopian question on 11th July was a, test case it is no less a test case to-day and the mistake, if a mistake has been made by ourselves, seems to me to rest in our not having said last autumn how far we were prepared to go. "The whole way with the whole lot," to use the phrase of the right hon. Gentleman the Member for Epping (Mr. Churchill), seems to me to-day, and has always seemed to me, the right policy. On 22nd October last, some time before the General Election, on one of the occasions when before that interlude I troubled the House on this question, I said I thought we should seek authority from the Council to bar the Canal. I explained, to the accompaniment of some isolationist interruptions from a Member from one of the Manchester divisions, how I thought it was both physically and legally feasible. It is as plain to-day as it has ever been that, to put it at the very lowest, it will be the height of folly if the States members of the League allow Italy now to reap the reward of her barbarous and intensified aggression. As in all disputes, wherever they occur over the globe, you cannot separate this question from the general interest which Great Britain and the British Empire have in peace. The Italians, if they are so minded, are already able to take a bath in the waters of Lake Tsana. They need it. Perhaps there is not yet any immediate danger of their doing anything to the head waters of the Nile, though frankly I would put nothing past the users of poison gas.
    When it is suggested that oil sanctions are going to cause war, One fact always seems to be forgotten, that the States members of the League will be depriving the aggressor of that vital fuel by which

    119
    Italy could carry her aggression against her European neighbours. In any event is it not time to face this fact, that a law which allows the law-breaker to determine the degree of pressure to be applied to him is clearly no law at all. But I doubt whether, the military situation being what it is in Ethiopia, anything short of denial of access to the Suez Canal will now prevail. For that measure we have the power. Have we, I wonder, the courage to make that proposal before the Council at Geneva? All the while the Nazis in Germany, the central danger to civilisation, are waiting, watching and working. I should like to say how glad I have been that there has been no weakening on the part of the Government over the Staff Conversations. The Nazi Government in Germany has already got away with far too much while our own Press, which is supposed to be so famous for its independence, has sung for the law-breaker a paean which has varied from piano to fortissimo.
    There is a current of opinion running through this country which is roughly expressed in the notion that Germany has not had a. square deal. I am one of those who in 1932 and early in 1933 urged the giving of equality to Germany by the qualitative disarmament of the victorious Powers down to her own level. In those days Germany was impotent, vanquished and democratic. That cannot be said to-day. She is heavily-armed, ruthless and totalitarian; to all her neighbours she causes terror, and to most of them she may constitute a danger. When I hear all this talk of "giving Germany a square deal," I wonder what would happen if she realised her ambitions on the continent of Europe. She would then undoubtedly demand back her colonies. There are people in this country who contemplate returning them to her quite regardless of the interests of the natives who would become subjects of the Nazi régime.
    Is it likely that when Germany had resumed her former position of a great imperial power with vast oversea responsibilities, she would any longer observe the Anglo-German Naval Agreement under which she is allowed in certain circumstances 100 per cent. of our submarine tonnage? Is there any guarantee that the violator of the Treaty of Locarno would stop short of a
    120
    1,000 per cent. of that tonnage? Give Germany a square deal! What we have to avoid doing is presenting her with a square meal. If we do not to-day make a reality both in Europe and in North Eastern Africa of the principle of collective security, if we, in a word, do not dedicate the strength of all to the defence of each, we are deferring a collision whose momentum may be increased by the postponement. Germany is really the central and underlying problem—Italy is really an item in the European problem. I wish in my last words to emphasise the danger implicit in the Nazi system in Germany. Never to my mind has there been a danger more manifest than that which Nazi Germany to-day presents to Christendom. I wonder if all hon. Members present in the House at this moment read the other day the Germanised version of the Sermon on the Mount by Bishop Muller. In his foreword he wrote:
    "For you my comrades of the Third Reich, I have Germanised, not translated, the Sermon on the Mount."
    Perhaps I may be allowed to read his interpretation of two of the Beatitudes. The first one:
    "Blessed are the meek for they shall inherit the earth."
    The Germanised version is:
    "Blessed is he who at all times is a good comrade. He will succeed in the world."
    The next:
    "Blessed are the peacemakers for they shall be called the children of God."
    The Germanised version is:
    "Blessed are they who keep peace with their compatriots. They do God's will."
