DEFENCE LOANS BILL.

HC Deb 25 February 1937 vol 320 cc2219-343

Order for Second Reading read.

3.48 p.m.

The Chancellor of the Exchequer (Mr. Chamberlain)

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

This is a short Bill containing only one operative Clause. Its terms conform so closely to those of the Resolution which we discussed last week that I should only be wasting the time of the House if I attempted to repeat the explanation of it which I then gave. In brief, it is a Bill to authorise the Treasury to borrow money, or, alternatively, to apply realised Budget surpluses up to a maximum of £400,000,000 during the next five years towards meeting in part the expenditure of the Defence Services. It contains provisions for the repayment by the Defence Departments of the borrowed money, together with interest, at 3 per cent. within a period of 30 years from the expiry of the borrowing period.

I do not think it will be necessary for me to speak at very great length on the Second Reading, but I should like to make some general observations arising out of the terms of the reasoned Amendment on the Paper in the name of the Leader of the Opposition. The first comment I would like to make upon that Amendment is that I note with satisfaction that no reference is made in it to the observation which previously fell from the right hon. Gentleman, namely, that this was a Measure likely to lead to war. I do not know whether I am to infer from that that the right hon. Gentleman, on further consideration, has felt it possible to take a different view, but, however that may be, I am glad that that allegation has disappeared, both because I am profoundly convinced that it is not only not true but the reverse of the truth, and also because it would be very unfortunate if any apprehensions were to be created in the country of an imminent war at a time when we have no reason to suppose that there is any justification for fears of that kind. Taking the opening words of the Amendment— That this House views with misgiving the massing of huge competitive national armaments,"— as if they stood alone, I have myself on more than one occasion expressed my abhorrence of the whole business of rearmament by nations which might be so much more profitably employed in pursuit of the arts of peace, and which could so easily avoid the penalties which they are piling up for themselves, in the shape of increased taxation and deprivation of comforts and even necessities, if only they could drop their suspicions and discuss their claims and their grievances like reasonable men. Even now, although the prospect may seem discouraging, I do not altogether despair of presently finding some new scheme on which fresh contacts might be made, which would avoid the necessity for the pursuit of this folly to the bitter end, but I have, of course, to recognise that the task of exploration is likely to be no short one. In the meantime, we cannot afford to stay our hands until we are satisfied that we have provided for the safety of the country and put ourselves in a position to fulfil our international obligations. When I go on to the words of the Amendment which follow— without any constructive foreign policy based upon collective security under the League of Nations "— I must confess that I do not understand what is the implication conveyed by those words. It is a common affectation on the part of hon. and right hon. Gentlemen opposite that they do not know what are the relations between the armaments programme of the Government and their foreign policy. I say "affectation" because those relations have been described and defined with the utmost clearness by my right hon. Friend the Foreign Secretary. But as hon. Members continue to ignore his statements and to pretend that they do not know what those relations are, I am afraid I must ask the House to bear with me a moment while I repeat them. Speaking at Leamington on 20th November, 1936, my right hon. Friend used these words: But, it may be asked, for what purpose will these arms be used. Let me once again make the position in this respect perfectly clear. These arms will never he used in a war of aggression. They will never be used for a purpose inconsistent with the Covenant of the League or the Pact of Paris. They may, and if the occasion arose they would be used in our own defence and in defence of the territories of the British Commonwealth of Nations. They may, and if the occasion arose they would be used in the defence of France and Belgium against unprovoked aggression in accordance with our existing obligations. They may and, if a new Western European settlement can be reached, they would be used in defence of Germany were she the victim of unprovoked aggression by any of the other signatories of such a settlement. Those, together with our Treaty of Alliance with Iraq and our projected Treaty with Egypt, are our definite obligations. In addition, our armaments may he used in bringing help to the victim of aggression in any case where, in our judgment, it would be proper under the provisions of the Covenant to do so. I use the word 'may' deliberately, since in such an instance there is no automatic obligation to take military action. I think we are entitled to ask the Opposition whether they quarrel with that statement of the relations between our foreign policy and our armaments programme. If they do, they should at least tell us where they get off. I know that hon. and right hon. Gentlemen do not like me to ask them questions. They generally show their dislike by evading or refusing to answer them, but I am encouraged by the engaging expression on the face of the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) who is to follow me, and I am going to try once more. I want to put only two plain, simple, straightforward, honest-to-God questions. My first question is this. Do the Opposition consider that our arms should not be used for any of the purposes described by my right hon. Friend? My second question is: Do they consider that our arms should be used for any purposes in addition to those which have been described by my right hon. Friend? If the right hon. Gentleman will be good enough to give us a plain answer to those questions, then, I think, we shall be in a better position to judge whether there is any justification for the criticism, if criticism there be, which is rather obscurely hinted at in the words of the Amendment.

In the rest of the Amendment allusion is made to three other points. There is the question of the advisability or otherwise of borrowing the money at all, and there is the alleged lack on the part of the Government of any effective measures to prevent profiteering or to co-ordinate the Defence Forces. So far as co-ordination is referred to here, I do not really think it is necessary for me to add anything to the speech which was made last week by my right hon. Friend the Minister for the Co-ordination of Defence. It is quite certain that there never was a time when co-ordination of the defence services was more necessary than it is to-day. I believe that the speech of my right hon. Friend convinced at any rate the majority of hon. Members in the House that that co-ordination is now part of the routine of our work and that it is being applied to-day to every aspect of defence.

With regard to the other charge, that we are not taking proper steps to prevent excessive prices being charged I can only say that no subject, no matter in the whole of the task of the Defence, has been the subject of more continuous or more concentrated attention than this one of preventing excessive prices, and I have no hesitation in saying that nothing that human ingenuity could devise or human effort could achieve to prevent excessive prices, has been left undone. Nearly a year ago, when the programme was first begun, a special committee, known as the Treasury Inter-Service Committee, was set up particularly to deal with the difficult cases which arise when it is necessary to depart from the ordinary principles which govern the placing of contracts in the Defence Departments. That Committee has held more than 60 meetings in the period during which it has been at work, and it has scrutinised most carefully every one of those cases. The underlying principle that is followed is to allow the contractor a fair and reasonable profit, and at the same time to give him an incentive and an inducement to keep his costs as low as possible. It is not possible to have any uniform system, but we have made arrangements under which we are able to keep a very careful check upon costs, both by examination of the books of contractors by the accountants of the Department and also by the preparation of technical costs as a check.

Of course, I know that hon. Members opposite will say, "What do you call a fair and reasonable profit?" I have explained before that it is not practicable to fix a definite percentage of profit which can be applied to production costs in all cases. There are a number of factors which have to be taken into account. There is the rate of turnover, there is the return on the capital employed, there are the size and volume of the order; and there is another feature of the present case which right hon. and hon. Gentlemen would do well to bear in mind because, although opinions may differ as to what is a fair and reasonable profit, one has always to recollect that we have no powers of compulsion, that we cannot force firms to take orders and execute a programme without at once advancing into war conditions and at once introducing a complete dislocation into the conduct of commercial business. Therefore, what we have to do is at the same time to try to prevent excessive profits being made and yet to leave a sufficient incentive to private firms to induce them to put the utmost possible energy into the carrying out of the programme.

It is not possible for me to give any short and precise answer to such a question as, what is a reasonable rate of profit? I have explained what is the general principle upon which we proceed, and I must ask the House to take it from me that, looking at this matter from the point of view of the Treasury, which has of course a vital interest in keeping down these prices, I am satisfied that the interests of the taxpayers are being adequately protected.

With regard to the last point which I wish to touch upon, namely, the suggestion that to borrow a portion of the money which will be required for this Defence expenditure is going to have ill effects in the shape of weakening the national credit, raising prices and depressing the standard of living, I am bound to say that I think there is both serious exaggeration in that statement and confusion—confusion between the effect of a great expenditure upon armaments and the effect of borrowing part of that expenditure. I doubt very much whether sufficient allowance has been made by right hon. and hon. Gentlemen opposite for the fact that during the last six years we have been steadily building up the credit of this country until it is so solidly based that it can certainly deal with borrowing on a far larger scale than anything we are dealing with. It is remarkable, I think, to compare what has happened in this country with the effect upon the debts of other countries of the great industrial crisis through which all have passed. For example, I wonder whether it is remembered that in the case of the United States of America during the last six years the national debt has been increased by a sum exceeding £3,000,000,000. Nothing which is comparable to a burden of that kind has been imposed on us here. Although it is true that we have had repeatedly to suspend the operation of the Sinking Fund, yet I would remind hon. Members that in the three years 1933–36 we have had realised surpluses amounting to over £40,000,000, in addition to an amount of debt redemption within the Fixed Debt Charge of £32,500,000, a total of £72,500,000. Besides that, do not let us forget that the Unemployment Insurance Fund, which in 1931 was accumulating a burden of debt at a rapid rate and had already reached over £100,000,000, has now been put into a solvent condition and reserves have been accumulated—

Hon. Members

At the expense of the unemployed.

Mr. Chamberlain

I shall not stop to argue that. Reserves have accumulated which, if no distribution took place, would reach by the end of the present year a sum of between £50,000,000 and £60,000,000. But I am sure it is not forgotten that the real burden of a nation's debt is not measured by the nominal amount of that debt. It is really measured by the amount of the annual charge that has to be made. In 1931 the interest upon our debt was £282,500,000. By 1935–36 that interest had been reduced to £210,500,000, a reduction of £72,000,000; and in the present year the interest charge will be about the same as it was last year. Therefore the House will see that the saving on the interest alone would be almost sufficient to cover the average amount of the borrowing which is contemplated in this Bill. I think it would cover it if it had not been for the fact that at the same time we have been able to provide a constantly increasing sum for the benefit of the social services.

I am not sure that it is always remembered how rapidly the cost of social services is increasing. In the last Budget of the Labour Government, before there were any cuts but at a time when unemployment was high and was rising, the provision in that Budget for unemployment was £45,000,000. In the current year, with the condition of unemployment enormously improved, the amount which is provided is £68,000,000. If you take, again, another item, old age and widows' pensions, the charge for that in 1930 was £48,200,000. and this year it is £59,300,000. You can find similar increases, wherever you look, in the costs of our social services. Therefore I say that in my opinion the Opposition are enormously exaggerating the effect even of the new expenditure.

The net annual income of this country, I think, is not put at less than £4,000,000,000 by any responsible authority. Surely in the light of that figure this £1,500,000,000, to be spent over five years, cannot be regarded as likely seriously to upset our economy. Hon. Members now say that it is not the expenditure but the borrowing which to them seems so disastrous. Borrowing is only a fraction of the £1,500,000,000 and, as I said just now, it does seem to me that the hon. Member for East Edinburgh (Mr. PethickLawrence) on more than one occasion has attributed to borrowing effects which are really attributable to the expenditure of that money, whether that money is obtained by borrowing or from revenue. He talked, for example, of the rise of prices. He was exultant the other night over the rise in prices of certain metals, and said that those were facts which I could not sweep away. I have no reason to sweep them away, but what I say is that that rise is not due to the fact that we are proposing to borrow £400,000,000. It arises from speculation in the base metals, and the speculation which brought about that rise is founded upon the prospect of this great sum of £1,500,000,000 being spent during the five years, which it is anticipated will increase very much the demands for these metals. [Interruption.] The hon. Member did not say "both" before; he was attributing it all to borrowing.

What I want to point out is that the criticism of hon. Members opposite is not directed to the expenditure upon armaments—they deliberately said the other day that that was not what they were challenging—but to the fact that we are borrowing a portion of the money, and it was to illustrate the dangers of borrowing that the hon. Member alluded to the rise in prices. Let us agree that some rise is inevitable when you make a proposition to spend upon armaments a sum of the order of £1,500,000,000 even in five years, but the hon. Member goes on to say that there will be a further rise due to the fact that we are borrowing £400,000,000 out of the £1,500,000,000. He says that will cause inflation. He was very free the other day with quotations from economists of authority who were, as he said, I think, unanimous in their fears of the danger of inflation, but no doubt he has read his newspaper this morning, and has seen there that at any rate one economist of reputation does not agree with him. Mr. Keynes says it is possible for the Chancellor to borrow this money without any inflation, and it is a fact that if inflation were bought about by this borrowing it could only be on account of an excess of borrowing over genuine savings. As long as the borrowing does not exceed the genuine savings of the country there will be no inflation. If one knows that the £400,000,000 is only a fraction of the savings, although it is true that there are other demands upon savings besides this borrowing, surely it does seem really a work of pure imagination to suggest that necessarily any inflation is likely to occur.

The hon. Member for East Edinburgh has on more than one occasion taunted me with what he calls my financial orthodoxy. I have never pursued orthodoxy for the sake of being called orthodox, but only when I have thought it was expedient in the circumstances of the time to abide by rules which experience had shown to be sound, and I have not any reason to be ashamed of the result. To advocate that the whole of this vast expenditure, a great part of which arises simply out of the necessity to make up arreas, should be found entirely out of current revenue, which would necessitate the imposition of fresh and crushing taxation upon those who will have to pay the taxes during the next five years, seems to me to be pushing orthodoxy to a dangerous pitch. I have every confidence that I shall be supported not only by this House but by the country as a whole when I say that such a course would be neither practicable nor just.

4.19 p.m.

Mr. Lees-Smith

I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof: this House views with misgiving the massing of huge competitive national armaments without any constructive foreign policy based upon collective security under the League of Nations, is opposed to financing defence expenditure by loan, and accordingly declines to proceed with a Bill which will weaken the national credit, raise prices, and depress the standard of living of the people, and, moreover, is unaccompanied by any effective measures to prevent profiteering or to coordinate the Defence Forces. The Chancellor of the Exchequer has not dealt with the points in our Amendment in the order in which they are enumerated. He found it convenient to deal with the section about finance first of all, and I think it will be also convenient if I follow him on that rather complicated part of the argument while it is fresh in the minds of the House. I would tell the Chancellor that there are certain technical though nevertheless substantial questions arising on the Bill into which we shall go in greater detail on the Committee stage, but for the moment I will confine myself to the wider issues which he has just raised. It is clear that we cannot get a final answer as to the financial result of borrowing as against imposing taxation by mere disputation across the Table now. The answer will be given before very long by the facts of the situation. The Chancellor quotes Mr. J. M. Keynes on one of the very few occasions when it suits him, but no one has spoken about the Chancellor's habit of borrowing, and also of refusing to borrow, at the wrong time with more contempt than Mr. J. M. Keynes. If he is now to bring up Mr. Keynes as a great authority for the Government to quote, I would only say that we on our side of the House have authorities just as good and more authoritative than Mr. Keynes. We have the Government expert, Mr. Henderson, the late secretary to the Economic Advisory Committee, and I notice that the right hon. Gentleman does not quote him. I am bound to say that as I listen to his comments upon our views I do not think he understands them yet; he does not state our views as they are. Let me put before him what we say, and try to resolve this dilemma about borrowing and the arguments as to what the effect will be on prices.

It is generally admitted that we are now at a fairly advanced stage of a world revival in trade, and I should have said that the forces behind that revival are so powerful that even a steep increase in taxation would not be able to reverse them. Therefore, I would say to the Chancellor that his fears about increased taxation are an exaggeration. On the other hand, the danger is not at the moment; it is going to arise a few years hence. The danger will arise at the period when—and I suppose it will come sometime—this armaments' expenditure slackens; then there will be a falling off in purchasing power, and that fall in prices which, in times gone by, has been the kind of fall which has precipitated the slump after the boom. If the Chancellor knows his Mr. J. M. Keynes, he will remember that in the past he has always pointed out, as have other economic authorities, that the proper corrective for this would be to reserve our borrowing now, in order that when the armaments' expenditure falls off we could use that to increase or to maintain purchasing power, and stop that sudden fall in prices which otherwise might precipitate a trade slump. This is where the Chancellor of the Exchequer does not seem to understand our argument. Our argument is, that instead of using borrowing as a corrective, he is using it now to double the danger of the trade slump when the armaments' expenditure slackens off.

Behind all his arguments he has to admit that there is a possibility of borrowing leading to a rise of prices which may reach, though one cannot predict it now, quite an inflated height; and there you have the other danger, that when the borrowing ceases it will then lead to a fall in prices, and you will have a force set into operation which in the past has been just the force which precipitates a trade slump. Therefore you are, as a matter of fact, now laying up for the future two dangers of a trade slump, instead of using borrowing to correct the danger a few years hence. The special peril of the Chancellor's policy is that by it he deliberately synchronises those two dangers at the same time, because practically at the same moment that the armaments' expenditure declines and creates the danger of a slump, the borrowing ceases and creates a second danger of a slump. In fact, the Chancellor is repeating in very exaggerated form the two main influences which did lead to the trade slump of 1920. If when that time comes it happens that over the world as a whole the trade revival is slackening, with the two influences which the Chancellor is now holding over the situation, that may very well lead to the most catastrophic slump we have ever had. The difference between ourselves and the Chancellor is simply this: There are dangers, of course but he is giving his whole attention to the dangers which may arise now to his Budget by an increase of taxation, and we are concentrating our attention on the dangers which may come some time hence when the armaments' expenditure slackens off; and I say that, although he quotes Mr. Keynes, the bulk of authority is on our side, because the bulk of independent authority now says that the danger of the future is likely to be greater than the danger of the present when we have the world revival behind us.

I should like to go on to the part of our Amendment which deals with the Minister for the Co-ordination of Defence. The Chancellor was greatly satisfied with the speech which the Minister delivered last week. I would begin by saying that that speech showed that the Defence Departments are undertaking their great activities along well-established lines. The Minister for the Co-ordination of Defence did not, in fact, answer the criticisms which have been directed against him and his conception of his office, not only by myself but by critics on his own side of the House. Of course, there is nothing surprising in finding—I should have predicted it—that with this sense of urgency behind us and with this money at their disposal the Defence Departments are proceeding with intensified activity along the old lines. But the Minister for the Co-ordination of Defence was not appointed for that purpose. He was appointed because the whole House felt that there were great problems unsolved, which no mere activity would solve—unsolved, because they were problems on which the different Defence Departments were clashing with each other, and a Minister was required who would compel an answer to these problems by compelling them to resolve their differences. What has the Minister for the Co-ordination of Defence in fact done? He has avoided trouble. On each of these occasions he has reached a very fortunate solution, a solution which maintains the status quo. On the controversy of the battleship versus the bomb, fortunately it happens that the answer is the status quo; on the Fleet Air Arm question, I gather that the answer is the status quo; on the Cardwell system, still the status quo; on the question of whether the ground defence against air attack should be in the hands of the Army or the Air Force, the status quo.

The right hon. Gentleman is not solving any problems. He is a mere shock absorber. He is keeping the ring between these Departments, and, of course, it is easy to do so. They are all pleased, because they are all getting all the prize money out of the unlimited resources which borrowing enables the Chancellor of the Exchequer to place at their disposal. I am bound to say that the Minister for the Co-ordination of Defence is one of the most popular Members of the House, but I am not sure that he ought to be. That is not what he was appointed for. All his colleagues in the Service Departments have a great affection for him, but I believe that he can only continue this benevolent, kindly, avuncular attitude towards his colleagues because he always follows the line of least resistance. The right hon. Gentleman the Minister for the Co-ordination of Defence will remember that in the last Debate upon his Department I said that I believed that the greatest lack of co-ordination would not be in the Defence Departments, but that it would show itself in the civilian Departments, or in those parts of the work of those Departments which were concerned with defence, and I pointed out that on the Committee of Imperial Defence, on which he relies, and whose Secretariat consists simply of officers, I did not believe there was a civilian. The phrase that I used was that I did not believe that the men in uniform could properly appreciate the problems of the un-uniformed population.

I have received a most powerful reinforcement of that statement in the three articles which have been published in the last three issues of the "Times," on Monday, Tuesday, and Wednesday, by the official whom the Minister for the Coordination of Defence himself selected to deal with the rationing of food, whose appointment he pronounced, in his first speech to this House, as his first great achievement, and who now, I presume, has completed his work, so that now, as a result of his experience, he can tell us as an individual what he thinks ought to be done. I find that the words which he uses are not unlike those which I used. He warns us against the danger that the home front will be forgotten by the Generals, the men in uniform, and he warns us that he believes that the greatest lack of co-ordination is in the civil Departments to-day.

I have noticed in the last few months, sitting here and listening to questions, that out of the 17 Cabinet Ministers who sit in this House, no fewer than 13 at some time or another answer questions which concern the preparations in case of an outbreak of war. The Home Office, for example, as we all know, has now become almost as important as the Air Ministry in dealing with defence against air raids. The Minister for the Coordination of Defence claims that, in addition to the other work of his office, he can carry on the work of a Minister of Supply in his stride. Is he now going to claim that he can carry on the supervision, the co-ordination, of the defence work of all these 13 out of the 17 Ministers as well? It is simply not being done. A fresh light was thrown upon the whole of this issue only a few weeks ago by the proposal of the Air Ministry to erect that factory at White Waltham, a proposal which, it is quite clear, they entered into without any co-ordination or any consultation with any other Department.

The Minister knows my views about the work of his Department. I do not believe that he can carry on his work unless he provides himself with a staff of his own, and not merely the staff of the Committee of Imperial Defence, whose failure to solve the problems of co-ordination was the reason for the creation of his office. I do not believe that any Minister who has not got a staff of his own can, when he is face to face with other Ministers—and that is his duty—be anything else in practice than a weak Minister, because these matters must be decided in the Cabinet, and no Minister without a staff will be able to hold his own in the Cabinet against the Minister who has the collective brains of a properly organised staff behind him. I would make a suggestion on this subject. I would suggest to the Minister for the Co-ordination of Defence that, in view of this very powerful testimony from the "Times," he should appoint a Civil Planning Committee of the Committee of Imperial Defence, and that for that committee he should have a civilian staff and that he should appoint, or ask for the assistance of, an Under-Secretary, who would devote his work to this obviously neglected aspect of the problem.

I cannot leave these articles without pointing out to the House this fact, that Sir William Beveridge—and this is why my hopes are not very great—points out in these articles that it will be impossible to plan the civilian defence, to make civilian defence plans in the case of war, unless we will accept the most ruthless interference with private enterprise and an advance towards the socialistic control of industry, which the mind of the Government has not yet by any means adapted itself to. I see that hon. Members opposite agree to that statement, and that is why these articles show that this is a piece of work which we could do very much better than they can, because our minds are adapted to it—we have adapted our minds to the change—and one volunteer is better than six pressed men.

The right hon. Gentleman the Chancellor of the Exchequer attacked the phrase in our Amendment about a "foreign policy based upon collective security under the League of Nations," and he read a statement of the Foreign Secretary's which epitomised the views of the Government. I will tell him what my comment on that statement would be. In that statement the Government practically commit themselves to certain obligations in France, Belgium, and, I think, Iraq and Egypt—the wording is absolutely precise—but when it comes to the obligations arising out of the League of Nations and collective security, they prefer to speak in general terms. I think that is practically what the statement amounted to. I do not often speak on foreign affairs, but I will tell right hon. Gentlemen the impression which has been formed in my own mind, especially in the last two months. I quite admit that vagueness has some advantage in foreign affairs, but I believe that they will find that the dangers of vagueness and obscurity at this moment are greater than their advantages.

A great many people would now say that if in 1914 it had been clearly understood, if we had not been vague and obscure, that if Germany attacked Belgium or France, we should come in, perhaps the risk might not have been taken. But Germany in 1914 had by no means so flighty a Government as Germany has to-day, and she was not subject to the frightful internal stresses which torture Germany to-day. Herr Hitler is always pushing to see where he can obtain an advantage and the other nations will give way. I hope the Government do recognise the possibility of their attitude. Up to the present we have given way always, and I believe that in fact we are misleading Herr Hitler. I believe we are unconsciously luring him on. We are a misleading nation in many ways, but I do not believe that the triumphs which he has secured mean that we shall give way for ever. I believe that each of them has left behind it a resentment which means that some time we must say "No," and, if that is so, it seems to me dangerous, almost criminal, not to let him know what the nation will not stand.

Mr. Denman

That is extremely important, but I wonder whether the right hon. Gentleman would make his statement a little clearer. Does he really mean that we should automatically undertake the imposition of military sanctions against an aggressor?

Mr. Lees-Smith

Perhaps the hon. Gentleman will allow me to come to my point. I read an article by the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) in the "Daily Telegraph" on Tuesday, in which he pointed out the great danger of raising false hopes. He was speaking of the Colonies, but, as a matter of fact, the danger of these week-end coups d'etat is not so much against the Colonies but perhaps against Czechoslovakia, or the Baltic States, or some of the neighbours of Germany. That is why, in my opinion, it is high time that we made up our minds at what point we are going definitely to resist aggression and, through the League of Nations, organise collective security against that possibility. That is my answer to the Chancellor of the Exchequer and is as far as I am going in my answer, which is quite far enough at the moment.

Apart from anything else, we would be justified in putting down an Amendment involving the rejection of this Bill, for the reason that this armaments expenditure of £1,500,000,000 is only the last chapter of a story which began five years ago, when this Government first came into office. It began particularly, con- fleeting it up with this country, at the opening of the Disarmament Conference in February, 1932. I always felt that that Disarmament Conference was probably the last opportunity we should have of averting a situation such as confronts us to-day. That is my opinion, and I am going to give my reasons for it. The Home Secretary is greatly involved in this. I am going to give my version and my explanation of how I believe we can account for one of the main reasons why the present situation has been reached, and, no doubt, when the right hon. Gentleman replies to-night, he will be able to answer my version of the history of the matter. Nothing is more pathetic and terrible than the contrast between what we were willing to offer to Germany at the end of the Conference and what we were willing to offer to her when the Conference began. At the end of the Conference we were willing to offer to Germany equality in the Army and, within a few years, equality in the air; and were willing to offer to France, in case the Disarmament Conference broke up, guarantees of security—and there was a very significant meaning behind the phrase.

There has been, so far as I can see, only one really successful disarmament conference since the end of the War, and that was the Washington Conference. Why did that succeed? Because, on the very first afternoon, almost before the complimentary speeches were at an end, Mr. Secretary Hughes came forward with his shattering proposals—at that time—for a complete holiday in all capital ships for the next 10 years. In February, 1932, I am convinced that the right hon. Gentleman who is now the Home Secretary had as good an opportunity as Mr. Hughes had in 1922. Everything was favourable. France was under a moderate government and Germany was under Dr. Bruening, a very moderate politician. Both countries wanted to come together but, as in all these cases, we who stand a little outside the economy of Europe were looked to as the arbiter and, indeed, the leader. When the Conference began, if there had been somebody corresponding to Mr. Secretary Hughes who would have come forward with a proposal, and even with the proposals which we made in March, 1933—there is a very good prospect that a success might have been secured.

