DEFENCE LOANS BILL.

HC Deb 04 March 1937 vol 321 cc561-684

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the Third time."

3.45 p.m.

Mr. Ammon

I beg to move, to leave out the word "now," and, at the end of the Question, to add the words "upon this day six months."

We are at the final stage of this Bill, and we wish to re-state our opposition on the ground of the economic reactions which have ensued in the international situation and the fact that a deadly blow is, by this Bill, aimed at the League of Nations. Since the Second Reading of the Bill there has been ample proof and testimony of the truth of the fears expressed by my right hon. and hon. Friends both as to the economic effects and the repercussions on the international situation. In view of the fact that both the Chancellor of the Exchequer and the Home Secretary have more than once been addressed on the subject by hon. and right hon. Friends on this side of the House, I want especially to draw the attention of the House and the country to the fact that the main charges and objections in respect of the manner in which this loan is being launched still remain unanswered by the Government. They have failed to meet entirely the arguments of my hon. Friend the Member for East Edinburgh (Mr. PethickLawrence) and my right hon. Friend the Member for Keighley (Mr. Lees-Smith) and others as to the trouble that will arise by superimposing upon a market approaching the condition of boom, a heavy demand for unproductive goods, such as armaments, which is bound to cause a reduction in the standard of living of the people who are not employed in the armament industries. There are indications of this at this very early stage, in proof of which I will quote an extract from "The Economist" of recent date: Politicians the world over who are working for peace are rightly apprehensive of a situation developing in which the only active trades will be those which are making arms. But this development is not only sinister; it is economically unsound. Armament production may create employment, but it is employment which contributes nothing to the real wealth of the nation. It is a charge upon the taxpayer of, precisely the same order as the charge for the payment of unemployment doles. It is an activity which does nothing to raise the nation's standard of living, but rather depresses it. When a country imports materials for armaments, she produces nothing to export in return; under the existing system of barter trade, she has to be content with fewer of the imports needed for feeding her people or providing materials for normal economic activity. If armament expenditure really increased security, this greater tranquillity would stimulate ordinary business and enterprise, and military expenditure might be a profitable investment for the world; in present circumstances, where it obviously diminishes security, its net effect is definitely negative. I gather from an aside of the right hon. Gentleman that he has a certain suspicion of "The Economist"; therefore, let me quote something else which will probably meet with his approval a little more. It is a quotation indicating the effect on the standard of living that is already being experienced. It is from the "Stock Exchange Gazette," and I imagine that there will probably be no objection from hon. Members opposite to this paper or to its shade of politics: Memories are short. I was asked the other day what was the amount of the big 5 per cent. loan which was converted into 3½ per cent. When I answered £2,000,000,000, I also recalled that the saving of 1½ per cent. in interest, equal to 430,000,000 per annum, was expected to bring us a welcome relief in the form of reduced income tax. What a hope! Now we are to spend another £1,500,000,000. How the gods must laff and laff and laff, especially Mars! Gilt-edged prices weak. Can you wonder? By taxation or by borrowing the Government wants £1,500,000,000 in the next five years—£300,000,000 a year to be provided, £220,000,000 by taxes and £80,000,000 by loans. … How is it possible, I am asked, to find the materials and the men to represent an expenditure of 300,000,000 a year for five years? Unfortunately any fool can spend, but getting value for the money is nobody's business. Already I hear tales of shortage of skilled labour, shortage of coal and iron and delayed deliveries of constructional steel and of machinery. In most cases the explanation is the priority of Government orders. Whatever else may happen the steel and engineering trades seem bound to be full up with orders for years to come. A considerable proportion of the £300,000,000 a year will be spent in the form of wages and those wages will be spent in the shops. So the holders of the shares in the chain stores and other general providers need not be upset by the reaction in the high-class equities. Admittedly cost of materials will be higher, but the adjustment of prices to cover the increased costs is inevitable. The rise in the general cost of living has undoubtedly started. It cannot be avoided any longer.

The Chancellor of the Exchequer (Mr. Chamberlain)

Is that a leading article?

Mr. Ammon

It is a front page article and I assume it is an editorial, but I am not sufficiently acquainted with the journal to give any further information about it.

Mr. Churchill

What is the name of the paper?