    There is much more besides, but when one sees the terrible disease which is spread through Germany, the denial of everything which we had thought had been confirmed by many centuries of ordinarily accepted decent practice, I think that it is fair to say that never was there a more pitiable self-deception than is to-day being practised in this country by thousands of our generous-hearted fellow-countrymen. If they can be persuaded to show themselves not hostile to the proposition that Britain will stand with other countries in the path both of the aggressor Italy to-day, and of a potentially aggressive Germany to-morrow—then there will be in fact no realisation of that frightful danger—

    121
    aggression by Germany in Central Europe. If that condition is not established, we may have to intervene yet again to stem an avalanche upon the continent of Europe that we have been too late to stop.
    8.41 p.m.
    Mr. RILEY: I wish to associate myself with the congratulations to the hon. Member for East Wolverhampton (Mr. Mander) for introducing a discussion on this subject to-night, and also to associate myself with the remarks of the hon. Member for West Leeds (Mr. V. Adams) as to the Nazi regime in general. This is bound up with the issue which faces this House and the country at the present moment. One cannot help feeling that the paucity of Members interested in this question to-night and present in this House is far removed from the deep feeling which exists in the country. Thousands of people of good will are feeling a sense of deep humiliation at the impotency to which our country and other countries are now being subjected in face of the situation produced by Italy in Abyssinia. I would emphasise the necessity of the Government really facing the question of whether a consistent and courageous policy of carrying out the commitments of our own and other Governments, who are Members of the League, is to be pursued, or whether such a policy is to be dropped.
    One listened with a great feeling of sadness to the pessimistic speech of the hon. Member for South-East Essex (Mr. Raikes). It was a sort of confession of helplessness because Italy, for the time being, has carried the day. It is true that Italy has succeeded in subjugating a comparatively unarmed and undeveloped nation by great and superior forces, but it does not relieve us—this country and the League of Nations—from insisting that in no circumstances shall Italy, the declared aggressor and criminal in this matter, be allowed to dictate terms of peace except it be a peace formulated by the League of Nations, of which we are members. That is the point I want to stress to-night and to impress upon the Noble Lord the Under-Secretary of State for Foreign Affairs. It is said that sanctions so far have not been effective. Is that any reason why they should not be made as effective as possible? When a country and a Government have been
    122
    declared the aggressor under the statutes of the Covenant, we are not only pledged to go to the defence of the country which has to face the aggressor but also to apply sanctions in the fullest extent, and to cut off all relations with the country which has adopted the attitude of aggressor.
    I would ask the Under-Secretary what are the difficulties that stand in the way of our own Government taking the lead at Geneva and asking the 50 other countries who are members of the League to join with us, this country taking the lead, in withdrawing diplomatic representatives from Italy straight away? Why should not our diplomatic representatives be withdrawn? Why should we not ask all those 50 countries, as provided under Article 16, to ostracise Italy as long as she remains a deliberate aggressor, and until such time as she is prepared to conform to her obligations as a Member of the League? Why should not the Council of the League, led by our own Government, or our own representatives at Geneva, seek agreement on these matters from all the Member States? Why should we not propose that among the 50 nations there should be common agreement that Ambassadors and Consuls should be withdrawn from Italy and diplomatic relations broken off, that there should be a stoppage of trains at the frontiers, and that telephonic, telegraphic and postal communication with Italy should be brought to an end until such time as Italy is prepared to accept conditions formulated by the League. It may be said that France is the only other great country in addition to ourselves in the League and that it is improbable that France would come into line with ourselves. It is difficult to visualise how, if we could get anything like unanimity among the other States within the League, France would stand out. Certainly it is our bounden duty to pursue the policy of sanctions until Italy is prepared to recognise her obligations, to accept peace and to make reparation for her aggression under conditions formulated by the League.
    8:48 p.m.
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Viscount Cranborne): In the past, before 1914, it was the rarest thing to have a Debate on foreign affairs. Two Debates in a year would, I think, have been regarded as a very high average. But we live in

    123
    difficult times now when problems are more complex, and it is universally recognised that they affect more nearly every man and woman in the country. Therefore, we have very frequent Debates on foreign affairs. We had two in the last week before the Recess, the last of which took place after my right hon. Friend the Foreign Secretary left for Geneva. Now, when he is hardly out of his aeroplane on the way back, we have another. In the circumstances, I feel sure that the House will understand that it is not possible for me to-night to add a very great deal to what has already been said by my right hon. Friend yesterday at Geneva. I think my hon. Friend the Member for Wolverhampton, East (Mr. Mander) recognised that fact and that his intention—so I understood from his speech—in raising the question was not so much to get information from the Government as to make perfectly clear to the country and the world the very strong views that are held by Members of this House in these dark and difficult days.