What actually happened was that the Government played, so to speak, a waiting game. There were all manner of proposals. There was the Hoover proposal, the Herriot proposal and other proposals, but what really happened was that the British Government held their hand. Finally, in March, 1933, 13 months after the Conference opened, they came forward with their programme of work; full proposals I admit, based upon a common measure of the others, and proposals in which British interests were naturally very carefully protected. I have no doubt that all that was very skilful diplomacy of the old-fashioned type, but the result of it was that—Herr Hitler was in power—a great opportunity had been fiddled away and we found ourselves in the end in the humiliating position of offering to the brutal threat of Herr Hitler twice as much as we ever offered to the reasonable persuasion of Dr. Bruening. That is the reason. When the Chancellor of the Exchequer, in his peroration last week, pleaded with the world to understand what was meant by give and take, I thought he was carrying complacency to a fine art. How much more useful and less humiliating it would have been if he had kept the lamentation which he uttered this afternoon, not for the ears of Herr Hitler, but had uttered it to the ears of Herr Bruening, who might have understood it, and to his colleagues when it might have influenced events.

I see the Lord President of the Council sitting on the Government Front Bench. I remember that he made a speech some time ago, I think it was in the country, in which he asked that the National Government should be judged by results. We do judge them by results, and the results of five years of National Government are that the Chancellor of the Exchequer tells us that he cannot balance his Budget without breaking our industry and trade, and that Europe stands nearer to the precipice than at any time since 1914.

4.56 p.m.

Major Lloyd George

I first came into this House a very short time after the end of the War, and if anybody had told me at that time that, within a very short period, we should be engaged in passing a Measure in this House to spend more money than had ever been spent before in time of peace on preparation for war, I should have found it extremely difficult to believe it. Many reasons are given for the increased expenditure which this country is now undertaking. The reason which most people would give is the rapid increase in armaments in other countries, and particularly in Germany. I do not propose to dwell this afternoon upon whose is the responsibility for this situation, not because I think it is irrelevant, but because it has already been dealt with by the right hon. Gentleman and in the previous discussion. One thing I would like to say about it is that it is a tragic fault that this expenditure and this situation might have been avoided had the victorious Powers carried out their own promise to disarm, and had those countries who subscribed to the doctrine of collective security given some indication that they really believed in it. Whatever views we may hold as to who is responsible for the situation, this is, unfortunately, the situation which we have to face.

Let me assume that this country suffered a serious misfortune. Let me assume that as the result of a Dissolution, the Government were defeated and another Government took their places—a pleasant prospect but, at the moment, I regret to say, rather remote. What would be the first duty of the new Government, whatever their colour might be? Undoubtedly their first duty would be to make a new, and I hope a real, effort to arrest this insane expenditure which is going on at the present time and will certainly ruin the world economically even if it does not end in war itself. Even if there be no war it is obvious that the policy which is being pursued in this country and other countries is bound to impoverish the peoples of those countries in the years to come. Such an effort, which a Government would have to make on being returned to office would, I frankly admit, take time, and no Government, whatever party it represented, could ignore the fact that other countries throughout the world are piling up armaments.

It is on that assumption, that whatever Government came into office to-day they would have to face the situation that now exists, that. I propose to say a few words. I take it that they would certainly have to decide to strengthen what have been referred to as the weak spots in the Navy, and in the Air Force particularly. But that is a very different thing from what we are doing this afternoon. Let me take first the Naval proposals. I regret—and I am certain that that regret is shared by a great number of people in this House and outside—the decision to go in for more big capital ships. There is no agreement even among the experts as to the necessity for these ships, nor was there agreement before the War. Many people before the War thought that we overdid the building of large capital ships. It is true that before the War we had to maintain control of the North Sea, but I would ask the House to consider what we thought necessary to maintain that control. It was something like 58 battleships, with about 14 new ones in building, and I think the German strength was 35 battleships and three or five building. I think the House will agree with me that that was an overwhelming superiority, and that it was unnecessary.

The results of that policy were twofold. First, we had to detach, in order to look after those big ships, swarms of small ships, when they went to sea. By building those big ships we were prevented from building more of the small craft essential for the protection of our commerce in time of war. That mistake was very nearly fatal so far as this country was concerned, but, fortunately for us, the Germans made exactly the same mistake. It was a very good thing that they did. Strengthen the Navy's weak spots by all means, but let us strengthen the Navy in the light of our war experience. Do not let us repeat the errors that we made before the War. I sometimes read speeches by hon. and right hon. Members opposite telling us that had the Navy been stronger at the time of the Abyssinian dispute it could have been prevented. If I may use an old saying, they had better tell that to the Marines, but they had better not tell it to the Marines of the Mediterranean Fleet. If we were short of munitions and essential equipment for those ships, that was a scandal, because if you have a Navy, however small, do let it be efficient, Much money has been spent on the Navy in the last 10 or 12 years, and certainly a loan of this magnitude is not required to put things right in the British Navy. Strengthen the Navy, certainly, but are the Government certain that they are strengthening the Navy by building these big capital ships at the present time? Let us look at it in the light of expenditure. They are incurring enormous capital costs. Each of these ships costs something like £8,000,000. The cost of their upkeep is enormous, and they have to be reconditioned, and the expenditure for wear and tear is proportionately greater.

I do not think the Government are meeting the real peril which confronts the country at the present time. During the last War the biggest problem, and the problem that nearly defeated us, was the problem of feeding the people of this country. I do not see why that should not happen again. There may be uncertainty or dispute as to whether an aeroplane or an airship can sink a battleship, but there can be no doubt as to the possibility of an airship sinking a merchant ship. In the last War the peril was the submarine; in the next war it may well be the aeroplane. The Minister for the Co-ordination of Defence told us the other day that the problem of the narrow seas and their dangers had not escaped his attention or that of his staff. I was very glad to hear that. He referred to the possibility of diverting shipping from the east to the west coast ports. May I remind him that the history of the last War shows that they are just as liable to attack there as elsewhere? Consequently, while I am glad to know that the right hon. Gentleman and his staff realise the dangers, I should like to ask, if any arrangements have been made for the diversion of shipping from the east to the west coast, what arrangements have been made to give protection to that area from the air or from the sea? If I can be told that, I shall be very grateful.

That brings me to the position of the mercantile marine. We have not heard anything on that subject in this discussion. I regard the mercantile marine as one of the most vital things in the defence of the country, but it is not a very good story that I have to tell. I have been reading the annual report to-day of the Chamber of Shipping. They say that whereas in 1914 we had 17½ million tons of cargo-carrying space, to-day we have only 14 million tons. They also say that the proportion of trade which British ships are doing between Great Britain and Empire countries is decreasing and that the proportion of trade carried by British ships to European markets is also de- creasing. What plans have the Government for putting that state of affairs right, especially in view of the fact that, despite all the legislation we have had from this Government, little or no progress has been made towards making this country more self-supporting from its own foodstuffs? I should like that question to be considered very carefully by the Government.

If we compare this year with 1914 we realise that the productivity of British soil has been going down, that thousands of acres are going out of cultivation every year, despite the measures that have been taken, and despite the millions that have been poured into the agricultural industry. I regret to say that since 1921 nearly 250,000 labourers have left the land of this country. Do the Government think that they have done all they can to ensure that this country can be anything like as self-supporting as it was during the last War? I would remind them that in 1917 we were at one time within three weeks practically of starvation in this country, and since then there has been an enormous decrease in productivity and in the amount of land under cultivation.

I want to say a few words about the financing of this proposal. We on these benches were opposed and are opposed to borrowing. I was surprised to hear the Chancellor of the Exchequer so airily talking about the loan of £400,000,000 and suggesting that it was a mere bagatelle. That is a very different attitude from that which he and some of his right hon. colleagues took when proposals were put forward to raise much smaller sums to provide decent reproductive work for the unemployed. I remember the right hon. Member for Hillhead (Sir Robert Home) saying that it would be a disastrous thing to raise a loan of that character, because it would divert money from legitimate industry. I should like to know what he has to say about the diversion of money from legitimate industry to-day. The Chancellor of the Exchequer quoted Mr. Keynes. He has been quoted in turn by each party, and therefore I suppose that now it is the right hon. Gentleman's turn to quote him we must not object. The right hon. Gentleman in his statement on the Financial Resolution referred to the Acts of 1895 and 1905. I should like to remind him that the Chancellor of the Exchequer at that time de- fended the loan proposals not on the ground of the urgency of the proposals but because of the permanent character of the works that they were contemplating, and he gave it as the considered opinion of the Government that it was improper to resort to loans for perishable things.

I suggest that a vast proportion of the things that will appear as a result of the present loan are perishable. Thirty years is the period of repayment. A battleship is written off in 20 years, and most of us hope that it will not be used for war during those 20 years. I think a cruiser's life is 16 years and a destroyer's 12 years. I should think that two or three years would be a pretty good limit for an aeroplane. Aeroplanes become obsolete quickly, especially in view of the developments that are taking place every day. I doubt whether you could find anything more perishable than an aeroplane at the present time. The loan is to be for 30 years, and I submit that by the end of that time not a single one of the things that we are building will be in existence either ships, aeroplanes or tanks, and others will have to take their place. [HON. MEMBERS: "What about factories?"] I should like to know what proportion of this vast expenditure will be devoted to factories. Would it be £40,000,000? I think the Chancellor of the Exchequer must have meant that, that expenditure will be a very small proportion of the total sum. The fact must surely emerge that an overwhelming amount of all these things will have disappeared before the end of the period of the loan.

Even if we on these benches approved of the programme we certainly could not approve of the method of financing it. It is bound to lead to extravagance in the Service Departments. I suggest to the Chancellor of the Exchequer that if more of the money could be raised by taxation there would be a much closer scrutiny of the expenditure of each Department. So far as I can see, they have had it all their way. The right hon. Gentleman says that the Income Tax must not be raised beyond a certain point. Has he considered an Excess Profits Duty? I am not at all satisfied with his explanation to-day. It would appear that nobody ever seems to make any money out of making armaments, but one of the things that created most bitterness in the War was the fact that people who served in the War came back and saw people who had made immense sums of money out of making armaments at home. The Prime Minister said that we shall all have to make sacrifices. We are all prepared to make sacrifices for the country, but for Heaven's sake let us all sacrifice equally. If these people are making big profits, and there can be no doubt that they are—their shares are not going up for nothing—let us consider our War experience and see whether we cannot get from them some of the money which has to be paid for these enormous armaments.

I look to the future with some misgiving. We are nearing the peak of what has been called a boom, and at this moment we have over 1,500,000 unemployed. A slump is inevitable, sooner or later, and I would remind the Chancellor of the Exchequer that in each succeeding slump the figure of unemployment has been a little higher than before. In the first slump the figure was 2,000,000 and in the last one it was about 3,000,000. I wonder what it will be in the next slump. I want the Government to try and imagine the situation that will then arise—heavy unemployment, high taxation, having borrowed £400,000,000 at least, and prices and raw materials having gone up. I should like to ask whether the Government are going to obtain all the raw materials which they want and which legitimate industry wants, especially in view of the fact that the prices have gone up. The Chancellor seemed to think that we were exaggerating this question of rising prices. Might I quote to him the opinion of the chairman of one of our big banks, who, referring to what might happen as a result of this rise in prices, said: The feature of our overseas trade during the past year has been the decline in the ratio between exports and imports. Imports have grown considerably, while exports have remained almost stationary. We have seen the results in this morning's papers, which record an adverse balance, including invisible exports. He went on to say: In this country, there has been a large increase in the production of armaments, and a continuance of a high level of building activity, both of which have necessitated the importation of raw materials, but have contributed nothing on the export side. At the same time, the steady rise in prices through- out the past year has increased the cost of imports, without, however, having had an equivalent effect upon exports. It is hardly surprising that manufacturers, finding themselves able to keep their factories fully employed on home business, with the much smaller risks this involves, have found little inducement to develop the export side of their trade. But it is earnestly to be hoped that this condition of affairs will not be allowed to result in the permanent loss of export markets, for the time will inevitably come when the home market will no longer be able to absorb the entire production, and overseas customers will again be needed. That is the opinion of a gentleman who speaks from the financial side. I have also here the opinion of one who speaks from the industrial side, and I would like the Chancellor to listen to it. The chairman of one of our big industrial companies with a very large capital said: When the Defence Programme really gets under way there will be neither raw material nor labour to satisfy all demands. An unseemly struggle for both commodities is hound to take place, with honest trade always the loser. In the end the cost of production both of honest trade and Defence trade will have been unduly raised, and a large amount of honest trade will have been necessarily conceded to the foreigner. The country will have handed over trade that increases prosperity, and taken in its place trade that saps it. Finally, when the armament boom is over we shall he faced with taxation to pay for it, and with a depleted honest trade from which to earn the taxation. That is the opinion of a gentleman who is chairman of one of the biggest companies in this country, and it certainly ought to appeal to the Chancellor of the Exchequer, because his name is Mr. Arthur Chamberlain. Big as is the programme which we have been asked to sanction to-day, are the Government certain that the demand is over now? There are indications in certain quarters that people regard this provision as too low. How long do the Government think even the existing international situation will last, and what are they going to do to try to improve it? Are they really still seeking for a system of collective security, despite what the Chancellor told us to-day? He was rather angry with my right hon. Friend last week for asking who our friends were and who our enemies were. There is no reason why we should not ask that question. I take it that our enemies will be any aggressors, and I am sure the right hon. Gentleman does not suggest that we have no friends left in the world. The diplomacy of the Germans during the War left them with antagonised friends and an in- creased number of enemies. I trust that our diplomacy has not got us to the same position. There is no doubt that there is a great body of opinion, outside this House and inside, that prefers the system of isolation, and I am not sure that I would not like to hear much more definitely what the Government's intentions are—whether they really mean to pursue and believe in a system of collective security. The right hon. Gentleman quoted a statement of the Foreign Secretary. I have a quotation here which I prefer, if I may say so, to that of the Chancellor of the Exchequer. The Foreign Secretary said in London last month: On the one hand we can take a great stride forward. By increase of international understanding, by free co-operation between the peoples, by a reduction of the barriers that hamper international trade and intercourse"— we did not hear much about that— by a genuine attempt to restrain our sentiments, however deep and strong they may be in favour of this or that ideology, we can better the international situation and increase the world's prosperity and happiness. Quite frankly, I prefer that to anything T have heard before. I think the Government ought to make up their mind what their policy really is. Is it alliance; is it isolation; or is it collective security? In what we are asked to spend to-day there is no indication what it is. I prefer a policy which really aims at international appeasement. The policy of collective security in which all hon. Members profess to believe, is the only policy that will stop this insane expenditure—

Mr. Amery

I certainly do not believe in it.

Major Lloyd George

I am not at all surprised to hear that. I cannot help thinking of the right hon. Gentleman as an isolationist when I see him sitting over there by himself sometimes. But, whatever he many think, the policy of collective security is the only policy that can put an end to this insane expenditure.

Mr. Amery

Has it ever existed; does it exist to-day; and does the hon. and gallant Gentleman himself believe that it ever will exist?

Major Lloyd George

It does not exist because the people who were supposed to carry it out did not really do it honestly. For the right hon. Gentleman's information, may I say that I do believe in it, and I believe that in it lies the only hope for the future peace of the world. The right hon. Gentleman's alternative is alliances, which have always led us into war. As regards isolation, if he thinks that the British Empire can be maintained in a state of isolation for all time against the whole world he is a greater optimist than I thought he was. The policy of collective security is the only policy that can ensure peace for the world and reduce this insane expenditure, which the Chancellor himself the other day told us was breaking the back of civilisation, and which, I may add, if persisted in, will most assuredly destroy it.

5.25 p.m.

Sir Robert Horne

I should like at the outset of my remarks to express my personal appreciation of the speech which we have just heard. It was a very pointed speech, full of adequate criticism, but at the same time it was given to the House with an amiability of manner which I think commended it and the speaker to every Member here. With a large part of it I agree. I do not intend to go into many of the matters with which my hon. and gallant Friend has dealt to-day, but only wish to make some remarks on one or two of them. He has indicated a profound pessimism with regard to the situation in which we now find ourselves. Looking to the hopes we cherished when we came here immediately after the Great War, I share the feeling which my hon. and gallant Friend himself holds with regard to the lack of faith in humanity which we now feel when we think of mankind being reduced again to these devices for slaying one another instead of building up a great structure of peace. I also agree with him that the policy we must pursue is to induce everybody ultimately to disarm. I entirely agree with the suggestion that in a policy of disarmament lies the only hope for the world and for civilisation. But I would venture to qualify slightly what he said with regard to the failure of the Government to induce other nations to disarm.

We certainly did everything we could by way of example, and I think it can scarcely be said that in showing that example we were in any way dishonest in our motives. I think it must be taken for granted that the Government intended disarmament, and intended to induce other people, if they could, to adopt the same process. I think they must be given at least that credit. But, in talking about their failure to induce other people, one has to take into consideration the minds of other people. We in this House represent differing points of view. The Opposition have been doing their best for a very long time to convert us to their views, but they have not done it yet. Are they to be reproached for their failure to get their views accepted by us who think differently? The unfortunate thing is that in the other countries of the world various Governments, not all of one colour, have found themselves confronted with exactly the same difficulty that is found in this House, namely, that there is disagreement among the various points of view. It may be said that they were not persuasive enough, but at least their intentions were good, and it does not seem to me that there can be any quarrel with them for a failure of which one can easily see the reason.

My hon. and gallant Friend suggested that a different attitude ought to be taken in the Government programme towards the capital ship, and that the experience of the War showed that smaller craft were much more useful, and would be more useful still in modern conditions. There is, however, great controversy on that point. I do not think that the Government are to be blamed for taking one point of view rather than another, when we find that two sets of views are ranged against one another all over the world. For example, the naval experts of the United States of America declare solidly for the capital ship. And let me also remind my hon. and gallant Friend that, after the experience of the War, this subject was considered by a Committee of a Cabinet presided over by a very eminent relative of my hon. and gallant Friend. I was a member of that Committee, and my right hon. Friend the Member for Epping (Mr. Churchill) was also a member of it. We reported in favour of the capital ship, and our report was accepted by the Cabinet and remained the policy of the Admiralty. That was after the experience of the War. Accordingly, whatever personal view my hon. and gallant Friend may take on this matter, at least there is great room for excusing people who take the contrary view.

Major Lloyd George

I did not suggest that it was a mistake to build capital ships before the War. What I suggested was that there is far too great a number of them, to the exclusion of more important small craft.

Sir R. Horne

I am talking about the period after the War. After the experience of the War, we decided in favour of a continuance of the policy of building capital ships. The policy of the Admiralty remained the same with regard to the building of capital ships.

Now I come to another matter, the question of the raising of this loan. It is said that this is a method which is of great detriment to the country and will be injurious to its interests, that prices will be put up and the poorest people in the country will suffer. I think this country can take this loan of £400,000,000 in its stride. In present conditions, and with the confidence of the money market in our financial position, we shall be confronted with no difficulties in raising a loan, especially over five years, of £400,000,000. The hon. and gallant Gentleman made reference to an opinion that I expressed, I think, about 1931. In connection with money matters, the condition of the country at the particular time at which you propose to enter upon an operation makes all the difference. I regret to say that the feebleness of the Government of that time was a great factor in the attitude of the money market. I do not mean to dwell upon that aspect any longer, I only drop a tear and pass by. Also the Government then were confronted with totally different conditions from those which we have to-day, in that in 1931 you had a depression which was already very bad and was deepening every day, every week, and every month. Everything that the Government of that time did, every impediment and every barrier that they set up against the depression was swept away in the avalanche. It is totally different to-day.

Major Lloyd George

It was in 1929, not 1931, when you made the remark.

Sir R. Horne

There is no deduction that is applicable to the present condition of things from what happened in 1931. You can do things on a rising market which you cannot do on a falling market. Any clerk in a stockbroker's office in London would be able to tell you that. To-day our condition of prosperity is such that we can easily carry the burden of a £400,000,000 loan. Look at the condition in which we are. I will not refer to the large amount of income that the Chancellor has told us the country enjoys, but look for a moment at the amount that is going into Savings Certificates, going into the coffers of the building societies, provident societies and trustee savings banks. Look at the amount that you can see from day to day being set aside by public companies—the amount they put into reserve; £400,000,000 is saved in a year. The Chancellor proposes to extend the raising of his loans over five years. There can be no possible inflation, especially when the loans are spread over such a period. If there is any rise of prices, it will not be due to any inflation that occurs as a result of this borrowing. It will be due to other causes. It has begun already. It is the ordinary play of the market. It is the demand exceeding the supply that is sending up prices. It does not require any loan to do that. I have sympathy with what the hon. and gallant Gentleman said, that the Government must watch these rises in prices, and must also watch the distribution of material between civil purposes and war purposes. These things, I imagine, are being taken into consideration, but they have to be carefully watched. It is certain that there will be a rise in prices. One of the things that are noticeable is the fact that the wholesale level of prices has flattened out in recent weeks. The prices of some commodities which the Government specially requires for rearmament are rising very high. On the other hand, other commodity prices have sunk to some extent or have remained at a normal level. But these results are not due to any borrowing or anticipation of it. I, accordingly, take the view that no injury can be suffered by the country through this loan.

The right hon. Gentleman who spoke for the Opposition suggested that this is the wrong time to raise the loan. He says we should defer it till the beginning of the slump, and we should raise the money to-day by taxation. I ask the House to look at that proposition as a practical scheme. In the first place, you can raise a loan now on far cheaper terms than you can at the beginning of a slump. It is going to cost the country very much more to wait till the period of the slump. If a loan had been raised in 1931, it would have been on very different terms from to-day. The period at the beginning of loss of confidence would be the last time in the world in which to float your loan, because it would increase the loss of confidence. Let us refer to an experience that everyone will remember—our last effort to keep on the Gold Standard. It was announced that we were going to borrow £1,150,000,000, partly from France and partly from the United States. In the ordinary way that would have been useful in supporting our credit but, instead of supporting our credit, it let the whole world know our condition and, instead of averting the calamity, if it was a calamity, it precipitated it. The appearance of a loan at a time such as the right hon. Gentleman suggested would have the immediate effect of decreasing confidence and, if there was a slump beginning, it would make it worse. I, accordingly, say that, both in respect of the time at which the loan is about to be raised and to the amount to be dealt with, the country need have no tremors whatever.

Now it is said that this extra expenditure ought to be put upon the Income Tax. The right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) will remember an experience which he and I had together. Psychological influences with regard to the Income Tax have a great effect upon our people. If you put an addition on the Income Tax at present, it would form a very severe check to our ordinary trade and upon the spirit of enterprise that exists everywhere to-day. In 1922 the country was in a very difficult position. I came to the conclusion—and a very much more important person in the shape of the right hon. Gentleman came to the same conclusion—that the best thing we could do to stimulate the country was to take a shilling off the Income Tax. When I proposed it, I was condemned by every economist in the country, and I remember Mr. Asquith getting up to tell me that I was gambling with the nation's interests. [An HON. MEMBER: "Trade was going down then!"] It was in a malaise at that time. What we did was to give a fillip to the enterprise of the country and a new spirit to traders, and every gloomy vaticination that had been uttered was dispelled. We ended the year with an increase of revenue and through economies in expenditure—with a surplus of over £100,000,000. That is the kind of example which you see working out in practice to a beneficent issue against all the theorists. Upon that head, therefore, it appears to me that the loan is well justified.

I heard the other day, when the House was debating the matter, something as to the effect on gilt-edged securities which was described as the immediate result of this foolish action on the part of the Government. There are two things to be said about that. In the first place, the Chancellor could have presented the matter, if he had chosen, in a rather different fashion. Instead of merely saying that an extra £400,000,000 was to be raised, he put forward the full figure of £1,500,000,000 which was to be spent in the next five years. People did not pause to think that that £1,500,000,000 was already in the course of being provided from ordinary taxation at the rate of £200,000,000 a year. The first effect was to create a suspicion that Government stock would go down, but I do not think it would have had so great an effect if the Chancellor had presented the facts differently. I do not criticise his presentation. One only has to read the foreign Press to see how right he was. It affected every nation of Europe. It affected people who are jealous of us in a manner which caused them very seriously to think, and the friendly nations on the Continent rejoiced to feel that we were once more renewing our strength. It is said, "You must negotiate to bring people into the League of Nations." How can you negotiate with a dictator who talks about peace as the flower of a forest of bayonets, and boasts of his 8,000,000 soldiers? How can you negotiate with a dictator who not merely preaches force as a harsh necessity, but preaches it as a philosophy, and speaks of war as a beneficent factor in human progress? How do you argue with him when you are unarmed? Again, how do you persuade to come into the League of Nations another country with a dictator at its head who, since he came to power, has initiated a system of education in which all the school books pro- vided for the children inculcate the theory of war and the necessity of preparing for it? How do you persuade him to come into the League if you are weak? You can only exercise persuasion at all if you are in a position never to be intimidated. As I take it, we are now, or shall be when these preparations are completed, in a position to work as a much greater force in favour of peace than we have been recently.

May I also say this—I only do it as an ignorant person as to the Chancellor's motives—I have no doubt at all that the Chancellor of the Exchequer has viewed with complete complacency the fall in gilt-edged securities during the last few days. Everyone knows that it is a bad time to issue a loan upon a falling market. All the Government stocks were really at their peak price, so that if any more stock was put on the market everyone might anticipate that, if there was any movement at all, it would result in a fall. One of the best inducements to have for a loan is the possibility of your stock rising, and the time to issue a loan is on a rising market. This market has already begun to rise on the realisation of what is going on.

But I should have supposed that the Opposition would have welcomed this programme, no matter how it was to be accomplished. They are of all people, outside Italy, Germany and Japan, the most bellicose people in the world. They wanted to go to war over Manchukuo, they wanted to go to war with Italy over Abyssinia, and they want us now to take a line in Spain which would certainly bring us into war in that country. They must be delighted that there are people who are prepared to find the means by which they can accomplish their purposes. But now they say, "We object to this because it has no foundation in collective security based upon the League of Nations." I will not waste time upon that suggestion. How much do they think has been accomplished in the way of collective security up to now? The right hon. Gentleman the Member for Caithness (Sir A. Sinclair) said that, after all, it had brought together 50 nations at Geneva. But what did those 50 nations do? There were only two of them that mattered so far as any action was concerned—France and England, and France would not act. There may be many reasons why France was not prepared to move at that time. It was said that there was some secret arrangement with Italy, but I do not know. At any rate, I was in France at the time the Abyssinian adventure started, and one of the matters most frequently referred to in the French Press was the fact that at that time England would have been a very doubtful ally because it had no Forces. I have not the slightest doubt that if we had been as strong at that date as we mean to be, the Abyssinian adventure would never have started. The right hon. Gentleman the Member for Caithness made a separate point. I think that he is making too many speeches.