Mr. Ammon

The "Stock Exchange Gazette." We are asked in this connection to bear the burden of a sum which is four times the cost of the Boer War, and the total cost of rearmament in the next five years will be equal to the cost to this country of the waging for a whole year of the last War. On the Second Reading of the Bill the Chancellor of the Exchequer looked with some hope for realised surpluses and under the fixed debt charge to the amount of £72,500,000. He also pointed to the improved position of the Unemployment Insurance Fund. In that connection it is well to note that all that hope has been speedily dissipated. In spite of the Chancellor's objection to "The Economist," that journal has a very pertinent comment on this point, for in another article it says: The contemplated Defence Loan considerably exceeds the total repayments of National Debt that have been made since 1924 when Mr. Baldwin came into power. Thus are the effects of 12 years of frugality swept away. The comparison is not, however, one of scale alone. The Government's proposals inevitably recall the steps taken during the Great War to divert our economic resources into war channels. Now, with its trebled expenditure on defence, the Government is going to bid in almost every basic market—including the all-important labour market—against manufacturers and traders engaged in normal production. Further controls and the regimentation of industry must inevitably follow. That was the case made earlier by my hon. and right hon. Friends, and it is a case that has yet to be answered by the Government. Therefore, we need make no apology when we warn the country of the inevitable result that is bound to ensue from the Government's policy. When the boom ends and the slump comes the result will be disaster, to say nothing of a tremendous increase in the cost of living, and the fact that for a good many years to COME we shall be saddled with a great burden of increased indebtedness. The Chancellor of the Exchequer did hold out some hope in the previous discussion that, after all, this was only, as it were, an intimation of the possibilities to which we might go, but that very likely the whole of the amount would never be spent. I do not imagine that any Member of the House cherishes that illusion now, having regard particularly to the effect that the announcement has had on Italy and the reply that is bound to come from other countries. It simply means that the Government having got on to this slope there is nothing to prevent their going the full length of it. It simply means that the whole of the money will be expended, and that at the end of five years we shall be no better off economically than we were at the beginning, but rather we shall be worse off.

There are one or two things on the economic side that still remain unanswered and we would like a reply today. What steps are being taken to bring more land into cultivation in order to meet the necessary food requirements of the country? Is any of this money to be spent on experiments in the production of oil from coal? I ask that question because one is rather suspicious that experiments of that kind are being given up as a result of the pressure of certain oil interests outside—experiments are being given up, instead of the Government pursuing what would be a valuable source of supply strategically, to say nothing of the great advantage to the coal industry.

I turn from that brief summary of the purely economic side of the question and ask for the indulgence of the House while I turn to the reactions on the international side and the effect upon the League of Nations. In that connection one cannot but take notice of the Home Secretary's reply at the end of the Debate on the Second Reading, when he played with unsurpassed skill his usual game of sticking up his own skittles and knocking them down again, while ignoring absolutely the whole of the arguments of the Opposition and giving no more than a cursory glance at the Debate itself. One instance of that was the attempt to misconstrue a question that was put by my hon. Friend the Member for Kingswin- ford (Mr. A. Henderson) in an earlier Debate. My hon. Friend had asked: 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.] In the course of his reply the Home Secretary said: 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 ours own defence?"—[OFFICIAL REPORT, 25th February, 1937; col. 2337, Vol. 320.] The Home Secretary knew very well that that was not the suggestion of my hon. Friend. My hon. Friend's question was quite clear. He asked in effect, "Are we viewing the whole world as potential enemies or are we as members of the League of Nations having regard to the distribution of forces and responsibilities for preserving the peace of the world?" That is plain. That was the purport of my hon. Friend's question. To give the reply that the Home Secretary gave was utterly to twist his meaning in order to make a debating point. I want to refer to one or two other points in the Home Secretary's speech. The right hon. Gentleman affords a very interesting study to those of us who have been in the House for some time. We have heard him make speeches that are not always of the same complexion. Of course one knows that he is a skilled and distinguished lawyer, and that he can speak with equal eloquence from a brief by whomsoever it is supplied, but it is interesting to look back over some of the speeches that he has delivered and to compare what he has said in other parts of the House with the speeches that he now delivers from the Government Front Bench. In this connection I note with some interest an extract from a letter from him that was read at a garden party in Spen Valley in July, 1932. The right hon. Gentleman then wrote: A real measure of disarmament by international agreement is essential for the recovery of the world, for the establishment of peace and for relief from the burdens which crush down our peoples. Be assured that the part which Britain is playing is fearlessly directed to this end. That is very different from the policy that the Minister is backing now, which will certainly impose very considerable burdens on our people. In the speech to which I have referred the right hon. Gentleman mentioned the Washington Conference. There again he mentioned my hon. Friend the Member for Kingswinford, who had pointed out that one of the most successful international conferences had been the Washington Conference. The Home Secretary said: 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."—[OFFICIAL REPORT, 25th February, 1937; col. 2342, Vol. 320.] If there is anything in a statement like that the right hon. Gentleman is suggesting that to a large extent the United States were intimidated by the large Navy that we had, that they were actuated solely by bargaining on those lines, and that because there was a better force on our side they gave reasonable consideration to our arguments. There is no ground whatever for any such statement. The reason why the Washington Conference was so successful was, in the first place, because Mr. Secretary Hughes went to the conference with a determination to give a lead to the world with regard to disarmament; and, secondly, because the United States had before them the ideal of bringing about world peace. That was the governing circumstance at that conference and there was no question of bargaining because someone held a stronger hand. The quotation which I have ventured to make is quite apposite in that connection. The right hon. Gentleman the Home Secretary has altered his tone a good deal on this subject during the past few years. He seems to have been very busy talking of this sort of thing in 1932. Speaking at Geneva in June of that year he said: Looking over the whole range of prospective horrors which might threaten the world in the event of a future war, the United Kingdom is convinced that there is not one that is rousing more concern in the minds of thoughtful men and women than the prospect of irregular and indiscriminate bombing of the civil population. We are devoting all our energies to the search, along with other nations, for the most effective form by which this peril might be removed from the world. Who is responsible for the continuance of bombing operations, for the continuance of the bombing plane, other than the present Government? What about the action of Lord Londonderry? If anyone has a measure of responsibility, that responsibility is on the Government Front Bench. In that connection it will be well if we can have an answer to-day. One of the chief items of this expenditure is on the Air because of the air peril or the threat of it. Responsibility for the fact that that continues to this day in such a form lies largely at the door of the Government, who refused when the opportunity came to show the moral ascendancy that it might have shown.