    I understood my hon. Friend to say that he thought it was essential that His Majesty's Government should in no way weaken collective action at the present time. I thought that after my right hon. Friend's speech yesterday he would have had no very great qualms about that, but if he requires any additional assurance I shall be very glad to give it to him and the House this evening. There has been no change in the view of His Majesty's Government on this question. They still stand firmly by the declarations they have made in the past. They have always said that this Abyssinian dispute is not a dispute between Italy and England. If I may say so with all deference to my hon. Friend, he did not do a great service to this country in that respect this evening. He indicated that a victory for Italy would be a defeat of England. That is not so, and it is a very unwise thing to have said in this House or anywhere else. We are acting in this dispute not as England, but as a member of the League. Victory for Italy might be regarded as a defeat of the League, but that it would be a defeat for England as against Italy is an untrue and a most unwise thing to say.
    Mr. MANDER: I said that it would be a defeat for England as a leading member of the League of Nations.
    Viscount CRANBORNE: That is not quite the way the hon. Member put it before. It is true that we are only in this dispute, and we have only been in this dispute, as a loyal member of the League. We have always regarded it as a dispute between Italy and the League arising out of Italy's violation of the Covenant, and that situaiton has not changed. In the belief of His Majesty's Government and of Members of the House Italy is still violating the Covenant. Moreover, the situation has lately become more acute, not only because of the progress of the war, but because of the alleged use of gas by the Italian military authorities in violation of the Protocol of 1935. I fully recognise that there are apologists for Italy in this country and elsewhere who say that gas is used only as a reprisal for Abyssinian atrocities, but I do not believe that that argument will convince this House. We were told by the same people when Italy first entered Abyssinia that she went on a civilising mission.
    If it turns out that gas has been used, and that Abyssinian atrocities have as a result been followed by Italian gas, then, so far from a forward nation civilising a backward nation, some of us must feel that it is a case of a backward nation barbarising a civilised nation. If it turns out that gas has been. used—it is not definitely proved by the League as yet, but I am afraid that there is very little doubt that it has been used—then His Majesty's Government must take the view that there should be no relaxation of the action of the League in this dispute; no relaxation of any kind. We still remain ready—if I may repeat a remark made by my right hon. Friend yesterday, in a different form—to impose any financial or economic sanctions on which there is general agreement at Geneva. I recognise that a number of people in this country and a number of hon. Members who have spoken in this Debate think that that is not enough. There have been accusations against His Majesty's Government, that their action in this dispute has been weak-kneed. I confess that I, and I think a great many other Members of this House, are getting tired of that kind of argument. Everybody knows, not only in this country, but in

    125
    every country, and certainly it is well known at Geneva, that we above all other countries have taken the lead. We have only to look at the Italian newspapers to see that. We find that they level all their attacks upon England. Hon. Members do no service to their own country or to the League by making accusations of that kind.
    Miss RATHBONE: Can the Under-Secretary tell us whether yesterday or during the proceedings last week at Geneva the Foreign Secretary proposed any further additional sanctions? He has said that the Government were willing to consider any further economic and financial sanctions that may be considered necessary to be effective, but did the Foreign Secretary himself make any proposals as to what further sanctions would be effective and desirable, or did he leave the initiative to somebody else?
    Viscount CRANBORNE: My right hon. Friend the Foreign Secretary some time ago at Geneva said that we were ready to impose oil sanctions. It is not our doing that they were not imposed, and there is no doubt either at Geneva or throughout Europe that the British Government have taken a foremost place in this dispute. The right hon. Member for Keighley (Mr. Lees-Smith) I am sure did not wish to mislead the House in what he said regarding the oil sanctions. I understood him to say that the Oil Committee stated that oil sanctions could have been made effective in three and a-half months. That is not what the Oil Committee really did say. They said that such an embargo if it were universally applied would become fully effective, that is, if it were applied not merely by members of the League but by the United States of America and by all other nations. They went on, to say:
    "If such an embargo were applied by the States Members of the Co-ordination Committee alone, the only effect which it could have on Italy would be to render the purchase of petroleum more difficult and expensive."
    If the League had put on an oil embargo in January without the co-operation of the United States it would not have had the effect which the right hon. Gentleman indicated.
    Mr. LEES-SMITH: I did not go fully into that matter, and the statement of the Under-Secretary is correct. But if I had gone into further detail I should have
    126
    said that in January there was every indication from official sources, including President Roosevelt, that the United States would have acted with us.
    Viscount CRANBORNE: I do not think that there was any indication of that nature. I am not going to say that it is not possible that the United States would have adopted such action, but there was no indication of that kind.