Mr. Gallacher

You speak more often than he does in comparison to your attendance. You only come and speak when there is money in it.

Sir R. Horne

I do not wish to disparage the right hon. Gentleman. He tends to repeat too often his objection to Tariff agreements, and there occurs again and again throughout the speech he made upon this topic an assertion that we would get rid of all these difficulties if only we could get rid of the Ottawa Agreements. What is the relevance of the Ottawa Agreements to this matter of our rearmament or the possibility of securing the peace of the world? Is it to be said that a looser contact between ourselves and our brothers overseas is going to make for peace in the world? Is there any other country that would take up the attitude that to deal with their own people just as they would deal with any others outside is the way they would achieve strength in the world? Is there any country that would adopt that attitude? After all, the status of this country depends very largely upon the strength we have in the Empire not only in these little islands, but spread all over the world. I welcome the proposal of the Government.

Sir Archibald Sinclair

If the right hon. Gentleman is referring to me, let me answer him straight away. If he thinks that I speak too much, perhaps he will allow me to say that he does not come here to listen enough. Secondly, if he asks what authority I have for saying that the new tariffs such as the Ottawa tariffs are an impediment to world peace, I would refer him to General Smuts, who made the same assertion only a few weeks ago.

Sir R. Horne

General Smuts did not make that assertion. Let me say, in the first place, that the right hon. Gentleman's reply to what I said a moment ago about his speech, was a perfectly proper riposte and with regard to the other matter the right hon. Gentleman must remember that General Smuts was not at all referring to the British Empire, but to the system of tariffs as between one country and another.

Sir A. Sinclair

He made no such distinction.

Sir R. Horne

He never took up that attitude. He knows too much to forget the connection between the various parts of the British Empire. I desire to say, in conclusion, that I welcome the plan which the Government have put forward. In my belief it will be the foundation of better relations in the world, and it will give us the power of persuasion in dealing both with disarmament and with collective security, if there is to be collective security, by collecting other people to form that security. As long as we are weak and powerless there is very poor chance of making any definite advance towards collective security. The stronger we are, the more certain will collective security be, and the more assured will be the peace of the world.

5.54 p.m.

Mr. McGovern

I rise to oppose the proposal to find £1,500,000,000 for the purposes of war, but the reasons why I oppose the Bill are not the reasons given by the official Opposition in the Amendment that appears on the Order Paper. They are quite entitled to put down their reasons for opposing, and, at the same time, we are entitled to go into the Lobby according to custom against the Bill, but having different ideas and objects from the official Opposition in opposing it. The proposal contained in the Measure is for the raising of a sum of £1,500,000,000 over a period of five years for the provision of armaments for military, naval and for Air Force purposes, in order to defend the interests of this country, either within these shores or in any of the colonial possessions throughout the world. Therefore, I as a Socialist cannot agree with the statements that have been made either from the Liberal benches or from the Opposition benches that the reasons for these vast armaments are either the result of the peace treaties or of the special type of Government that is in office. I believe, from my Socialist reasoning, that war is the outcome of the economic position and imperialist aims of various Powers throughout the world, and that you can no more bring in a Bill with the object of preventing rain that you can bring in any form of Measure to prevent war, so long as the underlying causes of war remain.

There are to-day certain Powers of which this country is afraid. Let me narrow them down, and we get Germany, Italy and Japan. Great Britain, with all her great Imperial possessions does not desire war. Let us be frank about that. She has plenty of territory, raw materials and black, yellow and white men that she can plunder in every part of the world. Therefore, she has the great opportunities desired by other nations who want to build upon an Imperialist basis. We have, and they have not. There is the germ of future wars in which either Germany, Italy or Japan will attempt to wrest that power from Britain and from France. Capitalism does not allow colonies to pass into the hands or possession of a country because of its need and its requirements. It does not say, as a sane Socialist system will ultimately say, that the whole of the raw materials of the world do not belong to one nation or to one group of individuals, but to the whole collective forces of humanity throughout the world to be used in the interests of all mankind instead of in the interests of the few.

In this aspect of war, Great Britain has come up against two very strong snags within recent years. First, there was the Rhineland where Hitler, a determined aggressor and capitalist dictator, born not of some theories of Fascism but of the necessities of the decaying order of capitalism, was compelled to bring into the open the whole brute force of the State machine in order to depress the workers within and try and extend the frontiers, from without. Hitler's forces went into the Rhineland and smashed the Peace Treaty which had been im- posed at the end of the War upon Germany. At that time, according to Press reports and the statements of many able authorities, France was anxious to march against Hitler to press his troops back out of the Rhineland that he had seized. We are told that the Generals and the Naval Commanders in co-operation gave the advice to the leaders of the Government of this country, that they were not able to take on either Germany, or Germany and Italy combined, from a military point of view, because of the overwhelming man-power and aerial power that had been amassed in order to break these Treaties. When Hitler moved forward he had behind him the necessary material in order to force his will if seriously challenged by Britain and France.

During the Abyssinian dispute there was a desire in certain quarters that Italy should be prevented from extending its colonial Empire in Abyssinia. The League of Nations and Imperialism had no sympathy with Haile Selassie and desired only to maintain their own Imperial possessions and power. Great Britain saw that an extension of the imperialistic powers of Mussolini would be a great menace ultimately to their possessions in the East. They found that Mussolini, the brutal, ruthless dictator, the gangster in Italy, had also behind him the necessary power to enforce his will and that he was prepared, if necessary, to send thousands of aeroplanes into the Mediterranean in an attempt to destroy the British Fleet. Great Britain saw, because her rulers were intelligent, that the wiping out of the Fleet would open the whole of her Imperial possessions to the danger of passing into other hands if Japan, Italy and Germany joined together in an attack.

After their experiences in Abyssinia and the Rhineland they saw that they were dealing with men, or a group of men, dictators, who were not only ruthless, but were determined to enforce their will if they were seriously challenged. They said we must be prepared, because war will ultimately come if these Powers are determined to build a great Empire as we built our Empire in the past. It was fortunate for British Imperialism that at the time we colonised and built our Empire it did not need thousands of millions in armaments, but only a few thousand professional men going out to battle with bayonets and rifles to enforce their will on unarmed native populations. To-day, with other Imperialistic Powers massing their arms, Great Britain begins to arm, to provide a tremendous force in tanks, aeroplanes, bombing machines, a larger Navy, a mechanical Army and great manpower.

When the Home Secretary was at Geneva as Foreign Secretary at the time of the Manchukuo business, he made a high moral speech against Japan and her encroachment there. If we apply our powers of observation we can see exactly what has happened behind the scenes. Japan was in danger of collaborating with Germany and Italy, and the three nations would be almost impregnable from a military, naval and air point of view. Therefore, the British Government, with their usual keenness and astuteness, said to Japan, who was turning her eyes to Australia, "Go ahead in China; you can cross the Great Wall, you can seize thousands of square miles, and we will not stand in the way." They sought to detach Japan from the Triple Alliance and keep her engaged for the next 10 years in colonising China. That is the policy which has been pursued, and today we find ourselves in the position of having to meet the combined forces of Hitler and Mussolini, who are prepared to wade through the blood of the entire people of the world in order to build great empires and acquire great colonial possessions.

If I were an Imperialist, a capitalist, a supporter of the National Government, I should support the policy of rearmament if I intended to fight to maintain Imperialism and the possessions of capitalists. I do not take that view. As a Socialist I say that this mad scramble and race in armaments is the outcome, the development, of the capitalist system, which will soon reach a point when the anger of the intelligent masses of the working classes will compel them to take a hand and tear the ruling classes from their seats of power and ensure peace by the common people; a peace which capitalism can never make. I do not evade the issue. I say sincerely that I think the Labour party had a splendid opportunity of presenting a class point of view on this rearmament programme, but they cannot face the position, because they are torn from top to bottom by conflicting points of view. They cannot put forward the Socialist point of view. They object to the method of raising finance. I have always been prepared to go on living at times as a borrower rather than pay as I go, especially when I have not the funds to pay. I say without fear of contradiction that the statement put forward in the Amendment regarding the method of raising the money is an attempt to evade the issue. If recent history has taught us anything—

Mr. James Griffiths

I gather that the hon. Member is very angry because the official Opposition have placed an Amendment on the Order Paper and have not raised what he calls the class issue. May I ask him why his party have no Amendment at all on the Order Paper?

Mr. McGovern

The reason is that we are never called, no matter what Amendment we put down. We can put it down only as a gesture, and I consider that our point of view can be much more amply placed before the House in a speech than in any Amendment. There is no dubiety about our position in relation to armaments and war, and that cannot be said about the Labour party. But I am not angry. Although I sometimes appear angry I am not really angry, because I have a keen sense of humour. It is only a method of enforcing my opinions. My father was an Irishman and my mother a Scotswoman, and I have the determination of my mother and the passion of my father. If recent history has taught us anything, it has taught us that, as in Spain to-day, any armaments a nation possesses are used to drown the working classes in blood and tears when the opportunity arrives. It is my Socialist conviction that armies, navies and air forces will never move to the orders of a Socialist Government. They will always move against a Socialist Government; if it means business and if it is determined to carry out the will of the electors. Therefore, if I vote to-night for £1,500,000,000 in armaments I am placing in the hands of reactionary officers weapons which ultimately I may have to face at the barricades when the class will of the nation is sought to be enforced.

Then the assumption here is—it is a serious thing from my point of view—that the armies are going to march when you have provided them with armaments. The Prime Minister said on one occasion that he often wondered whether the armies would march if they ordered them to march. I go further and I say that I believe and I hope that they will not march when the orders are given by a capitalist Government. I try to judge things from my own point of view and from what I am prepared to do. I am not prepared, and have never been prepared, to march for any capitalist Government. I opposed the War from 1914 to 1918, not as a pacifist. I have never been a pacifist. I am sufficiently aggressive to stand up for the things in which I believe and I am prepared to defend the things in which I believe, if necessary with my life, but I am not prepared to defend the Imperial possessions of people in Park Lane, who own and control and dominate the entire resources of these Imperial possessions. Believing that war is the outcome of economic rivalry I say that as long as the capitalist system exists I would allow the right hon. Member for Hillhead (Sir R. Horne) to do the defending, but I shall advise the poor working classes, who live in some parts of his division, although not in a great part, otherwise the right hon. Member would not be here—

Sir R. Horne

The hon. Member does not know my constituency as well as he thinks he does.

Mr. McGovern

I know you, and that is enough. I say frankly, let the people who have these Imperial possessions defend them, but do not expect the victims of the means test to defend them. You have told them that it was bad for trade to raise money by taxation to meet the needs of the unemployed; now you say that it is good for trade to raise money to blow into the air buildings and other things in all parts of the world. I say that the people must realise where they are being asked to march. I heard over the wireless a statement that we are providing 200,000 fire fighters against incendiary bombs which may be dropped in the next war. We are recruiting men for the ambulance service, for the Air Force, for the bombing squadrons, the antiaircraft guns, the Navy, for submarines, destroyers; we are recruiting men for the battlefield, for the tanks, indeed for every modern form of warfare and destruction. There are people living to-day who in 1914 heard of the high moral aims of "a war to end war." The people are gradually feeling their way in the darkness and are beginning to realise that war can never end until the system that makes war is destroyed.

There is then put forward the argument of a collective peace system; it is said that the Government should go in for a collective peace system. I do not speak either in anger or in antagonism, but I have never been able to understand, from a Socialist point of view, the idea of a collective peace system. People may honestly believe in it, but I do not understand it. I can never support a policy which says that a Tory Government or a National Government, which in this country is a menace to working-class ideals, can become the salvation of humanity when it goes to Geneva. If Hitler, Mussolini, the Japanese Prime Minister and the British Prime Minister go to Geneva, am I to have faith in the collective power of the collective capitalist class when I have no faith in the individual power of the capitalist class in this country? Collective peace and a League of Nations can come only after you have destroyed the economic foundations of war, for while it suits Great Britain not to have war, it does not suit Germany and Italy, who desire to have colonies, raw materials and natives to exploit.

The only reason they are more ruthless, terrorist and brutal to-day is that methods of warfare have changed. I have seen those methods practised in a part of Spain. I have seen buildings destroyed from the roof to the cellar by huge bombs weighing 500 lbs. which, falling from a height of 2,000 feet, had an impact force of 300 tons when they struck the buildings. I have seen bodies dug out of the ruins of these buildings—the limbs of men, women and children destroyed in their sleep. Is that what you are expecting in London and the cities of this country during a period of war? Throughout the whole of Madrid, women were running time after time into hotels—pulled out of their beds in pajamas morning after morning at one or two o'clock—looking for cellars and underground shelters in terror. Some of them were old women of 70 and 80 years. Those are the beastly methods of modern warfare. Do you expect the mothers of this nation and the mothers throughout the world to back you up in putting their children into such danger? The people do not fully realise the reasons to-day, but they are beginning to understand them more and more. They are understanding that it is not Hitter and Mussolini. They can be dealt with in Germany and in Italy only by an enraged working class. The workers in this country will require to deal with their rulers in the self-same manner.

We are coming to the period of war. The Minister for the Co-ordination of Defence and the Chancellor of the Exchequer speak in terms of five years' time. Is there any right hon. Gentleman on the Front Bench opposite who believes that it will be in five years' time? Is it not absolutely certain that if Hitler and Mussolini are determined to build an Empire, they will seek to strike before you have massed your great strength? War will come. You may be able to lead the people into war, but probably we will lead them out of war. We will march them out of war, not with a new Government but with a new system of society, when the men and women of this country develop that rage which they developed from 1914 to 1918 against the Kaiser. They believed that if they got rid of the Kaiser all would be well; they got rid of him and they got a greater opponent in Hitler. That is the way of this system. The other day, the "Daily Express" said that we can give no Colonies to Hitler and Mussolini because the workers of this country get their social reforms and higher standards out of India and Africa. Those are not the exact words used, but that is the meaning of them—out of the exploited people of the East comes the higher standard of the people of this country, and so we have not sunk down to the depths of crisis that would produce a dictatorship in this country because of the extensive possessions which it is sought to defend by this Bill.

I conclude by saying that we are opposed to the Bill and to the rearmament scheme. We will have no hand in the provision of armaments for a ruling class that is determined to use those armaments, not for working-class advancement, but for the defence of the exploitation of the natives of the East and the suppression of the aims and aspirations of the people of the world. There can be no permanent peace until the economic order of capitalism is rooted out of the world, so that the people may live in co-operation by owning and controlling their own destiny and the whole of the resources that nature intended, not for the use of a few or of one group of countries, but for the whole of humanity in order that it might live in harmony and build civilisation instead of having war, Fascism, poverty and disease.

6.22 p.m.

Sir John Wardlaw-Milne

The House has listened with great interest to the speech so vehemently and earnestly delivered by the hon. Member for Shettleston (Mr. McGovern). If I understood his arguments correctly, they may be summed up in this way, that he is not in favour of providing any arms for any Government, whatever label it may have, until the day comes when there is in power a Government putting into operation the particular brand of Socialism that he supports. I am, however, entirely in agreement with him in that portion of his remarks which referred to the sadness we must all feel, and which indeed had already been expressed on all sides of the House, that after something like 2,000 years of the preaching of peace, it appears that the only way to secure it is that we should devote a large portion of our resources and our energies to preparing for the possibility of having to destroy each other. To that extent I am entirely in agreement with the hon. Member, and others who have spoken from both sides of the House in the same sense. But if he has, as I am sure he has, the earnest desire to do the best lie can for the people whom he claimed in his speech to represent, surely it is a little dangerous to leave them for some indefinite period, perhaps for a very long term of years until those professing his brand of Socialism are in complete control in this country, to the tender mercies of the people he has denounced so continuously during the last half hour—the Hitlers and Mussolinis of the world. I do not necessarily associate myself with all that he said about these dictators, but surely if he feels so strongly about dictators—and I also dislike that system of Government—it is very unwise of him to leave the people he claims to represent entirely undefended until the whole of the country supports his particular kind of Socialism.

I do not think that the House really questions seriously that the Government are entirely warranted in the proposals which they have put forward. Indeed, I am afraid I am one of those who think that if there is any criticism that can be made it is perhaps the criticism that the Government have long delayed putting forward these proposals. If there is a criticism, it is that we have run very considerable risks, no doubt with the very best intentions, the intention of getting the nations of the world to disarm and of giving them an example which at one time perhaps we had reason to think might be followed. But it was not followed, and surely it was evident a long time ago that it would not be followed, and therefore, if any criticism is to be made, it is that the Government were late rather than early in bringing forward these plans to secure our safety. There is only one other thing I will say regarding the general scheme which we are summing up in these discussions as one of an expenditure of £1,500,000,000. The loan which is proposed, and to which I shall refer in a moment, will add in interest and sinking fund a severe burden —I agree a necessary burden—especially upon the middle classes of this country. We shall have to find the money very largely from these people, who have no pensions and whose interest on invested funds—very often very small funds—has already been very sorely cut down. Those are the people who will largely find the money.

The Amendment which is before the House was criticised by the hon. Member for Shettleston, and I was glad to hear him tell the House that he was not at all angry, but at any rate he very vehemently differed from the official Labour party as to the wording of the Amendment which is on the Paper. I do not care to follow the hon. Member in casting stones at the Labour party for their divided councils at this moment, for that might be a little unfair in a very delicate and difficult situation; but I am not surprised that the wording of the Amendment is not of a more constructive character, because it is entirely in accordance with the mandate and instructions which the official Opposition received last year from their party conference. I wish to draw the attention of the House to the resolution that as carried at that conference, and which I have no doubt is the basis of the policy the Opposition are trying to put forward to-night. This was the wording of the Resolution: In view of the threatening attitude of dictatorships, the armed strength of the countries loyal to the League must be conditioned by the armed strength of potential aggressors. That is a fairly clear statement, and I leave out the non-essential words. This was followed by: The conference therefore affirms the policy of the Labour party to maintain such defence forces as are consistent with our responsibilities as a Member of the League of Nations— that also is clear.

—"for the preservation of the people's rights and liberties"— I draw the attention of the House to the word "preservation"— the continuation of democratic institutions and the observance of international law. Apart from the hon. Member for Shettleston and his friends, I do not think there is any hon. Member who would not support the resolution so far. The conference then proceeded to deplore, without going into the details of the reasons for its disapproval, the foreign policy of the Government, and declined to accept a competitive armaments policy, after which it pledged itself to expose the Government's record of incompetence and the betrayal of its peace pledges. I have attempted, without wishing to tire the House, to read all that is cognate to the matter in hand. It will be seen that the Resolution began with a statement which would mean complete support of the proposals which the Government are putting forward to-day, and to my mind it could not be read in any other way. You have to preserve the people's rights and liberties, you must have defence forces consistent with our responsibilities, and so on.

All that would seem to be perfectly reasonable and clear. Then again, however, it added that on no consideration whatever could they support the Government. That is a natural attitude for a Labour party conference, but it really makes the resolution perfect nonsense. If that statement is too strong, I want to prove it from the remarks of Labour speakers themselves. After this resolution was passed it was described by Lord Arnold as "a masterpiece of inconsisten- cies, ambiguities and contradictions," and he said that the executive of the party was a body that learned nothing and forgot everything which it did not wish to remember. A well-known and esteemed Member of the House, who we regret is not here to-night, the right hon. Gentleman the Member for Bow and Bromley (Mr. Lansbury), was present at the conference, and he said that he was flatfooted against the resolution because, in the first place, he did not know what it meant. I am not particularly surprised at that. I think that the gem of denunciation however came from the right hon. Member for Stirling and Clackmannan (Mr. MacNeill Weir), who described it as "a redundant rigmarole of fatuous flap-doodle." It is on that sort of mandate that the Labour party have come to-night to oppose the Government's proposals. The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) at the conference repeated the original proposals in other words when he said, the totality of armaments of all the peace States must bear relationship to the totality of the arms of the potential aggressors, thus in effect putting himself in support of the Government's proposals. He added, however, that under no consideration would he line up on behalf of the Government because that would mean becoming implicated in the whole of its foreign policy. It is really unfortunate for the Socialist party that they have such outspoken members at this conference because, no sooner had the right hon. Gentleman made his statement, than the matter was taken up by Mr. Ernest Bevin, who said: Too much time has been taken up in saying that Labour did not agree with the Government—that went without saying and he described the speech of the right hon. Gentleman the Member for South Hackney as "the worst piece of tightrope walking he had ever heard of at a conference." With a record like that is it possible that any hon. Members opposite can come here and put down an Amendment which anybody in the House could reasonably be expected to support? The fact of the matter is there has not been one statement in the Debate to-day or in the Debate last week showing where the Labour party really disagree with the Government's policy. There has not so far been an answer to the simple and definite questions that were put by my right hon. Friend the Chancellor of the Exchequer to-day. I was in the House for all but a few moments during the speech of the right hon. Member for Keighley (Mr. Lees-Smith), and he made no attempt to reply to them.

Mr. Lees-Smith

I spent 10 minutes on them.

Sir J. Wardlaw-Milne

May I say a word regarding the proposal to raise part of this money by loan? It will be agreed, I think, that it is a sound canon of finance that money which is to be spent in any one year should be raised from taxation in that year. I look with considerable caution at any proposal which means the raising of money by loan when it can be spent before the loan has been entirely repaid. Of the money which is to be raised in the next five years, however, there is bound to be a considerable proportion which is for works of a permanent or semi-permanent character. It is impossible that the country could largely increase the three Services without having to build large permanent works in connection with the equipment and staffing of the Forces. To the extent that this expenditure is to be on permanent or semi-permanent work I do not think that it is against any of the strictest canons of finance that the money should be raised by loan. The hon. and gallant Member for Pembroke (Major Lloyd George) referred to the question of battleships. He suggested that they are generally allotted a working life of 20 years, and I agree with him that it is doubtful whether it is right that we should raise money for a longer period than the things which we are going to pay for with loan money will last. Only the Government have the information to enable them to judge how far the conditions are governed by this consideration, but I cannot help thinking that out of this enormous expenditure there must be a material proportion, probably nearly one-third, which will be on works of the character described.

I have only one comment to make in connection with battleships, and that is a personal one. I am sorry the Government did not start to rebuild that portion of the Navy, once they had decided on capital ships, two or three years ago in the period of depression when the work would have been of the greatest value, especially to the depressed areas. It would have been cheaper to do it then and far better than paying men while unemployed. The rebuilding was bound to come, and if the House will forgive a personal reference, I remember pressing the Chancellor of the Exchequer three years ago to follow this course. I would not suggest that he was so rude in a Parliamentary sense as to laugh at my proposal, but the Prime Minister, who replied, certainly did not give me the impression that the Government were prepared even to consider it. Looking back upon it, I think that it would have been wise, if we were to have an efficient Navy at all, to have built some of the ships at a time when work was badly wanted. Even then all our capital ships were more than 15 years old.

Although there is a fear in the House that we shall be met at the end of this period of rebuilding and rearmament with a serious slump, I do not think there is any real necessity for this to happen. The conditions which have governed recent booms and slumps need not recur. There is a great difference in the position to-day from the position after 1922 or even 1929. The first and most important difference is the enormous increase in the gold reserves of the world. The second difference is the chance of a wide currency agreement such as has already been entered upon between France, America and this and other countries. I doubt whether the House or the country realise the enormous advance towards preventing great economic and currency changes which has taken place by that agreement and the possibilities for good which may arise from it. There is no country that could not benefit by coming into an agreement of that kind. If it could be more widespread, as it may well be in the next few years, it might be a vital factor in preventing the slump of which we are so afraid when our rearmament period is over. We have not only a great deal more gold in the world and a great deal more in this country, but we are using it in a much better way. That is as good as having a still further supply. There is one thing which the Government could do to help to prevent a slump coming. They could at this time, so far as possible, stop financing directly, or encouraging the finance through others, of public works which are not urgently required. At a time of depression and severe unemployment they should by all means press on with any public works they can, but at a time when there is a great increase of employment and an absence of skilled labour, already serious and bound to become more acute, it is clearly the Government's business to reduce their commitments in the shape of public works and to discourage those works being put forward by others.

One danger that I see is that the expansion in this country and in others may bring about a period when we shall feel it desirable, for the benefit of our export trade, to lower the value of the pound. It may not be done deliberately, but it might come about naturally. The trouble will arise if that happened to coincide with the time when other nations in the agreement also wanted to lower the value of their currencies. Then there might be difficulty. The action of the Chancellor of the Exchequer in the last five years has been so successful that I do not think that anybody in the House, whether supporters of the Government or not, can deny the remarkable success which has followed his financial policy. It is a continuance of that confidence alone which will ensure our prosperity. It is far more important than anything else, even perhaps the exact balancing of the Budget, for the country to have confidence in the Government's financial policy. I do not think any one will deny that that confidence exists to-day. There are certain to be difficulties with labour, because already there is a shortage of it. The Government will also have to take great care in the question of the profits of armament firms because it is essential that labour should not be dragged away from the ordinary trades of the country. I admit that it may be difficult to avoid this altogether, but anything that the Government can do to prevent it should be done.

We have to face a heavy burden of expenditure which nobody wants to see put upon the people. There is, however, no other alternative before us at this moment but to carry that burden. The country can carry it. There are a great many nations which are putting upon themselves burdens of this character which they cannot carry. The action of the Government in this matter, paradoxical as it may seem, is the only possible hope of future peace in the world. When the nations realise that this country is putting upon itself this enormous burden to ensure peace, and that we can carry that burden and that they cannot theirs, it may well be that we shall see, for the first time, signs of a real desire to disarm and to bring about a lasting peace between the nations.

6.45 p.m.

Mr. Walker

We have seen this afternoon a united front against the Labour party's Amendment, composed of a left wing from Shettleston and a right wing from Hillhead. We have had from the hon. Member for Shettleston (Mr. McGovern) the statement that the Labour party's opposition to the Bill is based on lack of knowledge of the Socialist position and of the real causes of war. He says that war is bound to come as long as there is capitalism, and from that he reasons that the League of Nations and collective security, as advocated by the Labour party, represent an idea which cannot be realised until there is a world-wide social revolution. I know of two intensely capitalist countries which exist side by side without a fort or a gun on their frontiers—I refer to the United States and Canada—and Labour policy and Socialism are less developed in those countries than in any other industrial country of which I know. The hon. Member also said that armies and navies would never move at the dictates of a Socialist Government. I want him to convey that expression of opinion to his Soviet friends of the United Front. They have one of the biggest armies in the world, organised under what I understand to be a Socialist Government, and if the Socialists in Russia, with whose friends in this country the hon. Member for Shettleston is cooperating, are of a different opinion from the hon. Member that is something that will have to be decided between them.