The Home Secretary has played many parts in this House. We have heard him denounce his present political associates and praise the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), and we have heard him express the wish for the political extinction of the present Prime Minister. The right hon. Gentleman has made some memorable speeches. In the past few years we have heard him make speeches which to a large extent have made history or have altered the course of events both in this country and the world. He has made speeches which have been the delight of the reactionaries; speeches in which there has been a vital blow aimed at liberty, either at home or abroad. We remember the speech he made in this House when he was knocking at the door and asking to be permitted to join the party on the other side of the House, when he attacked the trade unions.

Mr. Speaker

We are on the Third Reading of the Bill, and the hon. Member must confine himself to what is in the Bill itself, and not range over other subjects.

Mr. Ammon

It is because we have been unable to get any answers to the previous points that we have raised in discussion. There is one point of the right hon. Gentleman's speeches which is relevant to the Bill and that is the impact on the League of Nations and our relations with foreign Powers. If that is not out of order, perhaps I may be allowed to raise it.

Mr. Speaker

On the Third Reading of the Bill the lion. Member ought not to go into historical reminiscences of the Home Secretay. I have come to the conclusion that on the Third Reading it will not be in order to go into the foreign policy of the Government during the last few years. That has been fully discussed on the Second Reading and Committee stage.

Mr. Ammon

Of course, we must bow to your Ruling, but one can only wish that our criticisms had been answered. Accepting, as one must do, your Ruling, I will turn briefly to the position that is created by the loan itself. The loan, having regard to the Government's policy, is very like the action of an incendiary who having set fire to a house, seeks to make the injured person pay for the damage done. That is exactly the position in which we find ourselves in the present' circumstances. The House and the country must realise that this Bill is the outcome of false pretences, because, by the Prime Minister's own admission, the Government gained their majority on an entirely different issue from that which is presented in the Bill. He stated quite clearly and unequivocally that he gained his majority at the last election by supporting the peace propaganda on grounds of expediency. To bring in a Measure like this, which is a war Measure, preparing for war, is an abuse of the confidence of the electorate and a betrayal of their trust.

We challenge the Bill on the ground of the harm done to our international relationships, and the vital blow that is aimed at the League of Nations, and we must not forget that it is a gross betrayal of the confidence of the British public, who were tricked into giving a verdict, and, that verdict having been given, those who got the confidence of the country are abusing it in order that they may bring in preparations for war, although they pledged themselves to peace. In these circumstances, we can do no other than safeguard our position to make it clear to the country by recording our vote against the Third Reading of the Bill.

4.20 p.m.

Mr. Churchill

I do not propose to follow the hon. Member into all the issues that he raised, if only for the fear that if I did so in a Debate which is necessarily reserved for the main issues and purposes arising out of the Bill, I might be out of order. There was, however, one issue on which I think the hon. Member and his friends should reconsider the statement which he has just made. Does he really believe that the idea of abandoning the bombing of defenceless towns from aeroplanes would have obtained universal acceptance throughout the world but for the action of Great Britain? Does he really believe that? Does he suppose that Germany, Italy, Russia, France and these other great countries on the Continent would renounce that method of warfare, barbarous, hideous warfare, finally and definitely, but for the fact of the malign influence of the British Government?

Mr. Ammon

Certainly we have every right so to believe, in view of the statement by Lord Londonderry, and that we failed to test whether or not there would be any response to it.