    Mr. LEES-SMITH: May I remind the Under-Secretary of the statements of Mr. Cordell Hull and Mr. Ickes, the Secretary for Labour, on that point?
    Viscount CRANBORNE: All I can say is that the information in the hands of His Majesty's Government gave no reason to suppose that the United States Government were ready to co-operate at that time. I do not say that in any criticism of the United States. They are not members of the League and are entitled to take what view they like on questions of this kind. But I would urge hon. Members to think carefully before they make statements in foreign affairs Debates of this kind as to the actions of His Majesty's Government in this dispute. Obviously there are causes for criticism, but I think hon. Members will recognise that throughout the dispute the leading part has been played by the British Government, and it is not due to them that further action has not been taken. Certain hon. Members would go even further. I think I detected a slight tendency in that direction in the speech of the hon. Member for Kingswinford (Mr. A. Henderson). They would have the British Government act alone. They say that if other people will not go on, we should go on without them. They consider that we should act alone and close the Suez Canal, and that we should act alone and impose oil sanctions. I think I also detected this tendency in the question of the hon. Member for the English Universities (Miss Rathbone). She considers that His Majesty's Government should act alone and impose oil sanctions. That policy is heroic but it is not collective.
    This country cannot ride two horses at the same time. If it is felt that collective action is ineffective, then the proper way is to advocate that this country should leave the League and build immense armaments and pursue an individualist policy—a Palmerstonian policy. It would be very difficult and

    127
    very expensive. It would not solve the present dispute or meet the present crisis. Abyssinians would still be bombed and still be gassed. No one would say that Lord Palmerston was a weak-kneed or timid Foreign Minister, but in the present crisis he would have said that he would only take action where national interests were involved. In this case we have aid again and again that our interests in this dispute are solely our obligations under the League of Nations. Nobody has said that we ought to have immense collective obligations and that on the top of that we should pile up individual responsibilities as well. If we did that the only result would be that we should place a burden on the country that it could not conceivably carry. Moreover the situation to-day is not the same as it was at the end of the 19th century. In present circumstances we cannot limit our interests or define our own vital interests. All international trade depends on peace. Our own trade is world-wide, and therefore a war in any part of the world must affect our vital interests. The main lesson of the Great War of 1914 was that in any first-class war no country can keep out. Japan and the United States, who had no direct interest in the original conflict, were gradually dragged in.
    There is only one way in which to get complete security and that is by a worldwide collective system. An individualist system is no longer any good for us or for any other nation; we must have a collective system if the peace of the world is to be secured, and it is to that end, I believe, that all parties in this country are aiming. Of course we must all recognise the limitations of the present League of Nations. They have been painful and obvious to us during the present dispute. What we can say is that the Covenant is an advance in one particular direction. It lays down a common standard of morality in international affairs. It is true that this common standard is not universally recognised. There are countries who are not members of the League who do not recognise it, and members of the League who have one standard of morality for themselves and another standard for other people. We
    128
    are accustomed to that in our own private life, but the fact remains that there is a standard laid down in. the Covenant which is accepted by the vast majority of the people in this country and many other countries of the world. It is there, and I believe that if it is supported it has come to stay in the world.
    If I amasked how long it will be before this standard of morality will be found completely and truly effective, it is, of course, very hard to say. However, we can judge to a certain extent by the analogy of our own history. A hundred years ago duelling was regarded as a very proper way of settling disputes; now it is a relic of the past. A hundred years ago the entries into London were haunted by highwaymen; now even the most timid of motorists can afford to cross Blackheath without any great tremors. I hope the House will not think that I am flippant in giving analogies of such small scope in a Debate of this gravity. I certainly do not mean to be flippant.
    I assure the House that His Majesty's Government have the very greatest sense of the gravity of this matter. They wish neither to ignore nor to minimise the grim realities of the Abyssinian situation to-day. It is something which none of us can afford to ignore, but we must recognise that Rome was not built in a day. If we have a new ideal of international structure, it must inevitably take time completely to establish it. But I submit to hon. Members that for that reason we ought not to abandon it. If you abandon advances in civilisation of this kind, you merely sink back into barbarism. I do suggest to the House that in spite of setbacks, in spite of disappointments and in spite of tragedies of the kind with which we are faced at the present time, we must keep this aim strongly before us. I can assure the House that it is towards that goal that the Government intend to move, and it is to that purpose that they will devote their very best efforts.
    Question, "That this House do now adjourn," put, and agreed to.
    Adjourned accordingly at Eight Minutes after Nine o'Clock.