Mr. McGovern

Does the hon. Member mean to compare the army of Russia with the army of a capitalist Power? Does he mean that the army of Russia would not march at the dictates of the Russian Government?

Mr. Walker

What you said was that the armies would not march at the orders of a Socialist Government—

Mr. Speaker

I did not say anything.

Mr. Walker

I beg your pardon, Mr. Speaker. I thought I was back in Glasgow along with my hon. Friend the Member for Shettleston. What he said was that armies and navies would not move at the dictates of Socialist Governments.

Mr. McGovern

I meant capitalist armies and navies organised by the capitalist class.

Mr. Walker

What is a capitalist army? Is it an army of capitalists? I want to have a clear definition. This country possesses an Army and a Navy and if, next year, or five years hence, or at any time, a Socialist Government comes into power in this country, I sincerely believe that that Army and that Navy would obey the orders of the Government that was in power.

Mr. McGovern

What I maintain is that an army under the capitalist system is officered by the sons of the ruling class and that the rank and file have to obey their orders otherwise the officers will break them. Therefore, I say that such an army would march for instance against Germany, or for capitalist purposes but it would never march, being under the command of the sons of the ruling class, for any working-class purpose. I say that in Russia the army is officered by working-class leaders and not by the sons of the aristocracy, and that is the difference.

Mr. Walker

Thank you. The matter is no clearer now than it was prior to that explanation. The purpose of a Socialist Government in this country would be to secure collective peace, and I say that the Army would march against the Germans, if the Germans were threatening that peace, or against the Italians if the Italians were threatening it, or against any nation which threatened the democratic liberties of this country and the countries with which we would be allied under the League of Nations, with a proper system of collective security. I know of no other purpose for which they would require to march, unless the hon. Member visualises the possibility of a Socialist Government asking the Army to march for purposes of Imperialist aggression, and I do not think he would expect that. The right wing of this united movement against the Labour party's Amendment to-day comes from Hillhead which is appropriately at the other end of Glasgow from Shettleston. We were glad to see the right hon. Gentleman the Member for Hillhead (Sir R. Horne) here to-night. We always welcome his genial personality, but we notice that when he intervenes in debate here it is always in the interests of the capitalist investor.

I can understand the right hon. Gentleman's position on an Amendment which objects to a loan being raised for Defence and wants the money to be raised out of taxation. The right hon. Gentleman realises—no one more fully—that you can only get the money from where it is, and in this case the money exists in the pockets of the class which he leads and speaks for in this House. This £400,000,000 loan on which we are asked to embark, will cost the country, over the period of repayment, £760,000,000 and all the goods on which that money will be spent are to be provided in the course of the next five years. We are not reaching up to the shelf of yesterday's production or waiting for to-morrow's production in order to bring all these armaments and goods to our assistance at this time. They are all being produced by the labour, the machinery, and the organisation that are in existence and available at the moment. All the Government are seeking to do by these proposals is to enable people who have been receiving more out of society than they have been putting into it, to make further profits. These people have amassed big surpluses in the banks instead of using them, as they ought to have been used, to keep labour fully employed. Now those surpluses are to be used for the making of further profits by means of investments in War Loans, and whatever other forms of investment the Government are prepared to introduce.

There is, however, a stronger condemnation of the proposal of the Government from the point of view of the general security of the country. The Government, ever since coming into power, have steadily neglected every opportunity of strengthening the defences of world peace by strengthening the League of Nations and making it a real live League of Nations which could have not only defended peace in other countries but enabled us in this country to defend it more effectively than we can do to-day. What the Government are doing is a gesture to the world showing that the National Government do not believe that the League of Nations can be made effective or that it is possible to build up a system of collective security. When Lord Beaverbrook in the columns of his Press pleaded for isolation, the leaders of the Tory party said they could not adopt such a policy. They paid lip-service then to the League of Nations and collective security. But the policy to-day is to build up an independent force for the purpose of trying to defend Britain and the British Commonwealth, without any reference whatever to collective security and the League of Nations. They know in their hearts that that is impossible. They know the danger spots of the world as well as we do—Germany and Italy in Europe and' Japan in the Far East. In those areas Great Britain is vitally interested, but it would be possible to build up in the League of Nations a defensive group of Powers whose total military, naval, and aerial strength would be so overwhelming, that those nations would never dare, either individually or collectively, to break the peace, knowing in advance the forces which would be arrayed against them.

What prevents the Government from doing that is that they do not want to make any sort of defensive or offensive alliance with Soviet Russia. If they still believe in Empire, however, they ought to remember that of the three nations that are really formidable, as far as the League is concerned, namely, Russia, France and Britain, Russia is the best help that we could have as an Empire in the event of trouble arising in the Far East from that source of which the late Foreign Secretary was so much afraid. I listened the other night to a well-known admiral telling us about our position in the Mediterranean, and when the present First Lord of the Admiralty visited Malta we were told that the British Government have no intention of evacuating Malta. When one looks back on the Abyssinian incident one is inclined to agree with the view that at that time we looked Like being in absolute fear of those who were setting out to build up a great Mediterranean navy on bases in North Africa—sitting right in the heart of the British Commonwealth and threatening that Commonwealth of which hon. Members opposite always claim to be the defenders.

When we look back over the history of the last 10 years in Europe what do we find has been taking place? The party opposite have claimed at election time that they owned and controlled the Union Jack. They have hung it up in their committee rooms. But the subject nations and independent native populations which have been defeated by aggressive nations in recent years are of the opinion that the Tory party have taken the red and the blue out of the Union Jack and have, left them nothing to hoist but the white flag as far as the Fascist nations are concerned. The Fascist nations have determined the diplomatic polity of Britain during the last six years. The Labour party say that the Government are travelling along the wrong road, that they should turn again to the League for the purpose of strengthening it, because a Commonwealth like ours cannot be defended by itself alone against the potential Fascist aggressors, but can best be defended in a common security pact under which you determine what arms are necessary for the common good, instead of acting on your own as you are doing in the proposals which the Government have put before the House to-night.

7.3 p.m.

Captain Cobb

May I ask the House for the indulgence which they always accord to a Member who addresses this Assembly for the first time? In the course of a debate on a Private Member's Bill a few days ago it was suggested by one of the hon. Members opposite that this House was always right in any decision which it arrived at, because it was always expressing the declared will of the people of this country. If that is really true, there can be little doubt about the fate of the Amendment which is on the Paper to-night, because it is becoming increasingly evident that the people of this country do not regard the Government's defence policy with misgiving, but rather with a real sense of thankfulness that at long last we are taking effective steps to repair our defences and safeguard our future. We all recognise the amount of unrest which prevails in so many countries of Europe to-day. We are all very much aware of the dangers in which that unrest might involve us. I do not think that there is any real division of opinion among the parties in the House as to the need which exists for some measure of rearmament in this country, but where the difference does exist is in attributing blame for that unrest.

The Labour party tell us that all this unrest and the troubled state of Europe to-day are due to the Government's foreign policy. They say that that policy has lacked determination, vigour and direction. But I think that they would find it difficult to convince anybody that any other Government in this country could have prevented the emergence of the spirit of intense nationalism in Germany and Italy which is disturbing the peace of Europe, or that any foreign policy would have been successful in inducing Russia to abandon the attempts which she has been making for years past, and is still making, to foment trouble in other countries. We have been told often that the trouble in Europe to-day is due to the clash between two extreme political doctrines—Communism, on the one hand, and Fascism, which is so often the result of Communism, on the other. I find it difficult to believe that a Labour, Liberal or United Front Government in this country could have prevented the rise of these doctrines or the ensuing clash.

The Amendment tells us what the Labour party have said on many occasions—that the Government's defence policy is a frank admission of the fact that we have no faith in collective security and owe no real allegiance to the League of Nations. One often wishes that people who talk of collective security would tell us just what they mean by that expression. When it was sought to put collective security into operation about a year ago, we found that the Labour and Liberal parties and the Council of Action joined themselves together in trying to urge the Government to undertake the task of preventing Italian aggression in Abyssinia. The Government were asked to undertake that duty alone and unaided. To my mind that is not collective security. It is unlateral insecurity, and if the Government had adopted that policy they would have acted in direct contravention of the wishes of the great majority of the people in this country.

If one is asked if one believes in collective security, I think that the answer is that the great majority of people in this country believe in the principle of col- lective security just as the great majority of people in this country believe in the principles of Christianity, but I think it is extremely doubtful whether there is any large body of people in this country or any other country who would be prepared to plan their whole future on the assumption that they would always be loved by their neighbours as they love themselves. It is true that no nation has been able to bring itself to effect the necessary sacrifice or make the necessary effort in order to make collective security real. If the time were to come when all the member States of the League showed that they realised the implication of collective security and gave evidence of the fact that they were really prepared to play their full part in such security, it would possibly entitle us to relax the efforts which we are making. Uutil that time does come it would be madness for this country to draw back from the task to which we have set ourselves, a task, incidentally, which we were asked to undertake by the people of the country t the last General Election.

There has been some talk on the subject of profiteering, and the Minister for the Co-ordination of Defence has told us of what he conceives to be adequate steps to prevent any form of profiteering by those with whom he has entered into contract. One must be satisfied that he is doing everything that is possible to prevent profiteering by these contractors, but I should say it is extremely difficult for him to devise a means of preventing individuals who are dealing in raw materials from profiteering. Contractors' costs must be based, to a large extent, on what they are paying for the various raw materials which go to the making of aeroplanes, guns and ships. It would be a good thing if the Minister were able to devise some means which would prevent the profiteering which, quite obviously, has been taking place during the last few days.

I should like to draw attention to what may appear to be a small matter—our whole source of light and power in this country. It has always occurred to me as a layman that the transmission of our light and power by way of overhead cable is extremely vulnerable. It seems to me that in the event of our becoming involved in war it would be an extremely simple thing for enemy agents in this country to do a vast amount of damage which would have serious consequences to all our large towns and the factories which were turning out war materials. A great deal of this interference could be avoided if these cables were carried underground. A few years ago there was a letter in the "Times" from the chairman of one of the large electrical undertakings in the North-West of England. He said that approximately a third of his system was buried underground and that the remaining two-thirds was carried overhead. He said that he had found in his own experience that the increased capital cost of burying underground was offset in something from five to seven years' time by reason of the very much reduced cost of maintenance. Some part of the expenditure on our defence programme might be lent to the Electricity Commissioners to enable them to bury the whole of our electrical system. When the cost is being returned by reason of the reduced cost of maintenance, this money which has been lent could be returned to the Exchequer. By some scheme of this kind one would achieve a double object. One would avoid a great deal of the risk of interference with our source of light and power and one would, moreover, by burying these cables underground restore beauty to a great many parts of the country which have had it taken from them.

In conclusion, I hope that the Government will take full advantage of the opportunities which will be offered this year at the Imperial Conference. I hope that it will be made clear as a result of that conference that the Government's Defence policy is essentially an Empire policy, a policy which has the whole strength of the Empire behind it. It might be possible to have it made known to the world at large that our forces are essentially Imperial forces, forces to be used for the safeguarding of our Empire and for the maintenance of peace. If it could be made known that these increased forces of ours had the strength of the Empire behind them and would be augmented, if need be, by reinforcements from the whole of our great Dominions, it would let the world understand that we are in earnest about this business and that the Empire is really united in its desire to preserve the peace of the world.

7.16 p.m.

Mr. Sorensen

First of all, may I humbly offer to the hon. and gallant Member for Preston (Captain Cobb) my very sincere congratulations upon his speech? May I assure him, too, that he looks far more at home in the House of Commons than I have ever felt in my life. I trust, therefore, that the atmosphere which he managed to exude from his personality and the reflections which he uttered will be repeated many times in the course of his lifetime in this House. I think I should not be inaccurate in describing the cool speech of the Chancellor of the Exchequer this afternoon as one of restrained pessimism. I use the adjective deliberately and advisedly for, after all, restraint is something in these days of all-round pessimism. It is as though he had been saying to us, "Well, you are about to be hanged, but, never mind, the trap door may not work." I suppose that is the attitude which a large number of people are taking up at the present time. They are settling down to the tragical assumption that war is not quite, though almost, inevitable, unless perhaps some unforeseen or miraculous occurrence may save us from that calamity.

Meanwhile most of us would agree that those in the House, and the populations generally in this country and in Europe, are being conditioned to anticipate war. In saying that I am not suggesting that the process of conditioning is one that anyone desires or that more than a very few people really endorse. I agree that most Members of this House, on both sides, dread the possibility of war, and I am sure that, according to their light, they desire most earnestly to avert war and look upon it as one of the greatest calamities that could occur to the Western world; but this process of conditioning is going steadily on. The atmosphere in this House and in the country as a whole is in striking contrast to the atmosphere which existed, say, five or six years ago, when the anticipation of war was infinitely more remote than at the present time, and that fact should cause us to reflect very seriously upon the policy we must adopt now and in the future. Even the Christian Church, I observe, is also being conditioned. Once more we are having some of the clergy, not so many as in former years, but certainly a large number, prepared to rebaptise the god of war and to confirm him a member of the Christian Church.

After all, we must recognise that on whatever ground war breaks out, no matter what may be its justification, no matter how righteous our cause, once it starts it will undoubtedly involve millions in death and when not in death, in suffering and disaster. I can well understand people saying "If we are to die let us die fully prepared and fully equipped; let us go down in a blaze of glory." I can appreciate that point of view, and I am speaking in no sardonic tone. If we are assuming that under some circumstances we must take up arms in order to protect and preserve either our country or the Empire or democracy or our civilisation, I can well understand the argument that we must fight with every modern weapon at our command. If we are going to fight it can be argued that we should fight properly, and in these days we cannot go into battle armed merely with pop-guns and bows and arrows. In the dreadful race of armaments in which we are engaged any nation which discovers a fresh method of destruction sets a standard for every other nation to follow. If there is some fresh method of destruction which ingenious chemists or inventors can bring to our notice in this country other countries, naturally, speedily adopt them. In the last war we accused the Germans of introducing poison gas as one of the arms of war—an assertion on our part which is not, I think, entirely exact—but we speedily followed suit employing the same deplorable device and doing it more efficiently; and in the same way, if we contemplate a war waiting for us round the corner, no matter what fresh methods of destruction are invented by other countries we are bound by the logic of events to introduce similar methods in this country.

I would go further and admit that the Government are driven by their own logic to rearm. I do not blame the Government for introducing this measure of rearmament. I blame the people of this country for electing this Government and for electing those preceding Governments, which in my estimation have helped to bring before us the possibility of this dreadful harvest of death. If once we accept certain premises I believe we are driven step by step to certain conclusions drawn from those premises. If we must prepare to preserve our present society, we must do so with the most competent weapons we can discover, and if it be the assumption, as it is in many quarters—indeed, it was expressed by the last speaker—that our imperial and industrial supremacy must be preserved at all costs, it seems to me inevitable that we must rearm and anticipate an inevitable war.

If we are enjoying the benefits of a far-flung Empire, and I fully admit that in a greater or less degree we are, it follows that we are setting an example to every other Power in the world. If we have secured approximately a quarter of the world's surface and about the same proportion of the world's population, if we have secured in the course of centuries the most important military and naval strategic points in the world, and built up in the last 150 years a great volume of trade and wealth from which we are benefiting, from which even the working classes are benefiting in some measure, it would seem to follow, surely, if we are bent on preserving our position as it is, that every other country which sets its envious eyes on us will determine to follow suit and secure an empire of the same magnitude and value. With corn-petition between rival Powers for empire, for possessions, for the tangible values that arise from it, you are inevitably involved in a conflict, for a time commercial and industrial but ultimately and inevitably naval, military and aerial as well.

Looking back, I think most of us now admit that we are to-day settling down to the assumption that the real conflict which will take place in the near or immediate future is a conflict between ourselves as fortunate possessors of the best parts of the earth and some of the best institutions of the earth and those who, through misfortune, do not possess those things themselves. We are settling down to this conflict for supremacy between ourselves and others. In reading a book written by a well-known motorist which has been sent, I believe, to every Member of this House, I notice that he, in common with many hon. Members, does not believe that war can ever be eradicated from human evolution. He accepts the fact that war is a sheer necessity, that just as pre-human life struggled inevitably in order to survive, so civilisations and society to-day are bound to struggle, and the strongest and best equipped will emerge and deserve to emerge. If that be so, obviously, though we may postpone the dread event, it will be merely a postponement, for as long as there is a deep assumption, nay more, a deep conviction, that war cannot be escaped, and as long as we have the conviction that our Empire as it is must be preserved at all costs, it is merely a question of time before we find ourselves involved in a gigantic struggle to preserve our Empire and all its institutions against the less fortunate but more envious nations in the rest of the world.

We must admit that since the end of the last war there have been many lost chances and opportunities. I am sure that many hon. Members opposite will admit that privately if not publicly. Surely we recognise, or should recognise, that we stand in a Europe surrounded by an atmosphere of fear and suspicion, if not of hatred, because of two factors, the persistence of British Imperialism on the one hand and the growth of German despair on the other. If after the War we had had vision and courage enough to say to the whole world, "We are going to rebuild on sound foundations," I not only venture to suggest but I state categorically that we should never have reached the state we are in at the present time.Statesmen and people were not courageous enough. Some, indeed, would have lost prestige, including the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). If he had only dared to speak the word against the popular voice, if only he and others had done it, though they had lost their political lives they might have saved England and Europe at the present time. Because, for one reason or another, they did not do so, we have drifted on from year to year, from stage to stage. The German people, becoming embittered and disappointed, cast on one side their democratic principles and hopes, and out of that bitterness they grew into their present state of belligerency, fear and suspicion. Alike in Germany and Britain we are paying the price of the blindness of the years immediately succeeding the War. I would suggest, however, that there is little value in mutual recrimination and censure. We can go on blaming each other, but that mood and that atmosphere will take us nowhere in the end. Something much greater is required if Europe is to be saved. We have to recognise that in this country we have certain opportunities and privileges which other countries do not possess to the same degree. Here I would disagree with some of my hon. Friends who rather place reliance in the belief that they can so intensify class consciousness as to create an overwhelming volume of working-class feeling against the war-mongers of Britain and Europe. Personally, it is not my reading of the psychology of human beings. This fact of national consciousness is very strong, and there are many working-class people in this country who would say, in the last resort, "Even though we protest against the exploitation which has been imposed upon us, we are prepared to preserve our country and to join even with our class enemies rather than see ourselves submerged by some other Power." That, I think, is a reading, perhaps not altogether infallible, but a reading of the working-class mind of this country at the present time.

But, to go further, I would say this: Recognising that to the full, recognising that our nation has a consciousness of certain values and institutions which I do cherish, nevertheless, if it comes to the test, my answer to the test is this, that if we can only preserve our Empire and our nation by war, then I would sooner the Empire and the nation as it is went than that we should engage in a war which would have the effect of demolishing such democracy as we possess, and indeed cause the whole of our civilisation to collapse into moral and physical ruin. For there is the choice facing us at the present time. I can and do appreciate those who say there are worse things than war. I agree that moral deterioration is worse than war; I agree that to say, "We will avoid our duties and our responsibilities and let things go," is worse than war; but I do not endorse that attitude. What I plead for is a recognition that something infinitely greater than preparation for war is required, something infinitely more than some scheme for extending the League of Nations, collective security, isolation, pacts, or any other method which we might adopt.

That is why I regret very much that in this fresh, grim preparation for strife which is taking place there is no striking note that goes out from this House of Commons to the world. We are missing a great opportunity, even if we agree as Members of this House on both sides that under some circumstances rearmament must take place. Even though it be admitted, as I do admit, that the great majority of people would endorse rearmament under some circumstances, yet I say that that is utterly insufficient. We may go on rearming, we may go on justifying this or that policy, and still we may be walking in a dreadful trance towards the edge of the abyss.

I would plead with the Government, even though their policy be not the policy of the Labour party, that they should try at least to find some means of speaking through the mists of fear and suspicion that are gathering in Europe to-day. Let there be some striking challenge made to the soul of the peoples of Europe. It is, I am convinced, the only way by which civilisation can be saved, and although I recognise that the Labour party itself would endorse rearmament, perhaps for other purposes than those put forward by the other side, I would say that even that would be utterly insufficient. What we do require is to make the world know that the preparation for another war, that is going on to-day, even though the majority may endorse it, as I fully admit, including even my own constituents, nevertheless will in itself lead nowhere but to the grave, and that what we require is undoubtedly a striking challenge to the latent soul of Europe before it is too late.

7.34 P.m.

Mr. Duncan

We have had some very remarkable speeches, and not the least remarkable was the one just delivered by the hon. Member for West Leyton (Mr. Sorensen). I think I agree with a very great deal of what he said, and I can speak feelingly, because of all the hon. Members who have spoken this afternoon, the hon. and gallant Member for Pembroke (Major Lloyd George) and myself are the only two, I think, who fought in the last war and are still of military age to fight in the next war. Therefore, we are personally interested in the Defence policy of His Majesty's Government.

I quite agree with the hon. Member for West Leyton when he says that this policy of rearmament is not enough. I wish we could get a call to the whole world, but when we see the censorship in Germany, for instance, we see that we cannot get at the people of Europe because of the censorship. Where there is only one Government Press—I do not mind whether it is in Germany or Russia; both countries are the same for my purpose—the Press is censored, and the wireless is censored, and there is no means of getting this call across the world to-day. I quite agree with the hon. Member also that the people of the world generally do not want war. There seems to be a gradual drift to war against the will of the people of the world, and yet this call which we all feel so insistently we cannot get across to the world because of the various means that are taken by people in other countries to prevent that call getting across. I only wish that the profession to which the hon. Member himself belongs was able to help to get that call across. If the Churches of Europe would only do this call for us, that would be doing a great thing for the peace of the world.

Before I say a few words about the Amendment on the Paper, I would like to emphasise one or two words which have been said about one detail of the Bill which is now before us. It is stated in the Bill that provision for repayment of these loans will take place over 30 years, but I am quite sure that a large amount of the money which will be spent will not be used for purposes, for goods, machines, ships, etc., which will last for 30 years. I quite agree that a large amount of the money will be spent on land, aerodromes, buildings, hangars, and so on, which will last as long as that, but I think it is generally financially sound not to spread the burden of a loan longer than the actual length of time that a particular article will last. Therefore, I hope that on the Committee stage of the Bill the Government will bring in some Amendment, if it is possible, so that the loan can be repayable in periods of less than 30 years if borrowing is to take place for such things as battleships, which are only designed to last for 20 years.

May I now say one or two words about the Amendment, which begins: This House views with misgiving the massing of huge competitive national armaments without any constructive foreign policy based upon collective security under the League of Nations That strikes me as being most unfair to the Government. It seems to me that the Labour party have never realised the exact position of our foreign policy. My right hon. Friend the Foreign Secretary made a very clear declaration at Leamington a few months ago, which has been read out by the Chancellor of the Exchequer this afternoon. We have not had an answer from the right hon. Member for Keighley (Mr. Lees-Smith) as to whether he agrees with it, whether it should go farther, or whether it should go less far than it has done. I wish he really would answer, because foreign policy to-day, in the difficult situation in Europe, ought to be united as far as this country is concerned, and I hope that the hon. Member for Caerphilly (Mr. Morgan Jones), who looks as if he is going to reply, will give us an answer, if the right hon. Member for Keighley will not, because it is important that we should get, if we possibly can, some agreement on our definite aims in the world to-day.

Anybody can say—in fact, we all agree—that the ultimate ideal of us all is, first, that we should have a universal League of Nations and, second, that we should have a collective security system under that League to preserve permanent peace. We all want that, but we all realise, on this side of the House at any rate, that it is perfectly impossible. The Foreign Secretary has stated very definitely how far we can go in this imperfect, world with a League that is not universal, and I think that the speech of the hon. Member for Motherwell (Mr. Walker) showed some of the confusion which exists in the mind of the Labour party to-day. He talked about a defensive group of Powers in the League of Nations, and he also talked about the aggressor Powers as Germany, Japan and Italy. But the whole idea of the League of Nations—my idea, at any rate—is that it should be as far as possible universal. The origin, the beginning, of the League of Nations as proposed by President Wilson was that it should be universal, that all the countries should come in. It was unfortunate, I think, from the beginning that America did not come in, but still the other nations of the world decided, wisely or unwisely, to carry on with it without America; and then it was still more unfortunate, I think, when Germany left.

None the less, the ultimate ideal of the League of Nations is to make it universal, and I suggest to hon. Members opposite that at any rate it should be universal for Europe, that one of our main aims should be to make it universal at any rate for Europe. One of the first essentials to make the League universal as far as Europe is concerned is to get Germany and Italy back into the League, and speeches such as that of the hon. Member for Motherwell, in which he talked about a defensive group within the League of Nations against the aggressors, will certainly not help Germany or Italy back into the League. Therefore, I do deprecate this confusion of thought among hon. Members opposite as to what is the meaning of the League of Nations, and I hope that they will really think a little closer and a little harder as to what the idea of the League of Nations is.

My idea at the moment—I give it purely as my personal view—is that it is, first, our duty to defend our own shores, and, second, that it is our duty to defend the Empire. I do not call it the Commonwealth, because it is not a Commonwealth only. The term "Commonwealth" applies only to the Dominions, but I believe that we have to defend our Colonies and mandated territories as well—the Empire. Thirdly, we have our duty to France and Belgium under Locarno, and under some possibilities we have our duty to Germany under Locarno. We have also our duty under the Covenant of the League. Then let us try to make this League practical. It seems to me to be the only hope of getting some form of collective security, which, as the hon. and gallant Member for Pembroke has said, is the only hope for future permanent peace in Europe, in spite of what my right hon. Friend the Member for Spark-brook (Mr. Amery) said. Let us try to get some scheme, by drawing Germany and Italy into a European League at any rate, so that we can get some form of collective security which may work.