Mr. Churchill

I did not ask the hon. Member whether he had a right to believe it, but whether he did believe A. I do not think he does believe it. I do not think that any responsible Member of this House believes for one moment that any action we took or did not take at that time had it in its scope to rid the world of this horrible invention which has so gravely darkened our affairs.

Mr. Noel-Baker

As I was present at all the discussions which took place on these matters at the Disarmament Conference, and as I know most of what went on behind the scenes, I venture to say, with some confidence, that all the great Powers present at Geneva did signify their acceptance of the main principles involved, and that if we had agreed to the French proposal for the international control of civil aviation and for some form of international air force, the abolition would have been carried through.

Mr. Churchill

The hon. Member says that he does believe it. That reminds me of the somewhat cynical, and I hope not irreverent, definition of faith—that you believe what you know to be untrue. I would not have troubled the House this afternoon if I had not felt that silence on my part on such a Bill as this might afterwards expose me to the reproach of withholding my opinion or of neglecting a Parliamentary duty. Naturally, I am a supporter of the Bill.

Mr. Maxton

I should think so. I thought you were its father.

Mr. Churchill

I am glad to think that although I sympathise with the infant in its early days, I am not likely to be made responsible for a paternity order. I am naturally a supporter of the Bill and gladly stand at its cradle side. The Chancellor of the Exchequer said at an earlier stage that he could not understand why the Opposition should be surprised either at the extent of the armaments programme or at the partial recourse to borrowing. He drew attention to his speeches last year and even earlier. I think that that contention is perfectly well established, and I do not think that the introduction of this Bill implies any alteration in the Government's policy or adds anything in principle to what was already known about that policy. We knew more than a year ago, when the first White Paper was produced, that the Government were convinced that it was their duty to spend upon rearmament every penny in their power without—as they so limited themselves, and I think wrongly—interfering with the normal trade and life of the country. The Chancellor of the Exchequer more than a year ago told us that this spending would substantially exceed the revenue from taxes.

That was the position a year ago, and it is the same position now. All that has happened is that a forecast has been made of Defence expenditure for a period of five years, which amounts to £1,500,000,000, £1,100,000,000 of which is to be raised by taxes, and £400,000,000 by loan, and permission is sought from the House of Commons to make the necessary borrowing as the occasion arises. The mention of these prodigious sums has made a profound impression, and I am bound to say that the reactions, upon the whole, have been highly favourable to the Government and to this country. The official Opposition have once again allowed themselves to be manoeuvred off-side on a great national question on which they are as convinced, or almost as convinced, as hon. Members on this side, that the needs of the country will require strong and continuous action to be taken to repair our defences. The Liberal party—to the exiguous proportions of which pathetic reference was made by its Leader the other evening—

Mr. de Rothschild

Is it not a fact that the exiguous proportions of the Liberal party depend to a certain extent upon the right hon. Gentleman himself?

Mr. Churchill

I do not know whether my hon. Friend was with us in those days, long ago. I think it is only more recently that he has associated himself with our affairs and with the affairs of the Liberal party. I am not seeking to be controversial and am only sorry that the Leader of the Liberal party is not in his place. I am bound to say that he has shown himself singularly resourceful in finding excuses for voting against a policy the necessity of which he sees as plainly as, perhaps more plainly than any other man in the House. The two Parliamentary Oppositions have got themselves into a sort of dull general crab on this policy, and the speech to which we have just listened is a speech not opposing merely the financial method by which the money is to be raised, but a speech which, if it means anything, means that the whole of this policy is wrong. That is not a view which the hon. Member's own party take. I am very glad to hear, and I trust that it is true, that they have decided not to oppose by vote this immense policy of rearmament. By taking such action I have no doubt that they will appreciably add to the safety of this country.

On this issue of finance, which has been so much debated, I am perfectly ready to trust the Chancellor of the Exchequer and the Treasury. They have never been, in my experience, which is a very long one, inclined to tolerate anything in the nature of lax or loose borrowing, and if the proportion between tax-raised revenue and borrowed money is the best way of getting the money out of us with the least injury to the productive energies of the country, I should feel inclined to believe that the preponderance of probability was greatly on their side. The Treasury certainly are shrewder and surer authorities upon financial orthodoxy than can be found in the ranks of the Opposition, and I was very much surprised indeed to hear the hon. Member for East Edinburgh (Mr.

Pethick-Lawrence) reading those portentous lectures to the Government in view of his own and his friends' extremely unfortunate financial experiences in the past.

Mr. A. V. Alexander

Were the Treasury officials the people responsible for the advice to return to the Gold Standard in 1925?

Mr. Churchill

If they were, it is only a proof of the severe Conservatism and Gladstonian orthodoxy which permeates the atmosphere of the Treasury buildings. I think His Majesty's Government have also placed themselves in a very favourable position against critics who, like myself, have for a long time been urging more active and timely measures. The great majority of the House will no doubt feel that the Government are doing everything that the situation demands, or at any rata everything that could be reasonably asked for, and they will feel inclined—I can sense their attitude to some extent, though not always—to silence critics with the remark, "If you are not satisfied with £1,500,000,000 being spent on armaments, nothing in reason will ever content you." The Parliamentary position of the Government is, therefore, as strong as it could possibly be. The Opposition attack halfheartedly a policy which everyone knows is essential to our safety, and critics from the opposite angle are easily disposed of by reference to the grandiose figures which are involved.

But there are other, broader advantages which flow from the Government's declaration. Nothing is more important for British policy than clarity and continuity. The fact that the British Government are coming forward with a five-years' plan of armaments on this scale, the evidences of our great financial strength, the very general acceptance of this policy by all parties in the nation, the welcome which it has received from so many countries, particularly small countries, in all parts of the world—all these give to our Dominions and to foreign countries a chance of walking in step with us. I have felt during the last few years, and especially now, in these years, that Great Britain has only to pursue a set course, uninfluenced by the shifting gusts of incident and opinion, and to pursue that course for a certain period of years, to find herself moving along in a great company. We are the head of an Empire of free Dominions. We are also looked to with friendly, appealing eyes by a large number of peace-seeking nations. We do not give them a chance of adjusting their policy, their future outlook, to ours if we chop and change from year to year, and swing to and fro in accordance with the minor and superficial variations which take place.

We have now got a policy in foreign affairs based upon the Covenant of the League of Nations—[HON. MEMBERS: "Oh!"]—and upon special agreements with France which, in any temper but that of partisanship would be recognised, I think, generally as carrying with it what the great mass of the nation as a whole desire. I certainly have not heard any language during this Bill from the Ministers that in the slightest degree diminishes the force of the declarations which have been made upon this subject; and now, in addition to a foreign policy, we have also a policy upon Defence which, if we pursue it resolutely for four or five years, if so long a period is granted to us, and if we do not vary or weaken our course, may well leave us in a far more safe and agreeable position than any which we have occupied since German rearmament began in earnest. Time passes quickly Everything is in constant change. When the first beginnings of evil which may subsequently challenge peace and freedom and even the life of the State make their appearance on the horizon, it is right then to sound the alarm and to try, even by frantic exertions, to arouse somnolent authority to novel dangers, but once we are in the danger zone, once everybody can see that we are marching through that long, dark valley of which I spoke to the House two years ago, then it seems to me that a mood of coolness and calmness is almost enjoined.

There is another aspect. When the dangers are distant, it is right to dwell upon defects and deficiencies so that they should be made good in time, but when the dangers come much nearer, it is perhaps natural and also prudent and healthy to dwell, in public at any rate, upon resources rather than upon defects, and to take a fair stock of our strength no less than of the hazards of our position. We must remember that we are for the time being not any longer entirely masters of our own fate. That no longer depends altogether on what we decide here or on what the Cabinet settle in Downing Street. It depends on what may happen in the world, on what other countries do, for good or for ill. It may be hard for our island people, with their long immunity, to realise this ugly, unpleasant alteration in our position. We are an undefeated people. Nearly 1, 000 years have passed since we were conquered or subjugated by external force. All our outlook for several generations has been influenced by a sense of invincible, inexpugnable security at home. That security is no longer absolute or certain, and we must address our minds courageously, seriously, to the new conditions under which we have now to dwell, and under which Continental nations have always dwelt.

Of course, the question turns entirely upon whether the air is regarded as a decisive weapon. In France it is not so regarded, and in Germany, I believe, it is not so regarded. I hope I shall not hurt the feelings of the hon. Member for West Fife (Mr. Gallacher) if I quote a once beloved leader, from whom, I gather, he has separated himself—Mr. Trotsky. We all have our delusions. At the Brest-Litovsk Conference he uttered the following sentence when the full strength of the German power was made known. He said that the destiny of great nations is not to be determined by the temporary condition of their "technical apparatus," and I must say that I have always believed that that was a very profound truth. If that failed to be true in respect of any country in the world, that country would be this island, so artificial in the character of its strength and wealth, and which is in a different position, from every point of view, from that of the great self-contained or self-supporting masses of the populations which inhabit the Continent of Europe.

It is this new element of uncertainty which darkens our outlook, and I must point out that mere declarations of readiness to spend money over a five-year period do not affect the realities through which we shall have to live in 1937, 1938, and 1939. It has been obvious for some time past that the Government desire to spend as much money as they possibly can upon rearmament, getting value for their money, but neither the readiness of Ministers to place orders nor the readiness of the House of Commons to vote enormous sums is the limiting factor which governs our position to-day. The sole question of interest from the point of view of security is not the amount of money which Ministers will ask or which Parliament will vote, but what the contractors can earn in the next two years, and the only proof of our increasing security, the only measure of the steps which are taken to regain our security, is the weapons which we actually put in the hands of trained units from month to month. I tried to bring this idea to the notice of the House a year ago. I know of no factors which are now apparent which were not apparent a year ago, and of no vital factors which were not apparent two years ago and even earlier.