The difficulty in the past has always been, whether it has been Manchukuo, Abyssinia, or anywhere else, that collective security has not yet worked, and the duty of the Foreign Secretary in the days to come—and they may not be many days—will be to try to work out a scheme. I think that one of the first things that has to be done is to try to work out a scheme for the reform of the League of Nations. I do not know whether hon. Members opposite play cricket, but recently the batsman was getting the better of the bowler, so they introduced a new "l.b.w" rule, which has levelled things up a bit, and the batsman and the bowler are now on fairer terms than they were. What has happened to the League of Nations has been that the Covenant has given far too much advantage to the aggressor and far too little to the defender. It has been proved on more than one occasion that the game, if you can call it a game for this purpose, cannot be played under these rules. Is it not the obvious and sensible duty of the players to alter the rules in such a way that they may be able to abide by the rules?

Mr. Bellenger

The trouble is to get them to choose the umpire.

Mr. Duncan

I hope that the hon. Gentleman is a good enough cricketer always to go out when he is declared out.

Mr. Bellenger

I generally await an appeal from the fieldsman.

Mr. Duncan

I gave that only as an illustration. Here is a position in which the League of Nations, obviously, does not work, although we want some form of collective security which will be collective and which will give security. We have not got it, and therefore, the best thing is to try to alter the rules of the Covenant of the League in such a way that we can get some form of collective security. Whether that should be for the whole of Europe, or confined to the Western Powers or to the Eastern Powers, is a matter of detail which can be worked out. The time may be getting short because influences are at work which, if this matter be not tackled, may lead to some emergency in the not far distant future. While I thoroughly approve of the Government's defensive policy and of the loan which is being raised to carry out that policy, I appeal to the Foreign Secretary not to waste one minute but to do everything that he can—not in public, because I do not think that too much publicity will do any good, but by all diplomatic means —to arouse the public of this country to the reality of the situation to-day, and to see that we shall not be involved in a war.

7.48 p.m.

Mr. Granville

A good many of us agree with the sentiments expressed by the hon. Member for West Leyton (Mr. Sorensen) and by the hon. Member for North Kensington (Mr. Duncan). If only we could get some of those sentiments expressed in countries where there is a strict Press censorship the Bill would not be necessary. In the House last week the Prime Minister and the Minister for Co-ordination of Defence appealed for unity. After hearing the Chancellor of the Exchequer this afternoon restating the policy which has been laid down by the Foreign Secretary as to the foreign policy of this country, I must confess that when the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) w as speaking I could not detect much disagreement with that statement among the hon. Gentlemen who sit behind him. I cannot understand the attitude of the party opposite. The hon. Member for Bishop Auckland (Mr. Dalton) stated on their behalf, at the Labour party conference, that a Labour Government would be compelled to provide an increase in British armaments, while at the same conference the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) stated that they were in favour of using British armaments for pooled security. The Government's policy is that the rearmament programme should be used for the defence of the nation and the Empire and of our League commitments. Perhaps hon. Members who criticise have forgotten that Article VIII of the Covenant of the League of Nations contemplates the existence of such national armaments as are consistent with national safety and the enforcement by common action of international obligations. A complaint was made in his speech by the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) of vagueness in the statement made at Leamington by the Foreign Secretary. I shall not read through that statement again, although I believe it has not been quoted often enough in this House and in the country, but those who read it will see that the commitment of this Government in support of collective security is not vague. It is not that vagueness in the statement does not deter power politics in some countries in Central Europe, but the fact that this country has not been strong enough to carry out its obligation. The pith of the question was stated by the Prime Minister last week when he wound up the Debate for the Government. He said: One of the most cogent causes of unrest in Europe during the last two or three years —and there are many of them—I definitely believe to be due to want of equilibrium between the obligations and the liabilities of our country and the material strength of our country."—[OFFICIAL. REPORT, 18th February, 1937; col. 1513, Vol. 320.] If there be any criticism of the foreign policy of the Government, it may be because at Geneva, in trying to carry out our commitments, there has not been that equilibrium between our defences and this world-wide demand upon us. The Bill will put that right.

Where we differ from hon. Members opposite is that they want these arms to be used for pooled security and for collective security, whereas we believe that if these should break down the British Empire should be strong enough to carry out its obligations and to defend its people. The Prime Minister has said many times in this House that the system of collective security is an experiment. He said that if it failed we would try again. We are trying again, with the aid of this Government's programme of re-armament. We are entering a phase of armed security. I have listened for a number of years to hon. Members opposite and to their criticisms. I believe that the problem of Manchukuo and of Abyssinia would have been very considerably different if this country had been more strongly armed, particularly with regard to the Fleet.

I see that there is criticism of the Minister for Co-ordination of Defence on the ground that he is not carrying out the co-ordination. I understand that that is what the right hon. Gentleman is there for, and there is in the House and the country a general feeling that he is the right man in the right job. He has to see that in the rearmament of this country our war planes must be made competitive, our Army must be mechanised to a modern standard and the Fleet made efficient and strong. It is all very well for Members to criticise academically, but the right hon. Gentleman is there to deal with the situation as it stands. If we were to carry out the implications in the Opposition Amendment, this country would be exposed to immediate danger.

A good deal is said about disarmament by hon. Members opposite. Ever since the days when the very distinguished father of the hon. Member for Kingswinford (Mr. A. Henderson) was beginning preparations for the Disarmament Conference at Geneva, a succession of Foreign Secretaries has tried to bring about an agreement on disarmament. The records at Geneva will show that it was a British Foreign Secretary who gave a lead to the other 60 nations. What is sometimes forgotten on this question of unilateral action, is that the British delegates or the Foreign Secretary can obtain only that upon which they can get agreement. If you cannot get agreement you can take unilateral action, but that is not consistent with what hon. Members have described as collective security. We would all like to lighten the burden of taxes for the British taxpayer, but the fact is that the nations are now rearming. The hon. Member for Bishop Auckland stated at the same Labour party conference that Germany has spent in recent years £2,700,000,000 in rearmament. The policy of His Majesty's Government is still based upon support of the League of Nations and on trying to work a system of collective security.

What very often happens in Geneva, where you have 60 nations discussing and trying to make their contributions, is that it sometimes degenerates into a talking shop. Delegates go there from countries all over the world and make very eloquent speeches advocating disarmament, but return to their own countries and immediately engage on fresh expenditure on armaments. All those countries—and any hon. Member who has been to Geneva will have seen this —were rearming while this country followed the policy rather of disarmament. Time after time we gave a lead there, in face of the fact that other countries were following a policy of rearmament. I have seen those nations there. I wanted disarmament as much as anybody in this House, but I saw those things happening there. Fifty miles away there might be a frontier beyond which were people who thought in terms of citizenship as the wearing of a uniform, and believed that war is a good thing. When one has had an experience of that sort of thing and has seen it going on time after time, one almost instinctively becomes an isolationist.

As a Liberal I am not prepared to see the standard of living which this party helped to build up in a free democracy jeopardised in a way which may enable any of those countries to start another war such as that of 1914. This is what is called League of Nations work. My experience has been that you have to see that this thing works. I believe that a non-aggressive British Empire, strong and united as an enlightened commonwealth of British nations attracting to its international outlook nations who accept its standard of decency, civilisation and progress, is the best hope for the peace of the world.

There is one point of criticism that I should like to make, very briefly, on a matter about which I am a little uncertain. Last week the Minister for the Co-ordination of Defence enlightened us as to the Government's plans for storing food. The House listened with great interest, and we are glad that those plans are being made, but it seems to me that that is not enough. What we have to do is to tackle the question of food production. It is well known strategically that our trade routes will be more vulnerable. I think it is generally accepted by hon. Members on both sides of the House that this nation in time of war will have to grow more food than we grew during the last War. We all recognise that the Minister of Agriculture has a very difficult job. There are very few right hon. Gentlemen who have made a complete success of that job. His great chance of success will come if he will make a bold effort to tackle the agricultural position and to revive the great food-growing industry of the country. Time is a vital factor. If we are too late, the taxpayer will have to pay again, as he did during the last War.

Hon. Members opposite have criticised this Bill because they say—I think it was the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) who said it—that it is going to increase the cost of living. I am not going to argue on the financial technique of President Roosevelt, Dr. Schacht, or the Chancellor of the Exchequer, but one has to agree that the Chancellor of the Exchequer's policy has been proved right for a number of years. We may have to face the position that there will be a rise in prices in this country. That may be offset later by a rise in wages, but it is quite possible that before that rise comes it will be the wage earners who will have to face the brunt of the lag. On the other hand, there is no doubt that this expenditure will create hope and a good deal of employment in certain areas where it is very badly needed. It must create a demand for retail goods. There is, however, a section of the community which perhaps will not get a direct or indirect benefit from this expenditure. I refer to the agricultural workers. The agricultural workers are among the lowest paid in the country as regards real wages. They come from a very fine stock and are very loyal. They are undoubtedly essential, and it would not be fair to ask these men, these comparatively low-paid rural workers, to stand an increase in the cost of living if their industry is unable to pay higher wages.

Mr. E. J. Williams

What do you propose to do?

Mr. Granville

I am going to appeal to the Government.

Mr. Williams

The Government are beyond appeal.

Mr. Granville

I can better serve the agricultural workers by appealing to the Government to do something for them, after having given them Unemployment Insurance, than by crossing the Floor of the House to the Opposition and making academic criticisms of the Government. I appeal to the Government not to forget the agricultural workers in their plans. The social services are being maintained, but they should be more than maintained. These people in the rural districts want housing, water supply and the general amenities of life, and this is a progressive Government, and I want to appeal to the Minister of Agriculture and the Minister for the Co-ordination of Defence not to forget the people in the agricultural districts in their plans, but to enable them to get some of the benefits of this programme.

Hon. Members opposite do not agree with the Government's proposals. I do not see why. I think they are more in agreement than they show in their speeches. There is a section of opinion in the country which says we must have more effective action under collective security. In other words, we must go and fight. There is another section of opinion which is purely pacifist and refuses to fight. There is a section of public opinion which says that you cannot to-day ask a man to do any more than defend his own native soil. There are hon. Members who want to see an international frontier between France and Germany, perhaps using Italian troops for the purpose. Some hon. Members want an international air force. Other hon. Members refuse to return any colonies to Germany. The one thing that emerges from all these things is that if we are to save democracy, democracy must agree about something. We cannot have all these views expressed in Acts of Parliament by the Government of the day.

I believe the Prime Minister has interpreted the point of agreement in public opinion in the country. He has kept the country out of war. We may or may not have been prepared for it, and we have certainly been in difficult positions. In my view the Prime Minister, the Foreign Secretary and the Government were right to withhold their hands and to see that this country was kept out of war. It is in the feeling against war that the mass of public opinion in the country reaches agreement to-day. The First Lord of the Admiralty expressed a very generally agreed point of view when he said that democracy has the right to choose the issue upon which it will precipitate this country into hostilities. If hon. Members opposite had been sitting on this side of the House, if they had been the Government of the day, I believe they would have been presenting a Measure very similar to the Bill which is being proposed to-night. If they wanted to preserve democracy against those countries in Europe who pursue the policy of power politics, whose appetite goes on and on, those countries whose political aspirations and ambitions are so often expressed in speeches for world consumption—if they wanted to preserve for democracy, that freedom and liberty which the British Empire, with all its associated nations, enjoys through the standard of life we have they would have to leave the policy of continually going to Geneva and making propositions for disarmament, for collective security, trying to get agreement and seeing it turned down time after time, and in the interests of the mass of people in this country and their commitments to the British Empire and the League of Nations, they would be forced to introduce a Bill very similar to the one that we are discussing now.

In politics, in political theory, one drifts towards realism, and, with all the enormous rearmament that is going on all over the world, I still believe that the ideals of the last War have not been forgotten. It is an unhappy thought, as expressed by the Chancellor of the Exchequer, that to be safe, we have to ask the country to rearm again. It is realism that has been forced on those of us who held those ideals. I am going to place my trust in the Government. I believe they have the situation in hand. I believe that the Prime Minister has been right in his feeling of the pulse of public opinion and keeping this country out of hostilities in regard to Abyssinia and Manchukuo. He knows how strong is the desire for peace and the loathing for war in this country.

The newspapers in each succeeding international crisis tell us of the terrible things that are going to happen, but they do not happen. In each succeeding crisis the possibility of hostilities on a vast scale has become increasingly difficult. The people want security. They want to be happy in their homes. I do not think the people of Europe and of the world are so interested in war as some of the dictators would imagine. Some dictators are finding it is impossible to move the pieces about the chequer board and to get the same reactions nationally or internationally as they used to get years ago. I do not think that war is going to happen for some years. I believe that the Government are making a great contribution for the preservation of peace for some years to come. It is because I believe that those countries who think in terms of aggression and have militarised their ideals must be deterred from their power politics, their appetite and demands for more, and their temptation to bully or attack democracies which may not be properly armed, that it is vital the British Empire should be strong enough to defend itself, and I shall go into the Lobby to give my support to the Government.

8.12 p.m.

Mr. Sanders

I rise to say a few words in support of the Amendment, but before doing so I should like to put before the House another view with regard to the attitude of this Government and previous Tory Governments to the League of Nations. We have heard from the hon. Member who has just spoken that when he visited Geneva he always found that the representatives of Great Britain were working for the good of the League, the permanency of the League and the promotion of peace and disarmament. I presume that, like most travellers, one sees what one expects to see, rather than what really happens. It is true that there have been moments at Geneva when the world has been convinced that Tory Governments believed in the League of Nations. There was a moment during the Abyssinian crisis when the Tory Foreign Secretary made a very bold pronouncement, which was backed very enthusiastically by the majority of the delegates of the League, with regard to the attitude the world should take towards the Italian aggression in Abyssinia. That action raised the prestige of England as a world leader in the League in a most remarkable, and apparently in a most solid way. A few months afterwards the whole of that remarkable addition to the credit of England was destroyed by the same Foreign Minister, and we saw a deplorable, regrettable scene in the House of Commons when that Foreign Secretary retired because he could not back up what he said at Geneva by actual action.

The truth about the position of Great Britain in Geneva is that, if we liked to lead the world at Geneva, we could, and, when the countries of the world believe we are sincere, the overwhelming majority of the countries that are affiliated to Geneva will follow our lead. But we have given so many blows to the belief in our sincerity that I am afraid that that leadership is departing farther and farther every year. I had the pleasure and honour of working in Geneva for nine years, and I was proud of the moments when what I believed to be the authentic voice of the people of England on matters of peace and war and general international policy was spoken from the tribune; but I had moments, too, when I felt that we were going back again to pre-War days on account of the attitude which delegates from Tory Governments took on questions that came before the League. If we want to make the world believe that we are sincere in our desire for collective security and for building up a great world organisation, not only to preserve the peace of the world but to preserve civilisation—because that is what the attempt to bring about permanent peace means—we must not send representatives to Geneva to say one thing at one moment and a few months afterwards tell the world that they are not able to carry out what they said they were going to do on behalf of the League.

The first question that I want particularly to raise is the question of prices, which includes the very difficult problem of profiteering. I have a certain sympathy with the hon. Member opposite, who said it was very difficult for manufacturers to prevent a rise in prices because their prices as manufacturers were very largely governed by the cost of their raw materials. That is true, but there is also another form of profiteering, which has nothing to do with manufacturing at all. Hon. Members will probably recollect that, when the great new Air Force programme of 'the Government was brought forward, there was a tremendous amount of profiteering on the Stock Exchange. There was a tremendous amount of profiteering by getting new money from the public for existing companies, which did not go into the production of either new factories or new aeroplanes, but simply into the pockets of the promoters. Nothing was done by the Government to prevent that, and, unless they take wartime measures, I do not see how they can prevent it; but it seems to me that, if you are going to make preparations for war on this scale, then you have to make them together with war-time measures for the prevention of profiteering of that or any other kind, because, as the hon. Member said, it is exceedingly difficult to check profiteering and bring manufacturers even to a sense of their patriotic duty in peace-time with regard to prices and Government control.

I had a very short experience at the War Office during peace-time in trying to control profiteering among manufacturers in connection with armaments, and especially in connection with new inventions. Being a simple-minded Englishman with a love of my country, I thought that anybody engaged in helping to defend his country would put patriotism first. When I came to the manufacturers, I found that they really did adopt, but in a very different sense, that remarkable and moving statement which is carved on a statue in Trafalgar Square. They adopted the statement, "Patriotism is not enough," but in a very different sense from the person who first uttered that statement. Patriotism is not enough, because there must be a considerable amount of profit in addition, or the patriotism will not be there. I have a very vivid recollection of one incident, because it was almost like a discussion going on a cinema film. An apparently very valuable invention was brought to the notice of the War Office by one of the great manufacturing firms, and the able officials who watch these things at the War Office asked the inventor to come and discuss the terms on which we, as a Government Department, should have the right to use that invention. The gentleman came; but was he anxious to pour out the treasures of his inventor's brain at the feet of his country? No; he did not want to agree or submit to the regular terms to which he ought to submit from the War Office, and ultimately he became as temperamental as a film star and declared that he was not in the mood to discuss with the War Office any further conditions with regard to the invention. We could do absolutely nothing with him.

What happened to that very valuable invention, which I am not going to mention, I do not know; probably my successors have been able to deal more drastically with the gentleman concerned; but I got the impression, from the attitude of that gentleman and other arms manufacturers, that they adopted a variation of Tom Paine's declaration of faith—that it was not any single country that was their world; the world was their country, and not Great Britain, and they were quite as willing that any new invention should be used by a foreign Power against British soldiers when war took place as that the invention should be used by British soldiers against foreign soldiers. Therefore, I came to the conclusion that their declaration of faith would not be, "The world is my country, and to do good is my religion," as Tom Paine said, but "The world is our country, and to do any Government is our religion." Unless the Government follow up this Bill with another giving them more drastic powers over private manufacturers, they are not going to prevent profiteering, but are going to promote profiteering and rises in prices such as we have already seen. What those new methods should be, it is not for the Opposition to say or to propose. But I consider that this scheme is so big that it justifies the Government, if they will not completely take control of private factories and workshops, in introducing some such Measure as the Government were compelled to do during the last war to prevent the country being rooked and bled by people who, in matters relating to armaments, consider first of all the question of profit, and only second the question of patriotism. But I do not hear the slightest suggestion of anything of the kind from the other side or from the speeches of Ministers in the country.

The other thing about which I want to speak is the suggested depression of the standard of living which will arise from the policy of raising this loan and the general policy of rearmament. I want to refer first to an influence in the policy of the Government which in this House is always derided but which, when it comes to actual policy, they follow. Whenever anyone mentions Lord Beaverbrook's in the House, the other side tries to suggest that he has nothing whatever to do with the framing of the policy of the Government, that they take no suggestions from him and that, generally speaking, they look upon him as a political enemy of theirs as much as he is of this side of the House. But when we come to examine the policy of the Government we find that on matters of the taxation to food, on matters of Imperial trading and on matters connected with the League, they follow the policy of Lord Beaverbrook. What is Lord Beaverbrook's policy with regard to the loan and how it is to be paid for? The first declaration will be found in the leading Tory evening paper of the Metropolis, which speaks for the Tory and Municipalities Reform party. Early in February in its financial columns, which in these days are almost more important than any other part of the paper, it demanded that the Government should immediately stop all municipal loans, which means the stoppage of all capital municipal expenditure. It means that there is to be no more housing by muni- cipalities, no more pulling down of slums, no more improvements that require capital expenditure to be raised: by borrowing. On 6th February it states that the money required for rearmament should come from savings on the social services, which are far too expensive and ought to be cut down. It says: If people were left to find their own social services out of their own savings, they would not only value them more highly but they would take pride in their own independence. I need not enlarge on that. The agricultural labourer referred to by the hon. Member who spoke last will, no doubt, appreciate the possibility of providing for his own unemployment pay, his old-age pension and the widow's pension of his wife out of his own savings. Then it went on to say that we should go back to the good, sound principle that, owing to the higher cost of education, the Government should enact a 13111 making parents of children who go to elementary schools pay the old school pence that we used to pay when I went to school. That is not all. On 19th February the campaign proceeded and a very definite statement was made. It demanded that the Government, in order to meet their armaments bill, should cut down the expenditure on social services by 50 per cent. That means, among other things, that old age pensions and widows' pensions are to be cut to 5s. a week, and so on throughout the social services, which have been built up under the pressure of the 'needs of the vast majority of our population. The other side may pretend that this has nothing to do with them. That is all very well, but that is the true authentic Tory voice.

Mr. Rowlands

Has not the hon. Gentleman heard practically ever leader of the Government distinctly state that it is not the intention to interfere with the social services?

Mr. Sanders

When they cannot carry out their intentions they can always resign, as the late Foreign Secretary did when he found he could not carry out the policy that he stated so firmly at Geneva. The intentions of the Government at this moment may be against these proposals but, when the time comes when economy is necessary in order to pay this bill, they might perhaps do as they have done before and follow the lead of Lord Beaverbrook, who utters the authentic Tory voice that still exists in spite of the facade of the National Government. I utter there words as a warning to the people who believe in our party. The great mass of the working people will have to pay this bill in some way or other, and you can rest assured that when the price has to be paid it will be paid in some form whereby the conditions of the working people will be depressed and the conditions of the well-to-do people will be maintained at the highest possible level.

8.34 p.m.

Brigadier-General Spears

I shall not attempt to follow the hon. Gentleman in his diatribe against inventors, nor of course will I follow him in what he has said about Lord Beaverbrook. Really it is a little bit childish to attempt to identify the Government with the policy of Lord Beaverbrook, considering that that gentleman spends his time attacking Members of the Government individually and in the mass. The hon. Gentleman who has been so long at Geneva will, I am sure, agree that it is the first duty of a member of the League to be able to defend himself, otherwise what is the use of collective security?

Mr. Sanders

How can Belgium defend herself against Germany?

Brigadier-General Spears

It is Belgium's duty to do what she can to defend herself and to be as small a liability as she can. If the British Empire, with its immense liabilities, is not able to defend itself, it is a source of weakness instead of a source of strength to the League. That is the absolutely indisputable fact. I do not wish to discuss to what extent our weakness in the past has been one of the causes of the discomfiture of the League of Nations. Suffice it to say that Italy assumed our weakness and was sufficiently convinced of it to challenge us. There is no doubt whatever about that, and, what is more, the French had so little faith in our strength that they went in for a very unsatisfactory method of procedure with Italy at the time of the Abyssinian crisis, which they certainly would not have indulged in had they had complete faith in our strength.

Hon. Gentlemen opposite seem to be terribly busy asserting these differences between us on this subject, when fundamentally there is very little difference indeed. We may differ politically, but the people whom we represent are very much the same sort of people as those represented by hon. Gentlemen opposite. Our constituents are quite as pacific as theirs, and we have no power to turn them into a warlike mob. The constituents of hon. Gentlemen opposite and our own have exactly the same point of view. They want peace above all things, and they are going to see to it that the Government which represents them voice that point of view. They are prepared to defend their country and the Empire if their country or the Empire is attacked, and I also believe that out of a sense of duty they would be prepared to come to the help of a country unjustly attacked, if it were necessary to do so. That is the point of view of constituents of hon. Gentlemen opposite and of our constituents, and it is no use pretending that there is any fundamental difference between constituents represented by the parties opposite and our own.

There are one or two suggestions which I would respectfully make to the Government with regard to this question. They all have reference to efficiency, which is the best kind of economy. There is a feeling in all parts of the House that when you are spending such vast sums of money as are being spent to-day, it is extremely difficult to control that expenditure in such a way as to ensure that there will be no waste. Can we not have an inquiry such as that of the Esher Committee into the Army? The Esher Committee sat over 20 years ago, and the whole of the development of the Army since then has been based upon the recommendations of that committee. There have been other committees since then—the May, the Geddes and the Weir Committees—but they have dealt with special questions and their inquiries were superficial. It is high time that there was a new inquiry into the Army on the lines of the Esher Committee. I do not believe that there has ever been an inquiry into the Navy, and there certainly has not been one into the Air Force. The time has come when a very strong committee should be set up to inquire into the three Services separately, and then into the relationship between them.

Another suggestion I wish to put to the House concerns the relationship between Governments and Commands in time of war. It is an extremely important question. The relationship between a com- mander and a Government are notoriusly difficult, and there were plenty of examples of these difficulties in the last War. Time is passing, and there are very few people left who really knew what occurred between the different military authorities and the Government. We are lucky in that we still have with us one of the Very best civil servants which this country has ever had, Sir Maurice Hankey. He really conducted the War Cabinet in those days. But there are very few others, and I respectfully suggest that all those people, like the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) and others who sat in the War-time Cabinet, should be asked to come together and make some recommendations based upon their personal experience. They are getting very few in number, and otherwise their knowledge will be lost to us.

I am not clear, and I do not think that the House is clear, as to how the sums of money allocated to defence are divided between the Services. Do the Chiefs of Staff make recommendations, or does each Department make claims which are settled by the Chancellor of the Exchequer? We ought to know. Actually what happened in the past—I do not know whether it is the case now—was that each Department put forward claims and the Department which was represented by the strongest Minister in the Cabinet used to pull the blanket all his own way. That is not good enough. There is only one way in which this question should be dealt with, and that is that the Chiefs of Staff sub-Committee, under the chairmanship of a civilian Minister, should thrash out the matter for themselves, and if there are difficulties on which they cannot agree the Minister should be able to throw his weight on one side or the other, and then come to the Cabinet and make recommendations. I attach enormous importance to the question of the relationship of the Government to the military authorities, because in my belief—and I have a good deal of experience—the difficulties which existed in the War between the civilian and military authorities cost us untold lives. The fact that there had been these difficulties was realised, and after the War the Government set up the Salisbury Committee to see whether a solution might not be found. That committee recommended the setting up of a sub-committee of Chiefs of Staff. That was all very well, but it had one fatal weakness; this sub-committee had no chairman. The members of the Salisbury Committee must have realised this weakness, because they proposed as a solution this: The three Chiefs of Staff should in addition to being technical heads of their own Service act "as it were as the super-chief of a War Staff in Commission."

I have never been able to understand what it means. Unless it is a formula of three in one and one in three, which is a theological dogma, I believe it to be absolutely and entirely meaningless. Some of us who were interested in this subject protested against this, but we did not have many opportunities, because hon. Members opposite know that it is only the Opposition who can raise these questions. No Minister was responsible for joint Defence. But what many people like myself were most anxious to avoid, and what kept happening in the War, was that a civilian Minister should have to decide between conflicting military advice. That is absolutely fatal, and under the arrangement we had until quite recently—the difficulty has not yet entirely disappeared—we shall have the heads of the three Departments compelled by the very nature of events to defend the thesis of their own Department, and the result will be that disputes will have to be resolved by civilian Ministers who are not qualified to do so. The proof of what I am saying was given when ex-members of the sub-committee of Chiefs of staff reported that all questions of any importance were shelved because no agreement could be come to.