There is, as I say, nothing new in this situation, nothing that the House has not long ago been apprised of. The Minister for the Co-ordination of Defence, as soon as he found out what to do, has been placing orders, endeavouring to stimulate the expansion of skilled labour, the manufacture of machine tools, the erection and adaptation of very large plants. All that process, so tardily begun, is now going forward, is now gradually acquiring momentum. No foreigner will underrate the possibility, the power and flexibility of British industry, and I certainly think that we ourselves should not do so, but the only figure of real interest in this enormous proposal of £1,500,000,000 is, from the point of view of security, the amount which can be spent in 1937 and 1938. That figure we do not yet know. Indeed, we are in a position to-day where it is difficult even to surmise about it. We do not know the outturn of 1936, although it is perhaps a fair deduction from the figures already published that our expenditure on armaments during that year will realise about £190,000,000. We now know the Navy and the Army Estimates for this year, but we do not know the one which is most important of all, the Air Estimates. We shall not know, I suppose, until this time next year how large is the borrowing in aid of revenue to which we must have recourse, because even when the Estimates are all before us, even when the Budget speech has been made, there is always the possibility of Supplementary Estimates and the hope that large supplementaries, increasing the expenditure demanded in the first instance, will show that practical and concrete steps are being swiftly taken to regain for this country its position of security.

I should be very much surprised, and agreeably surprised and reassured, if, proceeding on present lines, more than £60,000,000 or £70,000,000 was required by loan in the next 12 months. Surely the City of London has shown itself somewhat adrift from Parliamentary and political realities when there has been a fall in gilt-edged stocks in respect of borrowing which, during the next year, cannot possibly amount to any serious burden upon the great movements of the money market.

One of the many difficulties which baffles effective discussion of Defence programmes is that the Government are studiously vague on every point. The Minister for the Co-ordination of Defence —I am not going into these matters except to show how discussion is baffled—told us of a large number of important subjects upon which plans have been made or even actual preparations begun. He spoke of food supply, of the accumulation of raw materials, the gathering of projectiles and the production of cannon, and above all of preparation for Air defence. But nowhere was there any quantitative statement, nowhere was there any date given by which particular progress points were to be reached. Nowhere was there any distinction drawn between paper plans of committees and the elaborate organisation of personnel required to make them work. Nowhere was there any assurance that the programmes would be carried out punctually, or in good time. How could he do so when, except for the Air programme, no dates for the completion have been assigned to any of the numerous programmes nor even in most cases the dimensions of the programmes?

For instance, take shells for the Army. Without knowing what is to be the scale of the Army it is impossible for the House to judge whether the arrangements made are or are not adequate. An Army with three or four divisions is one thing, but an Army of five or 10 or 15 divisions, as we had in the first six months of the War, is an entirely different problem. We know nothing on the point. There is no means by which the House can check these provisions except by a secret Select Committee with power to send for persons and papers. Take the defence of London. Everything that has emerged from the Spanish business shows the importance of anti-aircraft guns. We know that Germany has 30 regiments of mobile anti-aircraft artillery, or about 250 to 300 batteries with 1,50o modern aircraft guns in addition to the whole of their static artillery for anti-aircraft defence. It is perfectly true that we do not need to have a large Army like Continental nations, but we do need to have as effective and adequate antiaircraft defence. There is no alteration in the scale for us on that point. How long will it be before we have 1,500 good modern anti-aircraft guns with trained crews and all the necessary equipment? I do not expect an answer. I am not criticising or blaming the Minister for not giving the facts. I am only pointing out how impossible it is for us to form any judgment without being given these details.

It is the same with the Air Force, although there we had a point, the 31st March, by which a certain measure of Defence was to be reached. We know that this programme is grievously in arrear. The Minister for the Co-ordination of Defence spoke in these debates of our anti-aircraft Defence being the "best that could be devised." I should like the House to note the use of the word "devised." I wonder how long the interval will be before what is being devised will be actually translated into what we actually have. Take the re-equipment of the Territorials of which we spoke a year ago. Is that going to be completed in 1938 or 1939, or in 1940? I am not bringing these matters forward except to point out how utterly impossible it is for the House to form its own opinion on these matters. We shall know in time, because people all over the country will see exactly the state of these forces when they turn out to drill; they must become known when they pass from schemes into realities. But we shall not be the only people to know.