It was only when these revelations came before the House that the Government decided to appoint a Minister for Co-ordination of Defence. Some of us had some doubts when this appointment was made, and I have listened with great care to the speeches made by the Minister for the Co-ordination of Defence since his appointment. I have come to the conclusion that he is a good Minister for the Co-ordination of Supply, but when we come to the question of co-ordinating policy, and a plan for co-ordinating the three Services whereby they can co-operate, as they should, efficiently for the defence of this country and Empire, I must say that I do not feel quite so certain. It seems to me that we must have a permanent civilian head of this committee of sub-Chiefs of Staffs. There is no other solution of the problem. The heads of the Services can sit, I gather, independently of the Minister and have the right of access to the Cabinet. That should not be so. They should on important matters sit under the chairmanship of a Minister and under his chairmanship alone. He should be responsible alone for recommending policy to the Government. That is the only means whereby we can hope to avoid some of the worst errors of the War.

8.54 p.m.

Mr. Bellenger

I do not propose to al tempt to follow the hon. and gallant Member in his rather technical remarks, but I think that what he has said in his somewhat pungent criticism is well worth the attention of the Government. At any rate, in one respect he has been able to endorse part of the Amendment we have moved, that is, that the present Minister for the Co-ordination of Defence is not carrying out his Junctions thoroughly. I want to make one reference to a remark made by the hon. Member for North Kensington (Mr. Duncan) when he said that the hon. and gallant Member for Pembroke (Major Lloyd George) and himself were the only two surviving Members who served in the last War who are still of military age. I also happen to belong to that band. I do not say that with any idea of mock heroics, but am merely stating a fact. I imagine that those hon. Members who may be preening themselves on the fact that they are now not of military age may be disillusioned by the time the next war comes, when the Secretary of State for War may raise that age limit. The hon. Member also referred to the League of Nations and the game of cricket in which both he and I sometimes take part. I only wish that the League of Nations could be likened to a game of cricket, because I am sure that if they observed the rules of cricket this would be a much more satisfactory world than it is at the present time. As I interrupted the hon. Member to say, it would be interesting to see who would be the umpires in the game to which he referred.

The hon. Member challenged the Opposition to state what is their concep- tion of the League of Nations. It would be just as well if I were to make the same challenge to the Government, for the Government have reiterated on numerous occasions that they believe in the League of Nations. After all, they are the Government of this country, for better or for worse, and we are only the Opposition. I am not satisfied with the League of Nations in its present form. I would welcome the admission of such powerful States as Germany and Japan. But the point is this: When we use the term "League of Nations" we mean a combination of the nations, or, at any rate, the great nations of the world, for the purpose of maintaining peace and satisfactory economic and political relations between the various nations of the world. The fact remains—and we must not overlook it—that there is a very good reason for Germany and Japan having left the League of Nations, and, to a certain extent, we in Great Britain are responsible for that. Let us go back to the days when the Covenant of the League of Nations was first incorporated in the Treaty of Versailles. I think it was a great pity that the Covenant was made part of the Treaty of Versailles, for there is no doubt that the Germans, at any rate, were badly treated in that Treaty. I welcome the fact that Germany has thrown off those shackles. I would have preferred that she had done so in co-operation with the other signatory Powers in a less bellicose way than she did, but the fact remains that Germany has finished with the Treaty of Versailles, which in very many respects was a shame on those who made it.

The hon. Member for Kidderminster (Sir J. Wardlaw-Milne), who spoke of slumps and booms, was, I think, somewhat confused in his reasoning. He stated that he did not see why, at the end of this great rearmament programme, there should be any slump, but history is entirely against him. For centuries past slumps have followed booms, and eminent economists—and I believe hon. Members opposite also—tell us that there is bound to be some slump after boom conditions. I cannot see why the hon. Member should have made the statement that at the end of the Government's rearmament programme there will not be a slump. I think the weight of evidence is against him, and in putting forward our case we are entitled to say that there will inevitably be a slump after this boom. We are entitled further to ask, what the Government are doing to prevent that slump or to level out the conditions which will arise at the end of the rearmament programme?

I have some diffidence in crossing swords with the right hon. Gentleman the Member for Hillhead (Sir R. Home), but there is one remark which he made to which I would like to refer. He stated that if we had been as powerfully armed at the time of the Italo-Abyssinian dispute as presumably we shall be when the Government's rearmament policy is carried through, Italy would not have gone to the same lengths that she did. I ask the Government whether their rearmament programme is to stop incidents of that nature? Will the Government be prepared, if Italy or any other country attempts another violation as occurred in the Italo-Abyssinian dispute, to use this rearmament in order to prevent it? It would be interesting to have an answer to that question.

The Financial Secretary to the Treasury (Lieut.-Colonel Colville)

Is the hon. Member prepared to give an answer to the two questions put by the Chancellor of the Exchequer?

Mr. Bellenger

I should be happy to give that answer. I am clear in my own mind, and I do not think hon. Members opposite can say that, on the occasions when I have spoken on matters of Defence, I have been afraid to state my mind. Sometimes my views have coincided with those of hon. Members opposite. But I maintain that the right hon. Gentleman who opened the Debate for the Opposition this afternoon gave a complete and adequate answer to the Chancellor of the Exchequer. Perhaps the Financial Secretary was not listening to him intently at that moment, but I was, and I was quite satisfied with the answer. Are the Government prepared only to protect British interests? Is this rearmament programme entirely for the purpose of protecting British interests? Is it for the purpose of maintaining, for example, the British Empire? If that is the case, why this mockery of the Government constantly saying that they believe in the League of Nations and collective security? It must be obvious that we have to defend this country and, I also believe, British interests; but if I were asked to support the Government's programme, which I regret to say I cannot do to-night, I should not do so on those grounds alone, because I believe it will not be effective for peace merely to protect British interests, although I recognise that those are essentials in our Defence programme.

This immense force, so the Government tell us, is a weapon for peace. I do not know whether I am lacking in a sense of humour, but I fail to see how rearmament either by us or by any other great Power, will achieve peace. I am fortified in saying that by what I remember of 1914. This country and other countries indulged in those days in considerable rearmament—or armament, as I suppose it was in those days—and did that achieve peace? It did not. I am prepared to admit that we are probably diplomatically better able to talk to potential aggressor nations if we are suitably equipped to enforce our views, which naturally we believe to be right. But I have not yet heard from the Government, except in very vague phrases, for what purpose this rearmament is to be used. The Chancellor of the Exchequer told us to-day that it is not directed against any nation in particular, and the Secretary of State for Foreign Affairs has defined the purposes of British rearmament. I am prepared to agree with him in some respects of that definition. I am prepared to admit that under certain circumstances we will protect the frontiers of France or Belgium, but should we commit ourselves entirely to saying that we will protect Belgium or France from aggression by Germany in any circumstances? Would we be prepared to protect those countries if they gave provocation to Germany, for instance?

Captain McEwen

The words used by the Foreign Secretan, were, I think, "unprovoked aggression."

Mr. Bellenger

I do not recollect the exact words, but I suggest that something more definite is necessary if we are to be asked to support a policy of re-armament such as this. What can be more definite than a League of Nations composed of those very Powers on a level footing? We know that Germany is not on a level with other nations forming the League. We know that Germany is encircled both politically and economic- ally. Therefore, I ask the Government what they are going to do to bring these nations into a real League of Nations. The answer to Germany or Hitler is not re-armament of this nature. We want something more than that if we are to achieve peace. The statement that huge defence forces will achieve peace is a paradox.

Rear-Admiral Taylor

How are you going to get the United States into the League?

Mr. Bellenger

I admit that it is not an easy problem, but it is not beyond our abilities to induce even America to join a proper League of Nations. I believe that that democratic country would be ready for it under different conditions from the old League of Nations. We have cause for complaint against the Prime Minister because he definitely told the country at the last election that he would only fill up the gaps in our defences. We maintain that this programme is doing something more than filling up the gaps. We know, although hon. Gentlemen seem very loath to tell us, why this re-armament policy has been embarked upon. The right hon. Gentleman the Member for Epping (Mr. Churchill) is constantly telling us about Germany's re-armament and Italy's rearmament, and we know that our rearmament is directed against those two Powers. They are somewhat sceptical when the Secretary of State for Foreign Affairs says that our re-armament is not directed against any nation in particular. This huge defence programme has had repercussions in Italy. The Financial Secretary, at any rate, will know to what I refer.

Even in totalitarian countries like Germany and Italy there is, I believe, among the people a strong desire for peace. I can speak so far as Germany is concerned, because I know that country well, and I have been backwards and forwards there on many occasions since the War. I know the German people very well and I have numerous contacts with them. I know that the average German does not desire war. I do know, however, that the average German believes that his country has been unjustly treated as the result of the Versailles Treaty, and I am inclined to agree. If the Government really desire peace, they can get it far more cheaply than by going in for a rearmament programme such as this. I am afraid, however—and I must direct my remarks now to the right hon. Gentleman the Member for Sparkbrook (Mr. Amery)—that we shall not be able to get peace with Germany and certain other countries if we are going to say continually that what we have we hold. Germany believes that she was unjustly treated when the colonies were taken away from her at the end of the War. It is no good our saying that they are merely mandated territories and that there is an open door.

Germany looks upon us as probably the richest colonial Power in the world, and she says, "Why should Britain have colonies and we be denied them?" Surely there must be some answer to that question. I believe that the late Foreign Secretary, the present First Lord of the Admiralty, recognised that fact, if I am to believe in the sincerity of the speech he made at Geneva. What has been done by the Government since then to implement that speech? It is impossible for this country to retain the British Empire in its present form in perpetuity, and I do not believe that whatever armaments we have in this country will enable us to hold that Empire. Can we stick our heads in the sand when day in and day out in Germany—and among responsible people, too—they are saying that they mean to have their colonies back? What do those words mean? We know very well what they mean. What answer are the Government going to give to Germany? Merely to put motions on the Order Paper saying that the Government will not give Germany back any of those colonies in any circumstances will have but one effect, and that effect will not be peace. We must have a far more comprehensive policy than the Government have put before us in introducing this Defence Loan.

I would like to say something about the financial aspect of this Bill and to ask the Financial Secretary a question to which, I hope, it will be possible for a reply to be given. The Bill states that the interest payable shall be at the rate of 3 per cent. per annum. Do the Government think that they will be able to finance this re-armament programme at 3 per cent. per annum. I note to-day that Government credit stands at over 3 per cent., and it would be interesting to a large body of investors to know whether the Chancellor can maintain cheap rates of interest, so that he can finance the loan at 3 per cent., even if it is spread over five years. I doubt it very much. The hon. and gallant Member for Pembroke made a remark about profiteering which interested me, and he asked whether the Government would not consider an excess profits duty similar to that which was imposed during the War. Hon. Members may remember that at the end of the War there was some suggestion of a capital levy, and I am not sure that it was not suggested by a Conservative Chancellor. I believe that it will be impossible at some future date to avoid a capital levy with a War Loan of £2,000,000,000 that has stood since the War; it is impossible to visualise that debt remaining for ever, and I cannot see the Chancellor reducing it, as it should be reduced, by ordinary taxation.

I conclude by asking the Government to believe that we are just as sincere as they are when we put forward our criticisms of their policy. It is no use directing questions to us as to what we desire. It is the Government which has put forward this policy, and we are entitled to criticise it on the grounds submitted by my hon. and right hon. Friends on this side. I think there is a universal desire in the House for peace, and if it were possible to achieve peace by some measure of re-armament, I would be willing to support such a Measure. It is because I believe that recent history, the history which I have seen and experienced myself, shows that the policy of re-armament will not achieve the ends which the Chancellor of the Exchequer says this Bill is meant to attain, that I support the Amendment.

9.17 p.m.

Mr. Maxwell

I thought when the hon. Member for Bassetlaw (Mr. Bellenger) began his speech that I would be able to say that I agreed with a great deal of it, and I admit that I do agree with the first part in which he told us that, in his opinion, the League of Nations, if it is ever to mean anything, will require a great deal of alteration. But surely the hon. Member contradicted himself when he went on to express the view that he would be ready to support these armament proposals if the Government declared that they were going to use the arms solely for the purpose of supporting the League of Nations.

Mr. Bellenger

I said I would be prepared in those circumstances to support a measure of rearmament, but not this measure of rearmament.

Mr. Maxwell

The hon. Member did say then, that he would support a measure of rearmament provided that it was solely for the purpose of supporting the League of Nations. But if he sincerely believes that the League will require drastic alteration before it can be of any use, he must realise that the matter is therefore not one of immediate practical politics. Between the present time and the time at which we shall have achieved those alterations, a great deal of water must flow under the bridges, and we have to legislate for that intervening period as well as for future time. I would not agree either with what the hon. Member said about our Colonies and the manner in which they affect German opinion. I think it is agreed, and the present First Lord of the Admiralty has said so on many occasions, that we would be willing, and indeed desirous, to discuss any means by which raw materials and primary products could be made equally available to all nations irrespective of the ownership of the Colonies from which they are derived. That is the policy of the Government, and I do not see that any good can be done at the present time by trying to buy off German aggression by handing over bits of territory here and there and stirring up trouble for ourselves now and in the future.

Normally, it would be expecting too much of hon. Members opposite to expect them to forgo their traditional right to oppose, but I think that this is an occasion on which unanimity in the House would have shown the world that where the safety o the people is at stake party politics can be put on one side. I know that the temper of this Debate has been amicable and all that it ought to be, but I wish to introduce one serious criticism, and that is that we have not been able on this occasion to put aside certain differences which are not fundamental. My hon. Friend the Member for Kidderminster (Sir J. WardlawMilne) very effectively pointed out that the Labour party cannot oppose the Government's foreign policy as stated this afternoon by the Chancellor of the Ex- chequer. I listened carefully to the Debate, and I was unable to understand the answers which the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) gave to the questions from the Chancellor of the Exchequer. The right hon. Gentleman said, in effect, that the Labour party could not support the Government's policy because the Government would not leave unqualified their support of the League of Nations by military action. But surely the Covenant of the League does not leave unqualified military action on the part of League members, and how could the British Government make any statement other than that which they have made?

As I say, no fundamental difference has been shown in this Debate, and it seems to me unfortunate that the Amendment was put down. Even if its terms were justified, which I do not admit, still there would be no good reason for voting against these rearmament proposals. Whether the Government fully support the League policy or not in the way desired by hon. Members opposite, it would still be necessary to spend the money. Why then should we not agree about it? I tried to point out earlier that reliance on the Covenant of the League alone was not at the moment practical politics. The hon. Member for Bassetlaw and I have agreed that before the League of Nations is reliable it will be necessary to reshape it in many respects. That will require a considerable time even if all goes well. It seems to be fairly generally agreed that a League of Nations which does not admit of any change in the status quo of frontiers cannot be a source of permanent peace. We know, to begin with, that we will not get Germany into the League, as it exists, on that very account, and we shall probably find that Italy will not remain in it for very long under such conditions. It is not unreasonable to suggest that the League must be a body to which one can appeal for a change of territories and have one's case heard, rather than a body which must give a blank refusal to all such appeals.

I submit that as the League stands it would be criminal folly to estimate our defence requirements on the assumption that in any quarrel the whole weight of the League would be at our disposal. Obviously, that could not be so and hon. Members opposite who pretend that it is so, and who grumble because there is no mention of collective security in the Bill, seem to me to be emulating the futility of the ostrich which prepares to meet its enemy by hiding its head in the sand, turning its posterior to the foe and breathing "Collective security, collective security." We must admit that the League in its present form is unable to prevent aggression. We have the example of Abyssinia too vividly in our minds.

I want to refer to one or two other matters in connection with the armaments programme. The Minister for the Coordination of Defence created on the House a favourable impression by his speech the other day, and I do not want in any way to criticise his part in the proceedings. On the other hand, there are one or two questions which might profitably be answered by whoever is to reply for the Government. As the hon. and gallant Member for Pembroke (Major Lloyd George) said this afternoon, there is a grave feeling of discontent about the possibility of enormous profits being made out of armaments, and although the Chancellor of the Exchequer gave us a reassurance on this point, if some specific statement of exactly what is being done with regard to the costing and supervision of the profits of armament firms could be made, it would allay a great deal of suspicion and trouble. For instance, the other day there were large headlines in the Press about what the Government were not doing, and it was stated there authoritatively that the Government were just giving 10 per cent. on the cost of production of anything manufacturers produced. While statements like that are going about it would be in the interests of everyone that a definite denial should be made by the Government, and some reliable statement made. I also hope in this connection that when we talk about an excess profits duty which, I suppose, is to say the least a possibility, whoever replies will make it clear also that there will not be any repetition of the state of affairs after the War, and that people will not be asked to pay excess profits duty and then be left with a lot of plant and machinery with which they are unable to do anything because of the cessation of production.

There is one aspect of this matter which has not been raised by anyone except the hon. and gallant Member for Pembroke. That is the question of what the Governrnent are doing to encourage food pro- duction in time of war. There was nothing about it in the White Paper, and we have heard nothing about it in the speeches made from the Treasury Bench. We have had many assurances that the matter is under consideration, but surely it is time that something more than consideration came from the Government, and that a sign should be given to us that something is really being done. Hon. Members have succeeded in making the Government Army-conscious, Navy-conscious and Air-conscious. Let us see if, at the same time, we cannot make them stomach-conscious. Feeding difficulties in time of war are only too obvious. A Navy which has to escort convoys of food must be very great, and anything we can do to decrease the amount of food that has to be imported would be a saving in Naval strength.

The really important part of food production is that we should give encouragement to arable cultivation, and one of the most important points in this connection is to have enough skilled labour on the land to keep arable production going. That is a serious feature of to-day. In the agricultural unemployment insurance scheme it was expected there would be £750,000 contributors, and now we find that there are only £600,000. That is a pointer to the fact that men are gradually draining away from the land and going into the towns, and, unless something is done to stop this, we may find it very difficult to keep up our food production in time of war. I want to emphasise, in conclusion, the fact that, when we can agree to such an extent about this rearmament programme, it seems more than a pity that we cannot demonstrate to the world that if we believe in this democratic system we are at least prepared to unite in defence of it.

9.33 p.m.

Mr. Gallacher

I want to express my strong opposition to this Bill and to this armament expenditure. Much has been said about the people of this country desiring peace. That is true. The people do desire peace, and if they are dragged into war as a result of an evil, pro-Fascist foreign policy and an armament grant associated with it, then it will mean the final and complete collapse, not only of the Government, but of all those whom the Government represent. Some people may say that that, in itself, is a consummation devoutly to be desired, but the cost would be too terrible and, therefore, our energies on this side of the House will be directed towards preventing a war from coming upon us. Some things have been said about the loan and about the difference in the circumstances in 1930–31 and the circumstances now, and the difference between a falling market and a rising market. But that is not the important thing that determines whether a loan will cause inflation or not. The important thing is what the loan is for, and you are raising a loan of £400,000,000 for waste.

Reference has been made to the speech of the Foreign Secretary it Leamington, but I remember reading a speech made by him since Leamington, at a banquet, in which he referred to the notorious remark of General Goering to the effect that arms were most important than butter. The Foreign Secretary said that that was an awful thing to say, that we in this country would never stand for that. But the loan which the Labour Government discussed in 1930 was a loan for butter, butter for the poorest of the poor, and all the forces of reaction in this country arose to drive the Labour Government out. Is the loan of £400,000,000 for butter? No, it is for guns. Guns are more important than butter.

The statement was made the other day, in connection with our mining industry, that between 1925 and 1935 over 11,000 miners were killed and over 100,000 in jured. Is this loan for their defence; is it for the defence of the unemployed? Night after night we hear terrible tragedies in connection with the means test, which is destroying homes and life, and then we talk about raising £400,000,000 for Defence. We have great areas in this country which have been destroyed and are derelict and desolate. Who has destroyed those areas; who has destroyed the homes of the unemployed? The very people who are talking about £400,000,000 for Defcnce. It is nothing to do with the defence of the people of this country. The hon. Member for Motherwell (Mr. J. Walker) stated very clearly and effectively the policy of the Labour party in support of collective security, and I am in full accord. But some hon. Members ask, "What do you mean by collective security?" It is time we had a few words about what collective security means.

If we had a Labour Government at the moment it would, some people say, go forward with this rearmament programme. Never on your life. If we had a Labour Government, or even a people's front Government, of which the Labour party was the strong driving force, if we had either representing the peace desires of the people, and not the war desires of the Fascist financiers, what would such a Government do? It would immediately have a meeting with France, where the people are for peace, with the Soviet Union, with Czechoslovakia, and with the Scandinavian countries. They would formulate a peace declaration and on the strength of that peace declaration make collective security, which is pooled secority.

Are you prepared to put the fate of this country in the trust of other countries? That is the question. Can you dare to refuse to put the fate of this country in the trust of other countries? But the question arises, "Can you trust other countries, and can you get other countries to trust you?" I am certain there is not a Government in Europe which would trust this Government. You could never make collective security under this Government, which does not want it. Its whole policy has been to assist and maintain reaction in Europe, to assist Hitler, to assist Mussolini, to assist Franco. One has only to listen to what is said in this House when there is any mention of Franco and the others to see what the feeling is. If all the nations I have suggested came together, the Governments which represent the real peace peoples, and if they pooled their resources, it would be found that the British Navy and the French Navy as they exist now—and I challenge any hon. Member on the Treasury Bench to deny it—would be capable of defending the North Sea and the Mediterranean against any combination of Powers. The French Army is still the greatest army in Europe, and supplemented by the Russian Army and the Czechoslovakian army there would be sufficient military force to stop any aggression. Russia has the greatest air force in the world.

Vice-Admiral Taylor

What does she want it for?

Mr. Gallacher

To defend the working-class of Russia. But are you going to tell me that the National Government, with all its pro-Fascist sympathies, wants an Army to defend the working-class of this country? No; you are destroying the working-class of this country. Is not the population going down all the time? [Laughter.] Is that something to laugh at? What is the cause of it? Look at your derelict areas. Who has destroyed those areas? How is it that you have so many miners killed? Is that something to laugh about? There were over 11,000 killed in 10 years, and over 100,000 injured. Even supporters of the Government got up the other night to paint the most gloomy picture, saying that if things went on as they are going on now there would, in a matter of 30 years, be catastrophe in this country from the point of view of its population. Who is doing it? The monopoly capitalists, who are concentrating on getting profit. They are destroying industry, destroying towns and villages, and destroying the lives of men and women. [Laughter.] It is all right for hon. Members to laugh, but if they were living in one of the derelict areas and suffering under the operation of the means test, they would not be laughing.

This Government will never protect the working-class of this country or of any country. If the nations came together and pooled their resources there would be no need for another penny to be spent on armaments. It would not be a question of armaments. Those nations would have sufficient economic and financial power to be able to make aggression on the part of either Germany or Italy impossible. Germany is over here begging loans all the time, and Italy is begging loans. The Government are not concerned with peace and collective security, but with maintaining private profit in Europe. I ask the Members of this House to realise the seriousness of the situation. The road which is being pursued is a road leading to war and to destruction. That road has got to be blocked, and blocked for ever. We have got to cut out a new path towards collective security, a path which will lead to the continuation of peace and lead to progress, which can only he associated with peace.

9.43 P.m.

Mr. Morgan Jones

I think it is not inappropriate to remind the House, as we draw to the close of the Debate on the Second Reading of this Bill, that there has not been in the whole history of our country, I should imagine, a closer parallel than that between the situation at the present time and the situation which existed before 1914. Indeed, the parallel is frightfully ominous. And if there be a difference I would venture to say that the outlook at the moment in some respects rather darker than it was in 1914. I would remind the House of a statement made on the authority of the late Lord Grey in his book "Twenty-five years." On page 271 he says this of the 1909–14 period: Every country has been piling up armaments and perfecting preparations for war. The object in each case had been security; the effect had been precisely the contrary of what was intended and desired. Instead of a sense of security there had been produced a sense of fear, which was yearly increasing. Such was the general condition of Europe. Preparations for war had produced fear, and fear predisposes to violence and catastrophe. I venture to say that those words could be equally truly written of this present hour in our affairs.

Perhaps it will not be inappropriate to remind the House of the point from which we start in connection with this problem. We emerged from the last war with a debt of roughly between £8,000,000,000 and £9,000,000,000. We have paid in respect of the total National Debt services since the end of the War over £5,400,000,000, and the debt is as high to-night as it was then. In addition to that appalling burden, this country has borne bills for over £1000,000,000 in respect of pensions for the disabled, not one penny of which would any of us begrudge, though it is a heavy burden none the less. We have provided in the postwar years round about £I,200,000,000 to £1,500,000,000, I imagine, in respect of unemployment insurance benefit. These are colossal burdens, but they are the ghastly legacy of war. I recall the concluding sentences of a speech delivered by the Chancellor of the Exchequer—it would be his first Budget speech—in April, 1932, when, speaking of the colassal task before us, he used these words: Everyone who has ever scaled a mountain knows how the peak which seems so close as he approaches the base, vanishes from his sight the moment he begins his ascent. Again and again, as he continues to mount, he thinks he sees the summit, only to find that there is another ridge behind. There comes a moment when he turns a corner, when he beholds at last the goal of his ambition before him, and with only a few steps more, he stands upon the final crest."—[OFFIcrAt. REPORT, 19th April, x932; col. 1439, Vol.264.] Are we in sight of the final crest now? Do we know what the highest peak is that we have to climb? The Chancellor of the Exchequer takes good care, both in his White Paper and in his speech, to warn us against any undue optimism in that matter. Someone says, "That is the peak." "No," says the Chancellor, "there may be another ridge behind," and so the £1,500,000,000 which hon. Members are discussing so easily and perhaps so lightly may in the event approach a more substantial and more forbidding figure. An avalanche has overtaken us as we have climbed up this ascent, and we have been carried hack almost to the point from which we started. I ask hon. Members therefore to observe that point, that we are starting with this colossal debt of £8,000,000,000, having paid the enormous burden of another £8,000,000,000, roughly, in National Debt services, unemployment insurance, and pensions, and now we are invited to embark upon another period of armament. And why? Oh, because, we are told, we are so disarmed; our condition is so parlous and so precarious.

What are the facts in terms of money? Up to 31st March, 1936, just 12 months ago, this country had spent on armaments since the end of the War £2,659,000,000. I exclude from that figure, so as to be perfectly fair—I do not want to exaggerate—the two years immediately succeeding the War, because they were the aftermath of the War, and that accounts for £894,000,000. Since 1920–21, therefore, we have spent in armaments £1,765,000,000, and the House is told we are disarmed. In heaven's name, what have we been spending our money upon? What have these experts been doing? Where has the money gone—nearly £2,000,000,000?

Mr. Wells

Does not that include pay?

Mr. Jones

Obviously, just as does this £1,500,000,000. Do not let us be stupid and silly.

Sir Joseph Lamb

The pay was doubled, was it not?

Mr. Jones

The fact remains that we have spent upon armaments, armed services, £1,765,000,000. Take out, if you will, what has been spent upon pay, but you must grant, none the less, that a substantial proportion of that money has been spent upon instruments of war, and am I to be told that all the money that you have spent upon these instruments has turned out to be utterly useless? Do not let us be really absurd in the claims that we make. I could, if I cared, analyse, in respect of the Army, the Navy, and the Air Force how in point of fact that money has been made up, but I will, if I may, take two periods and compare them. In 1922–23 we went upon the Army £45,000,000, and in 1932–33 we spent £35,000,000; we spent in 1922–23 on the Navy £56,000,000, and we spent in 1932–33, £50,000,000; on the Air in 1922–3 we spent £9,000,000, and in 1932–33 we spent £17,000,000. It is true that there is a difference on the decrease side in the figures for the Army and the Navy, but hon. Members will not controvert the proposition that in respect of the Army, though it has been reduced in point of numbers, you have mechanised it to such a degree that its striking power is infinitely greater than it was at the end of the War. It is not quite true, surely, to say that we are disarmed, as they seek to argue.

Of the five-year plan, I believe the idea is that some £1,100,000,000 is to be collected by revenue and £400,000,000 by way of loan. Having regard to these enormous expenditures, both past and prospective, well might the Chancellor of the Exchequer say that no one … can see this growing accumulation of burdens without a feeling of disgust and shame that civilisation is trying to break its own back."—[OFFICIAL REPORT, 17th February, 1937; col. 1219, Vol. 320.] My only comment upon it is this: The Chancellor of the Exchequer and his friends seem determined to be the last to add the biggest burden, in order to make sure that the back is broken. They must take their share of the disgust and the shame that the world feels concerning this present situation. I hope they will forgive me for saying that this expenditure is proposed by them because they are thinking in terms of inevitable war. They are blindly oblivious of their share of the responsibility for creating the situation they now envisage. What has been their record in point of fact? They helped to sabotage German democracy before Hitler arrived; they have obstructed, in large measure, substantial results accruing from the Disarmament Conference itself.

May I say in passing that many people speak too lightly of the impossibility of securing the success of important conferences like the last Disarmament Conference? The late Mr. Arthur Henderson, who was its president, gave instructions to the head office of the League of Nations at Geneva for the preparation of an unbiased and impartial report to be drafted by the officers, as though it were drafted by civil servants and could be accepted without any doubt as to its impartiality. It had to be strictly impartial and without bias of any sort. That report has now been presented, and it discloses, I say without fear of contradiction, that if you take the aggregate of the contributions made by respective Governments, our own included, if you like—the British, the French, the Italian, the Russian and the American plans—it is impossible for anyone to argue that the conference could not from that aggregate of plans, have arrived at some common method whereby disarmament could have been introduced into the world. What was lacking was the will.

I say that the Government are largely open to the charge of having obstructed some departments of the work of the Disarmament Conference. They have paid lip-service, and lip-service only, to the idea of collective security, especially when elections were on the go. The League can truly say of this Government: These people honour me with their lips, but their hearts are far from me. In Asia and in Africa, they have blindly allowed Fascist militarism to crush nations they were pledged to protect. The Home Secretary is to follow me presently, and he will know very well that in the early days of the last Parliament we oftentimes had controversies over the Manchurian affair, and he will know that it was whispered in the corridors of this House how the right hon. gentleman stood by the League and the demand for action, but that the Americans would not come up to scratch. Mr. Stimson has now published his memoirs, and I venture to say that even a cursory glance at his record of the situation hardly accords with the view that was so sedulously circulated in the corridors of this House during the last Parliament.

Take their own contribution to Germany and to disarmament. Behind the back of the League, this Government entered into a naval agreement with Germany. They now propose to extend their own Navy. If I understand the position aright, Germany, by that very agreement, is entitled to expand her Navy by reason of the expansion of ours. If Germany expands her Navy, France may do the same, and if France does so, Italy may want to do so. The result is that, instead of contributing by an instrument of that kind to disarmament, we have provided an excuse to many countries to rearm upon a larger scale than they might otherwise do. With two short breaks Toryism, in the days since the War, has been in charge of our foreign affairs, and, with the exception of approaching election times—I hope that the Prime Minister will bear this in mind—very little substantial help and assistance have been given to the League of Nations as an institution.

The Bill is, after all, the inheritance which we have to pay for the blindness of our statesmen. Hon. Gentleman will say that I am overlooking the bellicosity of Germany. I have heard some hon. Members in this Debate recall the phrase used—I think it was by Herr Goebbels, but I forget who it was—"Arms are more valuable than butter." A dreadful philosophy, and a horrible thing to say; but hon. Gentlemen have forgotten that we sent an Admiral to Geneva who, speaking on our behalf said: "Dreadnoughts are more precious than rubies." Which is the worse philosophy—the German or our own? Incidentally, the philosophy of our own Admiral was propounded years before Goebbels developed his.

Turning to the Bill, I would observe that hon. Gentlemen in various parts of the House have been speaking of the loan as though the 3 per cent. were the interest which the Government were proposing to pay for it. As a matter of fact, the Bill has nothing to do with the terms on which the Government will borrow their money. The Chancellor of the Exchequer was most explicit about that. He said: I might, perhaps, mention that neither the rate of interest of 3 per cent., which is the rate charged on the Defence Departments, nor the term of years have any relation to the term or the rate of interest at which the Treasury will raise the money. This is merely a book-keeping entry between the Departments."—[OFFICIAL REPORT, 17th February, 1937; col. 1217, Vol.320.] When hon. Gentlemen speak of paying 3 per cent. to the lenders to the Government, I can assure them, from the quotation I have read, that that is not the mind of the Chancellor of the Exchequer. When authority has been given to him to borrow this money he will get it for 2 per cent.,2½ per cent., or 3 per cent., and he may be willing to pay 3½ per cent. or 4 per cent. Nothing in this Bill governs that matter at all. All that this Bill covers is what is to be charged to the Departments as between the Departments and the Treasury.

Some five years ago we had a financial crisis which caused great political controversy in the country. In order to emerge from that crisis a good deal of money was borrowed, and the consequence was that the banking interests were in great distress, because they thought that that borrowing involved an invasion of our national credit. I do not see any sign that these lachrymose bankers are now wearing away the doorsteps of Downing Street. In 1931 they were in terror because we were borrowing, first, for public works and, secondly, for unemployment benefit. In both cases we were borrowing for life. One way was through the medium of work, and the other was in order to keep the wolf of hunger from the doors of our people. On the present occasion there is no objection from the bankers. Why? The more the Government float loans.the more loans expand, the more profiteers contract.

To meet the situation some years ago the Government embarked upon two or three major operations. One was economy. That may be done again. The second operation was an involuntary one—going off the Gold Standard. Apropos of that, it is worth while recalling what the "Times" newspaper said about our going off the Gold Standard: It is merely an insidious palliative, a dangerous intoxicant which can only lead to the general impoverishment of the economic system and to an unnecessary diminution of the standard of living of the poorer classes of the community. Within three weeks or thereabouts we were off the Gold Standard, involun- tarily, and very profitably from the point of view of the country at large. You cannot go off that again. The other major operation was tariffs. Whatever the argument for tariffs may be, you have also played that card.Although you have played your card you have still 1,600,000 unemployed. If the new factories put up as a result of your tariff policy developed to their full capacity, they will require either a home market or a market abroad or both. Your tariff policy may prevent the second, and purchasing power alone will assist you in regard to the first. But you have played your card, and you cannot play it again.

The other thing that you have done is that you have converted War Loan. There is another block of War Loan due to fall in in 1940, to the amount of …350,000,000 at 4½ per cent. I doubt whether the Chancellor of the Exchequer would be prepared to predict that as a result of to-night's operation he will be able to convert very much of that 4½ per cent. loan. I do not like to assume the role of prophet, but I venture to say that that operation will not be possible three years from now. Every hen-roost has been raided. The Road Fund has been raided. The Sinking Fund has gone. You have used up all these resources. Now, on the top of that, you float a loan of …400,000,000. Boom conditions are beginning to manifest themselves in some parts of the country. There is competition between employers of labour for materials and the resources of labour. As long ago as last July Mr. Arthur Chamberlain and Mr. Reeve, both heads of big industrial concerns, warned the country of the invasion which this defence programme was making upon the resources of labour for the more general forms of industry. Not only is that so, but people are now discovering that it is more profitable to invest in prosperous industries than in other forms of investments, and the consequence may be that, in addition, we shall be drawing upon the resources of raw materials for the Defence programme, and thereby forcing up the cost of those commodities for other forms of industry.

We have said that there will in the end be a slump. Meanwhile, the boom will be forced along at a rapid rate. But what about three, four, or five years from now? I would ask hon. and right hon. Members opposite whether they really anticipate that this re-armament campaign will last more than four or five years. The Government may agree to some form of limitation of armaments, and, if so, then will come the slump. I am not alone in saying that. There is authority for it. In the report issued yesterday by the Unemployment Insurance Statutory Committee, on page 13, there are these words: In the light of demobilisation experience after the last War, this is an optimistic assumption, justified, we hope, by the fact that we have adopted the higher of the two figures suggested to us by the committee, that is to say, 16¾ per cent. Of what? Unemployment. In other words the Unemployment Insurance Committee warns us that in a few years there will be another slump, and when the slump comes you will have utilised all these resources, all the hen-roosts will have been raided, people will begin to find it difficult to make both ends meet, and then you will begin to call upon people to pay. The Prime Minister said last week that the time for sacrifice is now. The Chancellor of the Exchequer says it is not now, but five years from now, and five years from now it is almost inevitable that the slump will begin to manifest itself in this country. The consequence of that is quite clear. What happened in the slump in the post-war years? Hon. Gentlemen demanded a committee of inquiry. You had your Geddes Committee, and the Geddes Committee recommended cuts upon education and upon the social services. It was not the Government; they appointed a committee to do it. In 1931, the May Committee reported, and they recommended cuts. I venture to predict from this Box now that, when the slump comes five years hence or thereabouts, a committee will be appointed and will recommend that the poor should be compelled to bear the heavy burdens which this Bill must inevitably involve.

I had intended to cover another point, but I stop now, because I promised to sit down at this juncture; but I just want to say this in all seriousness, and I hope the House will forgive me for saying it; I do not say it in any threatening way at all. If I understand aright the mentality of the people of this country, they are prepared to endure sacrifices if the sacrifices are fair all round, but they are tired of being called upon to sacrifice the means whereby they can enjoy a decent livelihood while the profiteers get away unscathed. There has been no means propounded to the House whereby profiteers shall be restricted to a certain degree of interest upon their investments. A stockbroker told me the other day that his experience last year was that it was almost impossible for stockbrokers to make mistakes in their investments. Fabulous sums have been made already as a result of this rearmament campaign. I would say to right hon. Gentlemen opposite, "Have a care what you do. There may come a time when the people of this country, though they may support you now, will rise up in sheer resentment against these colossal burdens that are imposed upon their shoulders."

I close, therefore, with this appeal, if it be necessary and if it be of any use, to the Government: Is it impossible, even now, for the Government to convene once again a Disarmament Conference, so that these colossal burdens which fall upon all nations shall be speedily reduced? There is a story of an irate parent who was worried by a child, while he was doing some work, with a series of inquisitive questions. In desperation he thought of something to occupy the child's attention. He saw a jig-saw puzzle, and he said to the boy, "Put that world right." On one side of the puzzle was a picture of the world, and on the other side the picture of a man. In no time the child had finished. The parent was surprised, and asked, "How did you get that world so quickly together?" The child replied, "I got the man right, and I got the world right easily then." I would say to the Government, "Get your foreign policy right, and your armaments policy will fall into its proper and appointed place."

10.19 p.m.

The Secretary of State for the Home Department (Sir John Simon)

Now that this Debate is reaching its close, and the full broadside has been delivered from across the Table, including the sincere and powerful speech which has just been made by the hon. Member for Caerphilly (Mr. Morgan Jones), I think it is fair to say that, while, of course, there are many matters which may be in dispute, as to what this proposal may bring about in the future, where the responsibility should be truly laid, and so forth, there really is not any deep dispute between the Government and right hon. Gentlemen on the Front Bench opposite that in the present circumstances there must be a very substantial increase in the expenditure on armaments for Defence. The opening exchanges between the Chancellor of the Exchequer and the right hon. Gentleman the Member for Keighley (Mr. Lees-Smith) will long be remembered by those who were here because of the two questions that the Chancellor addressed to the right hon. Gentleman and his efforts to reply to them. I was particularly interested, because I have known for a good many years that, if you really want to frame a good question in cross-examination, it should be a very simple question which admits of only one answer, and that an answer which the witness dare not give. That test was completely satisfied by my right hon. Friend's questions.

Mr. Lees-Smith

I gave a perfectly clear answer.

Sir J. Simon

Let me remind the House what the two questions were. Not for the first time a speech of the Foreign Secretary was cited in which he laid down with great precision the extent of our commitments, both express commitments under Treaty and general commitments under the Covenant of the League, and the Chancellor of the Exchequer asked these two questions. Do the Opposition consider that our arms should not be used for any of these purposes and, secondly, do the Opposition consider that they should be used for any other purpose whatever? Of course, the only correct answer to those two questions will at once show, first that the Foreign Secretary had correctly defined our obligations, and secondly, that, if those are our obligations, in the circumstances in which we stand we are bound to provide, unpleasant and disturbing as it may be, additional resources for the purpose of defence. The right hon. Gentleman opposite is under the delusion under which witnesses often are that he answered the questions quite clearly. He at least exercised a privilege which witnesses in court cannot exercise. Having attempted an answer, he hastily added that he declined in all circumstances to be asked any more questions on the subject.

The right hon. Gentleman opposite passed to a very important part of his speech when he discussed the co-ordination of defence. I should like to answer him rather fully, because it is a very important point. He drew a picture of the Committee of Imperial Defence as though it was an assembly of Generals, Admirals and Airmen, all in full uniform, with my right hon. Friend the Minister for the Co-ordination of Defence benevolently presiding in mufti and letting everyone have his own way. Having been a member of that body for a good many years, I say that that does not in the least correspond with what I have seen and heard, and I think the general impression of the House, especially after the speech of the Minister for Co-ordination of Defence the other day, is that it is quite manifest that he has taken hold of his task with both hands.

The right hon. Gentleman went on to make a reference to the Secretariat of the Committee of Imperial Defence, and I think that he is under the impression that the Secretariat consists entirely of Service officers. That is not correct. Two of the Assistant Secretaries belong to the Civil Service. But the really important point is not who are the Secretaries but—a question which has been very prominently raised—who are the body of advisers in our Defence organisation, and are we getting, as we ought to get as the contribution from experts and men of special knowledge whether they be uniformed men or whether they be civilians, a proper system of organisation? If you take the Committee of Imperial Defence and its many sub-committees—I have seen a list of them, and there are an enormous number, over 70, I think—the majority of the members of those committees, and of the Committee of Imperial Defence itself, are not Service officers at all. They are civil servants and business experts who come in from outside Government service and give their aid. There are men of science, and there are all sorts of people who have a special contribution to make.

I do not wish to represent the right hon. Gentleman as having made accusations; I think he made very useful inquiries. He wanted to know how the civilian Departments are organised as far as they are concerned with Defence. He suggested that there might be lack of co-ordination. He observed—and I have no doubt that his calculation is right—that there are 13 Minister—it sounds an unlucky number—who answer questions about these matters. He said, in a striking phrase, that he did not believe that a uniformed staff can deal with the needs of the un-uniformed population. He suggested a civil planning committee, with a civilian staff, to devote specific attention to problems, which, he thought, might be neglected at present. These are very important points which he raised. He referred also to the articles which have been appearing in "The Times" over the name of Sir William Beveridge. I think he conveyed the impression, and perhaps himself thought, that these articles involved the criticism that the Government were neglecting these vital matters. I must deal with these points. Those articles, which are very interesting, very useful and very informing, are not articles which are intended to draw up an indictment against the Government. Sir William Beveridge, first of all, says: To make a practical examination of the problems of defence on the Home front and the conditions of safety there … does not imply belief that all these problems are now being neglected by the Government. Obviously, that is not so. The object of these articles—and it is most usefully served—is really to stimulate public interest and the nation. He points out that the topic of the defence of the Home front—and this is the principal point—has been strangely neglected in recent Debates by nearly all speakers on both sides of the House of Commons. I cannot hope to give a full account of all the Committee's that are at work on these problems, but will the House allow me to give two or three illustrations? I want to illustrate how these committees in this vast staff organisation, which is much more civilian than military, are working to explore and to secure all sections or aspects of the Home front.

I give three illustrations. Take the food defence plans. Nothing can be more important than an examination of all the aspects of food supply in time of war. That whole subject is continuously being most closely studied and planned, with sub-committees on the problem of rationing and on the problem of food storage. Indeed Sir William Beveridge himself presided over the committee for rationing food in war time and himself prepared a very valuable memorandum on food control. Let me give a second instance. There are subordinate committees as well as a main committee on the distribution of imports in time of war. So far from this being in the hands of the military the chairman of the main committee is a gentleman well known in this House, although he is not now a Member, Sir Cuthbert Headlam, with sub-committees to consider special plans dealing with the diversion of shipping, the distribution of food and raw materials inside the country, and also with the organisation, in case of war, at our principal ports. Let me say, in order that the House may not suppose that I am merely talking in general terms, that port emergency committees have already been set up and are hard at work making the necessary plans, if the evil hour should come, at 45 important ports in this country.

Then there is the third example, which I mention just in passing, the committee to deal with oil. There again it is a complete mistake to suppose that that committee is being run and staffed by military or uniformed persons. The oil committee has the help of the most experienced civilian experts. I hope I have shown that, at any rate as regards the study of these problems, it is on the line which the right hon. Gentleman rather stressed. It may be asked whether these many committees are organised and co-related. Let me say briefly that there is a very careful interlocking of these committees and their results come before the different coordinating committees, of which the chief is the Committee of Imperial Defence itself. Having become now rather familiar with this scheme, I think it is correct to say that there is in fact in this country a vast general staff, civilian for the most part but of course assisted by military, naval and air experts, for the defence of the whole front. While it mostly consists of civilians, there must he an inclusion at various points of the Defence Departments. You cannot organise the diversion of shipping in time of war without the expert help of the Admiralty; you cannot devise protection for oil supplies without the expert advice of the Air Ministry.

That leads me to the suggestion which the right hon. Gentleman made and which I do not think on reflection he will support. He spoke of constituting a single body, a civil planning committee, to be composed of civilians, as though you can really draw this line, this division, between the contribution which the civilian has to make and the contribution which the Service officer has to make. I am sure the House will see on reflection that it is quite a delusion to suppose that you can improve the organisation of home defence by attempting a divorce between civil and military advisers; If a civil committee did that it would lose an essential element of co-operation.

As regards Sir William Beveridge's articles, I should like to say that His Majesty's Government welcome very much the attention which has been called to the subject of the Home front and the organisation to protect it, and I am glad to have the opportunity of explaining the extent of our existing organisation. It is most important that the public should get quite out of its mind the idea that plans for the Home front are being drawn up merely by what are called "military minds," which is not at all a good way of doing it, for, after all, if indeed this evil hour ever came, it is the general public which would be in the front line, and it would be all the better that there should be civilian help and civilian advice if we are to endure and to overcome attacks which will strike at our own homes and our own streets.

Sir William Beveridge's articles cover a great deal of ground, and they have been very carefully examined by the authorities. But I venture to make this statement. It is satisfactory to be able to assure the House that there is not a single aspect of the suggestions in these articles for the organisation of the Home front that has not already been receiving most careful and continuous attention for some time past, and, as I have said, Sir William Beveridge has himself contributed very much. I do not claim that all our plans are complete. I would not for a moment suggest that there may not be many improvements to be made. I do not even wish to imply that the Government are in full agreement with Sir William Beveridge on every point he raises, but as regards the field to be covered, we are covering the field as he has described it, and that field is being diligently cultivated. But real co-ordination does not mean that one man does everything. Is it possible to conceive that a single Minister could make himself so familiar with the detailed working of every aspect as to assume personal responsibility for the whole thing? I think that is quite a false conception of scientific organisation. One might just as well say, "How unreasonable it is to have 20 people in the Cabinet; why should not one person do it all? "The real answer is that you must have delegation and distribution of work, but you must secure—and I think we are securing—unity and control by a proper system of co-ordination.

My hon. and gallant Friend the Member for Carlisle (Brigadier-General Spears) raised a question on a cognate subject. He suggested inquiries into each of the three Defence Forces on the lines of the Esher Committee of 1904. I would only point out that the role of the three Forces in relation to each other is constantly under consideration, and, as last year's White Paper stated, the subject was exhaustively examined by a committee that was called the Defence Policy and Requirements Committee last year, and that committee reported to the Cabinet. In the same way, I think the other point he made about the relation of the High Command to the Government in time of war is a matter which was dealt with in the speech of the Minister for the Co-ordination of Defence the other day.

May I carry my observations on this matter a little further and break what is new ground as far as the House of Commons is concerned? I should like very much, if hon. Members will have the patience, to offer some account of the Air Raid Precautions Department and what it is doing. It is a branch of the Home front which is of great importance, and there has not been an opportunity as yet, I think, of making a connected statement about it. Of course, when you consider the possibility of air attack, there are many departments of the problem. There is the active defence, the defence by the Air Force, by anti-aircraft guns, by searchlights and so on—that stands in one category. Besides that we are engaged in preparing what I may call passive defence which, under the head of Air Raid Precautions, is being more specially dealt with inside the Home Office. I am greatly indebted to my hon. Friend the Under-Secretary for having so diligently and constantly given his attention to this matter.

What have we to provide against? Of course, the appalling thing is the development of the striking range and striking power of air attack. Hon. Members who know this subject very exactly will bear me out when I say that the radius of action of bombing aircraft and the bomb load which such aircraft can carry are increasing at a truly horrible and frightful rate. It is true, of course, of all forms of flight. We observed the other day how the Imperial Airways non-stop flight was successfully carried out from Southampton to Alexandria. What we have to do, therefore, in the Air Raid Precautions Department is to consider how we can develop passive defence on the home front against three things—the high explosive, gas, and the incendiary bomb. As far as high explosives are concerned, I am not aware that there has been any startling new explosive invented. The increase in the possible danger arises from the increased load which an aeroplane can carry. As regards gas, it is obvious, of course, that the effect of gas on an unwarned and unprepared population might be something frightful, and our efforts are being directed to making preparations of a practical kind in case that awful disaster should fall upon us. In this trinity of devilish ingenuity the worst is the development of incendiary bombs. Incendiary attacks pressed home by aeroplanes, each of which may carry 2,000 two-lb. incendiary bombs, are frightful to contemplate.

This is what we have been doing. There was many years ago an Air Precautions Committee which has existed since 1925. That has been developed into the Air Raid Precautions Department. The Home Office is in charge and every one of these problems is now being, and has been for some time past, the subject of the most detailed examination and planning. The Home Office, in cooperation with the local authorities, are building up local air raid precautions organisations. I will just mention, without describing them, seven or eight heads under which these local organisations are working. They are: First, fire fighting and special arrangements to deal with a multitude of fires; second, decontamination from the effects of persistent gases; third, a system of air raid wardens developed so that we have one responsible man for so many of the population; fourth, expert gas detectors; fifth, first-aid and hospital provision; sixth, rescue parties; seventh, clearance of debris when houses are hit; and, eighth, emergency communications. That is the side which is being worked out, under the guidance of the Home Office, in the areas of local authorities.

There is also a central service in this connection. Take the case of gas masks on which questions have beeen put and on which, I think, no connected statement has previously been made. The Government had to consider the problem of the protection of civilians against poison gas and, of course, in that connection the provision of gas masks is of vital importance. The presence or absence of a good gas mask might be a matter of life or death. We had to consider this problem—whether citizens could be left to provide themselves with gas masks as private individuals or whether some other system should be devised. Obviously, if you left it to private individuals, some people would buy and others would not, and it would have been, as I think, a very unfair arrangement for the poorer population. We had, therefore, a very serious problem to overcome. If the gas mask had remained an expensive instrument of special manufacture, we could not have overcome our problem. Consequently we set experts to work some time back, to see whether it was possible to produce a new design of gas mask, which was satisfactory from the technical point of view but would facilitate production on a large scale. The most intensive work has been done under this head during recent months.

I am glad to say that after several months of very arduous work, the Government experts—and I mean by that both experts whom we were able to bring in to our aid as well as the Government experts—succeeded in devising a simplified gas mask which was capable of being turned out by methods of mass production. That has made it possible to do what we could not otherwise have done, and that is to take the decision to accumulate a stock of gas masks to be issued, in the event of an emergency, free of charge, to everyone in dander. I think that is a big decision and a right decision, and I may add something which I am sure the House will be interested to know, namely, that, as far as we are aware, this is the only country in the world which is making this extremely valuable provision for the safety of the civilian population. Following that decision a factory was established with the utmost speed, and a second one is being brought into production. That factory was opened by the Under-Secretary a short time ago, and production has been rising rapidly week by week, and only yesterday I received a report that that day's output of that factory was 100,000 gas masks. That is very satisfactory and the House will see that, for once, we have succeeded in fulfilling our previous estimates. It has already been announced that we aimed at producing 500,000 a week until we had enough, and it is satisfactory to know that we can produce 100,000 a day. I apologise if I have kept the House too long on these points, but as they are so vital to the interests of so many people, and as the problem itself is in the House of Commons a comparatively novel one, I hope I may be excused. I should like, if I may so far trespass on the patience of the House, to deal as briefly as I can with two more general points. One is a point which has been raised again and again in the course of the discussion. The hon. Member for West Fife (Mr. Gallacher) just now said that it was high time that we had some explanation of collective security, and in a maiden speech which was made this afternoon by my hon. and gallant Friend the Member for Preston (Captain Cobb), and on which I should like to congratulate him, he made the same observation.