There is a serious issue, which I am bringing forward on another occasion, raised by the fact of the large number of foreigners in this country who now since the war are all held together by bonds of Nazi and Fascist organisation. That is a new feature, and it is a matter which certainly will have to be considered. In my view there are any number of facts about which we have no good information in this House, on which probably foreign general staffs are perfectly well informed. When the Fleet went to the Mediterranean a year and a half ago the movements of every ship were printed in every paper on the Continent. The only country which was unable to form any opinion about it was the one which was vitally interested. I must say that I am astounded at the wave of optimism, of confidence, and even of complacency, which has swept over Parliament and over public opinion. There is a veritable tide of feeling that all is well, that everything is being done in the right way, in the right measure and in the right time. So much are hon. Members reassured that it is a matter of public comment that it is difficult to keep a House even when the gravest matters are being discussed.

I cannot resist the conviction that we are moving through times as dangerous as any through which we have ever passed. I wish that even now the House would rouse itself, face the responsibilities and exercise its full commanding powers. I am sure that in no other generation would the House of Commons have been content to dwell in this complete ignorance about the vital security of the State and nation. In any other but this war-stricken and war-ravaged generation the House of Commons would have insisted on making a discreet but resolute inquiry into some of the leading facts about our defences, especially after the miscalculations which the Government have candidly admitted. In any other country in the world which boasts free Parliamentary institutions, in France in particular, there would have been a searching inquiry. Members who could be trusted would be chosen to converse with the Government on these matters and make a brief report to the House as to whether all was well in this or that sphere, or, if not well, whether extra measures should be taken to repair the deficiencies.

But the official Opposition do not desire to be drawn in any way into sharing the responsibility of the Executive. The Government refuse a secret Session, I am sure on the wrong view of what its character and course would be. It, therefore, would seem that the choice open to a private Member is really limited to saying in public things which, as matters get more critical, ought not to be said, or else acquiesce in an endless series of blind and purblind Votes of Confidence in whatever we are told by the Administration. This difficulty will recur with sharpened edge as debates on defensive forces take place this Session, and in the end the House of Commons will have a far less clear view of what our position is in a great many important matters than will be possessed by foreign countries, friendly or otherwise.

The Chancellor of the Exchequer told us that there is no imminent danger of war. I hope it is true; I believe it is true so far at any rate as the Spring and Summer of this year are concerned. But what has the future in store for us? Can Ministers assure us that this time next year the British Air Force will be more nearly a match for the German Air Force than it is to-day? Can Ministers assure us from their special knowledge that this time next year the German Army will not be a good deal stronger compared to the French Army than it is now? The immediate future offers us no surcease from the anxieties under which we must lie. Wars do not wait till everyone is ready. Usually they come when one Power thinks itself less unready than another, and sometimes they come when one Power, under great strain, feels that it has nothing to gain by delay and that the future holds for them no relative improvement.

When a whole Continent is arming feverishly, when mighty nations are laying aside every form of ease and comfort, when scores of millions of men and weapons are being prepared for war, when whole populations are being led forward or driven forward under conditions of exceptional overstrain, when the finances of the proudest dictators are in the most desperate condition, can you be sure that all your programmes so tardily adopted will, in fact, be executed in time? At any rate, His Majesty's Government would surely be prudent to shorten this dangerous passage through the valley by every means in their power and bring to an end the period of insecurity to which we should never have been exposed. I have dealt with the good effects of this Defence Loans Bill throughout the. Empire and Europe, but probably all the reactions abroad have not been equally beneficial.

I do not set too much store by the declarations of the Italian Dictator, which are no doubt addressed to our account. Italy has for a long time, under the inspiration of that extraordinary man, been held at a very high pitch of tension. I seem to have read a year ago that even quite young children were being taught to fire with the rifle. I expect they have been doing all that they can for a long time back. In Germany too the strain is very great. One wonders whether the people of these countries have a spirit so much uplifted above all other races as to enable them to support hardships and perform prodigies which are beyond the normal vigour of mankind. In short, I do not believe that either of these great dictators can do much more than they have been doing for a long time past. But do not ignore what they are doing. They are welding entire nations into war-making machines at the cost of the sternest repression of all the amenities and indulgencies of human existence.

But that only disposes of half the argument. We must recognise that one of these great countries is putting a direct question to us, and we must recognise that another country is closely associated with that. I cannot understand, in the face of all these facts and so many others that are known to all of us, that His Majesty's Government can imagine they can meet and ward off the armed menace of nations already at full strain and overstrain, merely by going along in the present comfortable manner without any decisive impingement upon private trade or profit making or without demanding temporary sacrifices of comfort and changes in our way of living in order that we may preserve ourselves in freedom. Financial sacrifices alone will not suffice; the whole nation must pull together.