May I offer a small contribution to this much discussed phrase I do not know who first invented it. It is not a phrase that occurs in the Covenant. Like so many phrases for abstract conceptions I dare say its origin is French. But though it is a very convenient phrase, there is always a danger for all of us that such a phrase may be employed to save the more painful process of thinking things out, and it may perhaps obscure some difficulties which should be faced by practical men. Therefore, I would venture to offer some reflections about it. The first point is this: The conception of the authors of the League was of a world in which all States would be firmly bound to one another by mutual covenant to act together to suppress the aggression of any one of them, and the strength of this universal pressure would be so overwhelming that resort to war for purposes of aggression by any State would be effectively discouraged. That was the classical idea. I call it classical because I recall that some 22 centuries ago a Greek poet wrote some verses to much the same effect. I venture to offer a rendering of them: Now if each would prepare, as his personal care, To punish the evils that men did, And would boldly declare he was willing to share In the sanctions on those who offended, Then the wicked would know they were watched, and go slow, And aggression would soon be exceedingly rare, Or would even be utterly ended. In the realm of international affairs this is a conception which every thoughtful and sincere friend of peace must wish to further. There can be no doubt about that. It is analogous, it seems to me, to the good principle that every citizen ought to lend his aid to the forces of law and order to arrest a bandit and to suppress crime. That is undoubtedly true, but we do no service to the cause of peace, or the achievement of the ideals of the League, if we do not face certain difficulties and complications which arise. In practice, different citizens show a very different degree of readiness to come to the aid of the police in stopping or arresting a bandit. The work is not discharged with equal readiness by everybody, and, of course, some are better able to lend aid and are expected to run more risks than others. They may be nearer, or they may be stronger, or they may be more courageous. Moreover—I think the analogy holds—it must not be assumed that, because every good citizen would be justified in interfering, the bandit will not shoot back, and the difficulty is still further increased if there is ground for suspecting that there are some powerful members of the community who would really like the bandit to succeed, Every one of those considerations applies not merely to the position in civil life but to the position as between nations.

There is a second consideration which I would urge on the House. The founders of the League conceived of it as a worldwide institution embracing all States. Under those conditions collective security is quite different from, and indeed is quite opposed to, the conception of groups or alliances of certain Powers set in opposition to others outside the circle. The moment you do not get an all-embracing League collective security begins to be a much more difficult conception to work out, especially if heavily-armed Powers are outside the League or speak of it with contempt. The reason why Locarno and why any corresponding regional pact is consistent with the League is precisely because it is not a select alliance but reciprocal in its undertaking. That was why I thought that my right hon. Friend the Member for Caithness (Sir A. Sinclair) made a false point the other day when he reproached the Chancellor of the Exchequer for saying that he did not think it was in the public interest to discuss who might be our enemies and who might be our allies. I should have thought that was an extremely good League of Nations doctrine. There is, indeed, a profounder misconception even than that. I do not see the hon. Member for Kingswinford (Mr. A. Henderson) in his place.

Mr. A. Henderson

I am sitting over here.

Sir J. Simon

I recall, and the House recalls, I am sure, his interruption last week when the Chancellor of the Exchequer was speaking. It was an interruption which received much encomium in certain quarters and with which, I should imagine, the hon. Member would be exceedingly satisfied. What he asked was this: Are we working, on the assumption that we are fighting our own battles, or on the assumption that we form part of a system of collective security? "—[OFFICIAL REPORT, 17th February, 1937; col. 1213, Vol. 320.] Let us examine that. Anybody who puts it in that form seems to me to be trying to imply, first, that the conception of collective security in existing circumstances in some way diminishes our need for efficient national Defence. Secondly, such a proposition implies that there is some supposed contrast between these two purposes which puts them, as it were, in two different moral scales, that there is something admirable and praiseworthy as long as you say your are arming for collective security, but that there is something old-fashioned or reactionary or otherwise undesirable if you say you are arming for national Defence, I submit to the House that that is a completely misleading contrast. You cannot treat collective security as though it were an arrangement by which you are going to receive a contribution without making one. When I hear that argument I am always reminded of the passage in Lewis Carroll's famous book "The Hunting of the Snark" in which he describes a man who At charity meetings stands at the door And collects—though he does not subscribe. You cannot have collective security on that basis.

Mr. Garro Jones rose—

Sir J. Simon

If the hon. Member will listen for a moment I think he will appreciate what he does not appreciate now. Article 8 of the Covenant does not draw any contrast of that sort at all. It does not regard the promotion of collective security as a good thing and arming for national defence as a bad or an unnecessary thing. It treats them with equal approval. There is no justification at all for the view that a policy directed to promoting collective security could be any excuse for failing to provide adequately for national safety, and I gather that hon. Members opposite so far agree with me. Then I would like to put this question very plainly to hon. Members: In the present state of the world, is there really any solid ground for holding that, because we declare ourselves anxious to promote collective security, we are on that account relieved from providing anything for our own defence? I am wholly unable to see that that argument stands at all, and if that is so, the whole of this argument is meaningless. I have never believed that our duty to fulfil our obligations, if necessary by force, in the least justifies the view that we do not need such defence as we should need if we stood alone. I think it may very well turn out that those who believe most deeply in the sanctity of international obligations and are most determined to fulfil them will have to admit that that does not lighten the burden, but may actually increase it. We are providing ourselves with the means for doing both, and no well instructed friend of the League can possibly object to that.

I would like, finally, to answer very briefly the observations made by the hon. Member who spoke just now, echoing what was said earlier in the Debate, as to the reason why we have reached this situation, because I must say that I take quite a different view of it from the view which he takes. He put in contrast the success in getting an agreement at the Washington Conference, and the failure to get an agreement at the Disarmament Conference. There is a very material distinction between the two cases. We went into the Washington Conference, a naval conference, an extremely strong naval Power, the strongest naval Power in the world. Indeed, just before that conference, if I remember rightly, the decision was arrived at to lay down four super "Hoods," and two of them we had actually laid down. We went, therefore, with this high degree of armament in our hands, and the negotiation took the form of a bargain, of a discussion, and ultimately of an agreement.

Contrast that with the position of the Disarmament Conference. After the War Britain made, as everybody knows, a sincere, sustained effort to give to the great Powers a lead in the direction of disarmament. Successive British Governments, formed from different parties—from the party opposite as well as on this side—pursued this course. The condition of the post-war world made it possible to do that. Germany was unorganised and disarmed, Russia was in chaos, Japan was our ally, and Italy's policy gave us no cause for anxiety. But I think we are entitled to say that we did it for nobler reasons than those. We did it, and the Labour party did it when they were in office, because the Covenant of the League of Nations calls for reduction of armaments. They did it because Germany had been forcibly disarmed, and it was our hope that that would be the first step towards the disarmament of others. Undoubtedly, that reduction in our expenditure would have been an immense relief for us and would have justified the ideals for which the War was fought.

What happened? Everybody knows that our lead was not followed. Let me quote the words of a very distinguished person, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), who put it some years ago very plainly when he said: Germany disarmed; Britain followed and even anticipated the process of disarmament, but she stood alone in carrying out her obligations. Every other country that signed the Treaty rearmed. Their armaments are more powerful to-day than they were in 1914. Everybody knows that is true. [Interruption.] It may be very deplorable and appalling, but it is an unchallengeable fact. When I hear somebody opposite challenging it, I am provoked to offer one or two quotations from hon. Gentlemen on the other side. Let me quote the right hon. Gentleman who was First Lord of the Admiralty in 1931. He said: I think you can go too quickly in this matter [of disarmament] unless you can get other countries in Europe to go just as quickly as you. You find a steady decline in our naval expenditure and a steady rise in almost every other country, and you begin to ask whether it is a sane policy. Let me quote an observation made by Mr. Shaw, also in 1931. He was in the Labour Government, and he said—and he could not have put it more plainly: Experience has definitely proved that example does not produce the results that I, for one, had hoped from it. I believed 10 years ago that, provided somebody set an example that example would be immediately followed. In my opinion the example was definitely shown, but the result did not come; and I cannot shut my eyes to the facts of life because I hold a beautiful theory that ought to work out, but does not."—[OFFICIAL REPORT, 24th March, 1931; col. 294, Vol.-250.] We held our hands on rearmament because we wanted to give general disarmament every chance and the Disarmament Conference every chance, and I tell the House this from experience of the Disarmament Conference: It is perfectly hopeless to try to persuade other Powers to reduce their level of armaments by pointing out how greatly you have reduced your own. It is very difficult to induce anybody to drop his vices by pointing out how virtuous you have already become. I assure the House that again and again at Geneva—I know this very well—the argument for reduction was complicated by the fact that we had already reduced so much that the parties were not on a level for the purpose of a percentage cut. The conclusion is quite certain that our influence in negotiating the achievement of armaments reduction was not increased by the fact that we had already disarmed so much. That was the reason why in the White Paper we had to say that the situation had become too serious and that we could not allow it to continue. That is why we are anxious now, as Sir Herbert Samuel insisted, that A disarmed British Empire in the presence of an armed world might expose other nations to temptations which they would find it difficult to resist. One-sided disarmament may be magnificent, but it is not peace. The conclusion that I invite the House to come to is this: What we are presenting to the House does not represent a new policy, aiming at a different objective from the objective at which Britain has hitherto aimed. That objective is the promotion of international agreement and the strengthening of the foundations of world peace. There is no change in the objective. The rearmament that is now forced upon us does not represent the abandonment of that objective. It represents a new method which we are bound to adopt in order to pursue that objective more effectively.

We are not urging, and I would never urge, rearmament as an end in itself. We are fully alive to the barrenness, the futile barrenness, of a policy which consisted in nothing but an endless piling-up of armaments. All our past experience has plainly shown us that we are not going to establish a possible basis for international agreement and world peace by pursuing a policy of comparative disarmament while other great nations are rearming themselves so much. We are convinced that we shall strengthen the basis for peace and improve the prospects of agreement by establishing our own defences on a more appropriate level. The effort that this country is now called upon to make is no doubt a most serious burden, a very deplorable situation, but it is an effort undertaken purely for this high purpose. If it leads, as it may lead, to new opportunities for agreement and a lowering of armaments all round, it will be entirely consistent with our purpose, and will be welcomed by the hearts of all of us. This country, by its response to our proposals, shows clearly enough that it knows that we are not the war mongers. The whole world knows that this country is set upon nothing but the maintenance of peace, and it is as a programme for making our contribution to world peace effective that we are asking for the passage of this Bill.

11.14 p.m.

Mr. De Chair rose—

Hon. Members

Divide!

Mr. Speaker

Order! I hope the hon. Member will get a hearing.

Mr. De Chair

I am sure the House will bear with me for half a minute when they know that I have borne the burden and heat of these Debates, not only for several hours to-day, but on the two previous days. I rise only in order to make one point arising out of the speech of the right hon. Gentleman who has just sat down. I hope he will forgive me for raising it at this moment. It is simply that, in his very lucid exposition of the preparations which the Committee of Imperial Defence and the Food Plans Department are making for the emergency

of war in this country, he did not give us any indication that the Government are considering the possibility of a sufficient production of food in this country before war breaks out. I feel that that is a point which ought to have been made by the Government.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 307; Noes, 132.

Division No. 90.]	AYES.	[11.16 p.m.
Acland-Troyte, Lt.-Col. G. J.	Churchill, Rt. Hon. Winston S.	Glyn, Major Sir R. G. C.
Adams, S. V. T. (Leeds, W.)	Clarke, Lt.-Col. R. S. (E. Grinstead)	Graham, Captain A. C. (Wirral)
Agnew, Lieut.-Comdr. P. G.	Clydesdale, Marquess of	Grant-Ferris, R.
Allen, Lt.-Col. J. Sandeman (B'kn'hd)	Cobb, Captain E. C. (Preston)	Granville, E. L.
Amery, Rt. Hon. L. C. M. S.	Colfox, Major W. P.	Gretton, Col. Rt. Hon. J.
Anderson, Sir A. Garrett (C. of Ldn.)	Colman, N. C. D.	Gridley, Sir A. B.
Anstruther-Gray, W. J.	Colville, Lt.-Col. Rt. Hon. D. J.	Grigg, Sir E. W. M.
Apsley, Lord	Cooke, J. D. (Hammersmith, S.)	Grimston, R. V.
Aske, Sir R. W.	Cooper, Rt. Hn. A. Duff (W'st'r S. G'gs)	Guest, Hon. 1. (Breoon and Radnor)
Assheton, R.	Cooper, Rt. Hn. T. M. (E'nburgh, W.)	Guest, Maj. Hon.O. (C'mb'rw'll, N.W.)
Astor, Hon. W. W. (Fulham, E.)	Courthepe, Col. Sir G. L.	Guy, J. C. M.
Baldwin, Rt. Hon. Stanley	Cranberne, Viscount	Hacking, Rt. Hon. D. H.
Baldwin-Webb, Col. J.	Craven-Ellis, W.	Hamilton, Sir G. C.
Balfour, G. (Hampstead)	Croft, Brig.-Gen. Sir H. Page	Hanbury, Sir C.
Balfour, Capt. H. H. (Isle of Thanet)	Crooke, J. S.	Hannah, I. C.
Balniel, Lord	Croom-Johnson, R. P.	Hannon, Sir P. J. H.
Barolay-Harvey, Sir C. M.	Crossley, A. C.	Hartington, Marquess of
Barrie, Sir C. C.	Crowder, J. F. E.	Haslam, H. C. (Horncastle)
Baxter, A. Beverley	Cruddas, Col. B.	Haslam, Sir J. (Bolton)
Beamish, Rear-Admiral T. P. H.	Culverwell, C. T.	Heneage, Lieut.-Colonel A. P.
Beauchamp, Sir B. C.	Davies, C. (Montgomery)	Hepburn, P. G. T. Buohan
Beaumont, M. W. (Aylesbury)	Davies, Major Sir G. F. (Yeovil)	Herbert, Major J. A. (Monmouth)
Beaumont, Hon. R. E. B. (Portsm'h)	Dawson, Sir P.	Hills, Major Rt. Hon. J. W. (Ripon)
Beit, Sir A. L.	De Chair, S. S.	Holmes, J. S.
Bennett, Sir E. N.	De la B?re, R.	Hope, Captain Hon. A. O. J.
Birohall, Sir J. D.	Denman, Hon. R. D.	Hopkinson, A.
Bird, Sir R. B.	Despencer-Robertson, Major J. A. F.	Horne, Rt. Hon. Sir R. S.
Blair, Sir R.	Dodd, J. S.	Horsbrugh, Florence
Blindell, Sir J.	Doland, G. F.	Howitt, Dr. A. B.
Blindell, Sir J.	Donner, P. W.	Hudson, Capt. A. U. M. (Hack., N.)
Bossom, A. C.	Dorman-Smlth, Major R. H.	Hudson, R. S. (Southport)
Boulton, W. W	Drewe, C.	Hulbert, N. J.
Bowater, Col. Sir T. Vansittart	Duckworth, G. A. V. (Salop)	Hume, Sir G. H.
Bower, Comdr. R. T.	Duckworth, W. R. (Moss Side)	Hurd, Sir P. A.
Bowyer, Capt. Sir G. E. W	Dugdale, Major T. L.	Inskip, Rt. Hon. Sir T. W. H.
Boyce, H. Leslie	Duggan, H. J.	Keeling, E H.
Boyd-Carpenter, Major Sir A. B.	Duncan, J. A. L.	Kerr, Colonel C. 1. (Montrose)
Bracken, B.	Dunglass, Lord	Kerr, H. W. (Oldham)
Braithwaite, Major A. N.	Eastwood, J. F.	Kerr, J. Graham (Soottish Univs.)
Brass, Sir W.	Eckersley, P. T.	Keyes, Admiral of the Fleet Sir R.
Briscoe, Capt. R. G.	Eden, Rt. Hon. A.	Kimball. L.
Brooklebank, C. E. R.	Edge, Sir W	Knox, Major-General Sir A. W. F.
Brown, Rt. Hon. E. (Leith)	Edmondson, Major Sir J.	Lamb, Sir J. Q.
Brown, Brig.-Gen. H. C. (Newbury)	Elliot, Rt. Hon. W. E.	Lambert, Rt. Hon. G.
Browne, A. C. (Belfast, W.)	Ellis, Sir G.	Latham, Sir P.
Bull, B. B.	Emery, J. F.	Law, Sir A. J. (High Peak)
Bullock, Capt. M.	Emmott, C. E. G. C.	Law, R. K. (Hull, S.W.)
Burghley, Lord	Emrys-Evans, P. V.	Leokie, J. A.
Burgin, Dr. E. L.	Entwistle, Sir C. F.	Leech, Dr. J. W.
Burton, Col. H. W.	Errington, E.	Leighton, Major B. E. P.
Butler, R. A.	Erskine-Hill, A. G.	Levy, T.
Caine, G. R. Hall-	Evans, Capt. A. (Cardiff, S.)	Lewis, O.
Campbell, Sir E. T.	Everard, W. L.	Lindsay, K. M.
Cartland, J. R. H.	Fildes, Sir H.	Little, Sir E. Graham-
Castlereagh, Viscount	Findlay, Sir E.	Llewellin, Lieut.-Col. J. J.
Cayzer, Sir C. W. (.City of Chesfer)	Fleming, E. L.	Lloyd, G. W.
Cayzer, Sir H. R. (Portsmouth, S.)	Fox, Sir G. W. G.	Loftus, P. C.
Cazalet, Thelma (Islington, E.)	Fremantle, Sir F. E.	Lumley, Capt. L. R.
Cazalet, Capt. V. A. (Chippenham)	Furness, S. N.	Mabane, W. (Huddersfield)
Chamberlain. Rt. Hn. Sir A. (Br.W.)	Fyfe, D. P. M.	MacAndrew, Colonel Sir C. G.
Chamberlain, Rt. Hn. N. (Edgb't'n)	Ganzoni, Sir J.	McCorquodale, M. S.
Channon, H.	Gibson, C. G. (Pudsey and Otley)	MacDonald, Rt. Hon. J. R. (Scot. U.)
Chorlton, A. E. L.	Gilmour, Lt.-Col. Rt. Hon. Sir J.	MacDonald, Rt. Han. M. (Ross)
Christle, J. A.	Giueksteln, L. H.	MacDonald, Sir Murdoch (Inverness)
Macdonald, Capt. P. (Isle of Wight)	Ramsden, Sir E.	Stourton, Major Hon. J. J.
McEwen, Capt. J. H. F.	Rankin, Sir R.	Strauss, E. A. (Southwark, N.)
McKie, J. H.	Rathbone, J. R. (Bodmin)	Strauss, H. G. (Norwich)
Maclay, Hon. J. P.	Rayner, Major R. H.	Stuart, Lord C. Crichton- (N'thw'h)
Macnamara, Capt. J. R. J.	Reed, A. C. (Exeter)	Stuart, Hon. J. (Mcray and Nairn)
Magnay, T.	Reid, Sir D. D. (Down)	Sueter, Rear-Admiral Sir M. F.
Maitland, A.	Remer, J. R.	Sutoliffe, H.
Makins, Brig.-Gen. E.	Rickards, G. W. (Skipton)	Tate, Mavis C.
Manningham-Buller, Sir M.	Ropner, Colonel L.	Taylor, Vice-Adm. E. A. (Padd., S.)
Margesson, Capt. Rt. Hon. H. D. R.	Ross, Major Sir R. D. (Londonderry)	Thomson, Sir J. D. W.
Mason, Lt.-Col. Hon. G. K. M.	Ross Taylor, W. (Woodbrldge)	Titchfield, Marquess of
Maxwell, Hon. S. A.	Rowlands, G.	Train, Sir.
Mayhew, Lt.-Col. J.	Ruggles-Brise, Colonel Sir E. A.	Tryon, Major Rt. Hon. G. C.
Meller, Sir R. J. (Mitoham)	Russell, A. West (Tynemouth)	Tufnell, Lieut.-Commander R. L.
Mellor, Sir J. S. P. (Tamworth)	Russell, S. H. M. (Darwen)	Turton, R. H.
Mills, Sir F. (Leyton, E.)	Salmon, Sir I.	Wakefield, W. W.
Mills, Major J. D. (New Forest)	Salt, E. W.	Walker-Smith, Sir J.
Mitchell, H. (Brentford and Chiswiek)	Samuel, M. R. A.	Wallace, Capt. Rt. Hon. Euan
Mitcheson, Sir G. G.	Sandeman, Sir N. S.	Ward, Irene M. B. (Wallsend)
Moore, Lieut.-Col. T. C. R.	Sanderson, Sir F. B.	Wardlaw-Milne, Sir J. S.
Moreing, A. C.	Sandys, E. D.	Warrender, Sir V.
Morrison, G. A. (Scottish Univ's.)	Selley, H. R.	Watarhouse, Captain C.
Morrison, Rt. Hon. W. S. (Cirencester)	Shaw, Major P. S. (Wavertree)	Wayland, Sir W. A
Muirhead, Lt.-Col. A. J.	Shute, Colonel Sir J. J.	Wedderburn, H. J. S.
Munro, P.	Simon, Rt. Hon. Sir J. A.	Wells, S. R.
Neven-Spence, Major B. H. H.	Sinolair, Col. T. (Queen's U. B'lf'st)	Wlokham, Lt.-Col. E. T. R.
O'Connor, Sir Terence J.	Smiles, Lieut.-Colonel Sir W. D.	Williams, C. (Torquay)
Ormsby-Gore, Rt. Hon. W. G. A.	Smith, Bracewell (Dulwioh)	Williams, H. G. (Croydon, S.)
Orr-Ewing, I. L.	Smith, L. W. (Hallam)	Willoughby de Eresby, Lord
Palmer, G. E. H.	Smith, Sir R. W. (Aberdeen)	Windsor-clive, Lieut.-Colonel G.
Patrick, C. M.	Smithers, Sir W.	Winterton, Rt. Hon. Earl
Peat, C. U.	Somervell. Sir D. B. (Crewe)	Wise, A. R.
Percy, Rt. Hon. Lord E.	Somerville, A. A. (Windsor)	Womersley, Sir W. J.
Perkins, W. R. D.	Southby, Commander A. R. J.	Wragg, H.
Piokthorn, K. W. M.	Spears, Brigadier-General E. L.	Wright, Squadron-Leader J. A. C.
Ponsonby, Col. C. E.	Spens. W. P.	Young, A. S. L. (Partick)
Pownall, Lt.-Col. Sir Assheton	Stanley, Rt. Hon. Lord (Fylde)
Raikes, H. V. A. M.	Stanley, Rt. Hon. Oliver (W'm'l'd)	TELLERS FOR THE AYES.—
Ramsay, Captain A. H. M.	Stewart, William J. (Ballast, S.)	Sir George Penny and Lieut.-
Ramsbotham, H.	Storey, S.	Colonel Sir A. Lambert Ward.
NOES.
Acland, R. T. D. (Barnstaple)	Greenwood, Rt. Hon. A.	Naylor, T. E.
Adams, D. (Consett)	Grenfell, D. R.	Oliver, G. H.
Adams, D. M. (Poplar, S.)	Griffith, F. Kingsley (M'ddl'sbro, W.)	Owen, Major G.
Adamson, W. M.	Griffiths, J. (Llanelly)	Paling, W.
Alexander, Rt. Hon. A. V. (H'lsbr.)	Groves, T. E.	Parker, J.
Ammon, C. G.	Hall, G. H. (Aberdare)	Parkinson, J. A.
Anderson, F. (Whitehaven)	Hall, J. H. (Whiteehapel)	Pethick-Lawrence, F. W.
Attlee, Rt. Hon. C. R.	Hardie, G. D.	Potts, J.
Banfield, J. W.	Harris, Sir P. A.	Price, M. P.
Barnes, A. J.	Hayday, A.	Pritt, D. N.
Batey, J.	Henderson, A. (Kingswinford)	Quibell, D. J. K.
Bellenger, F. J.	Henderson, J. (Ardwick)	Richards, R. (Wrexham)
Benn, Rt. Hon. W. W.	Henderson, T. (Tradeston)	Riley, B.
Benson, G.	Hills, A. (Pontelrat)	Ritson, J.
Bevan, A.	Hollins, A.	Roberts, W. (Cumberland, N.)
Brooke, W.	Jagger, J.	Rothschild, J. A. de
Brown, C. (Mansfield)	Jenkins, A. (Pontypool)	Rowson, G.
Buchanan, G.	Jenkins, Sir W. (Neath)	Sailer, Dr. A.
Burke, W. A.	Johnston, Rt. Hon. T.	Sanders, W. S.
Cape, T.	Jones, A. C. (Shipley)	Seely, Sir H. M.
Charleton, H. C.	Jones, Morgan (Caerphilly)	Sexton. T. M.
Chater, D.	Kelly, W. T.	Shinwoll, E.
Cluse, W. S.	Kennedy, Rt. Hon T.	Shinwoll, E.
Clynes, Rt Hen. J R	Kirby, B. V.	Short, A.
Cove, W. G.	Lathan, G.	Silkln, L.
Cripps, Hon. Sir Stafford	Lawson, J. J.	Simpson, F. B.
Davidson, J. J. (Maryhill)	Leach, W.	Sinclair, Rt. Hon. Sir A. (C'thn's)
Davies, R. J. IWesthoughton)	Lee, F.	Smith, Ben (Rotherhithe)
Day, H.	Leonard, W.	Smith, E. (Stoke)
Dobbie, W.	Leslie, J. R.	Smith, Rt. Hon. H. B. Lees- (K'ly)
Dunn, E. (Rother Valley)	Lunn, W.	Sorensen, R. W.
Ede, J. C.	Macdonald, G. (Ince)	Strauss, G. R. (Lambeth, N.)
Foot D. M.	McEntee, V. La T.	Taylor, R. J. (Morpeth)
Frankel, D.	McGhee, H. G.	Thurtle, E.
Gallachar, W.	McGovern, J.	Tinker, J. J.
Gardner, B. W.	Maclean, N.	Viant, S. P.
Garre Jones, G. M.	MacMillan, M. (Western Isles)	Walkden, A. G.
George, Rt. Hon. D. Lloyd (Carn'v'n)	Mainwaring, W. H.	Walker, J.
George, Major G. Lloyd (Pembroke)	Maxton, J.	Watkins, F. C.
George, Megan Lloyd (Anglesey)	Montague, F.	Watson, W. McL.
Gibbins, J.	Morrison, Rt. Hon. H. (Hackney, S.)	Westwood, J.
Green, W. H. (Deptford)	Muff, G.	White, H. Graham

Wilkinson, Ellen	Wilson, C. H. (Atlercliffe)	Young, Sir R. (Newton)
Williams, E. J. (Ogmore)	Windsor, W. (Hull, C.)
Williams, T. (Don Valley)	Woods, G. S. (Finsbury)	TELLERS FOR THE NOES.—
		Mr. John and Mr. Mathers.

Resolution agreed to.

Bill committed to a Committee of the Whole House for Monday next.—[Captain Margesson.]