As I have said, when dangers are far off one may dwell upon deficiencies, but when they are near one must dwell on resources. Having felt bound to strike a sombre note this afternoon I am most anxious not to omit the other side of the case before I sit down. First of all there is the Navy which, even to-day, is far stronger, relatively to any Navy in Europe, than it was in 1914. When we see the enormous programme included in this Bill, which Parliament will so gladly vote this year, we may well feel assured that, so far as Europe is concerned, not only will the supremacy of the Navy be maintained, but it will become increasingly preponderant. I am glad to think that the menace of the submarine is no longer comparable to what it was in the Great War. Everything we have heard from the Spanish war seems to enforce the Admiralty view that it is not so easy to annihilate warships by aeroplanes as some people have been making out. We must not undervalue the enormous power and security which we would derive from the British Navy in any quarrel in which the right feeling of the United States was not withdrawn from the British Empire.

In the second place, I rest my comfort and my reassurance upon our association with our closest neighbour, the other great Western democracy—the French Parliamentary democracy. What has come to pass is, undoubtedly, a virtual defensive alliance between these two countries against any unprovoked act of aggression towards either of them. I feel that the companionship of these two countries, who have no other aim than the peace and freedom of all States and races in Europe, is one of the greatest guarantees for our common safety, for a continuance of peace, for, at the very worst, our joint survival.

Finally, I think we ought to place our trust in those moral forces which are enshrined in the Covenant of the League of Nations. Do not let us mock at them, for they are surely on our side. Do not mock at them, for this may well be a time when the highest idealism is not divorced from strategic prudence. Do not mock at them, for these. may be years, strange as it may seem, when Right will walk hand in hand with Might. Let us, therefore, lay aside every impediment and do everything in our power to add to our own strength and use that strength for the purpose of helping the gathering together of the nations upon the basis of the Covenant of the League. Upon the rock of the Covenant many nations great and small are drawing constantly and swiftly together. In spite of the disappointments of the past, in spite of many misgivings, difficulties and ridiculings, that process is continuing, and these nations are welding themselves into what will some day be a formidable yet benignant alliance, pledged to resist wrong-doing or violence from an aggressor.

That is what we are working towards. It is not the situation as it exists to-day. The situation, as it exists to-day, is that we are moving forward towards our goal but are still widely short of it. Every step that we take to advance along this path, to make what are now, perhaps, only, in some cases visionary assurances, into solid effective pacts—every stage that we move forward on that road, we shall be taking not only the best measures for our own safety but the surest means for safeguarding the civilisation of the world.

5.5 p.m.

Mr. W. Roberts

I think many of us who sit in this part of the House can agree with the eloquent words with which the right hon. Gentleman concluded his speech. If we can find agreement with him in those words, it is perhaps because—although he taunted us with fewness of our numbers—his peroration may partly have been the result of his early education in this party shall I say, or at any rate his early association with the Members of this party. The right hon. Gentleman suggested that my right hon. Friend the Leader of our party had not very clearly stated his reasons for opposing this Bill. I felt that my right hon. Friend stated those reasons in an explicit manner. He pointed out that we had in the past supported and would in the future support the Estimates when they came up, but that we were not satisfied with this Bill; that we did not feel it necessary and that we should oppose it on a variety of grounds. Some of these grounds are fairly wide and have reference to the foreign policy of the Government. Those I do not propose to go into now. Nor do I propose to follow the right hon. Gentleman the Member for Epping (Mr. Churchill) in his general argument, except to say this: If we were convinced as to the words which he used at the end of his speech and the sentiments which he has on other occasions expressed, if we thought that the energy which is being displayed in rearmament was also being displayed in re-creating the League of Nations, we should be able to vote for these Estimates with much happier minds. The right hon. Gentleman, speaking on 5th November last, said: I plead for a plan. … It is the same plan that nearly all Members who were elected talked about at the General Election and gained votes for urging, namely, the plan of standing by the Covenant of the League and trying to gather together under the authority of the Covenant the largest possible number of well-armed, peace-seeking Powers in order to overawe and if necessary to restrain a potential aggressor whoever he may be."—[OFFICIAL REPORT, 5th November, 1936; col. 311, Vol. 317.] We feel that while the Government have been devoting to rearmament an energy which has almost taken some of the drive out of the right hon. Gentleman's speeches, nothing like the same energy has been devoted to re-creating the League of Nations. But, as I say, I am not going now into these wide aspects of the problem. We realise that we are engaged now in an armaments race, a race in which the Under-Secretary of State for Foreign Affairs suggested the other night, the important thing is that we should be superior to any possible aggressor. We are told that in this race that is the object towards which we have to work. I think the difference between us and those who regard the problem in that light is that we believe in arriving at an agreed limitation. We do not wish to win the race; we are ready to come to an agreed limitation under which there shall be some equality.

I turn to the provisions of this Bill, and I note, in the first place, that it is a five-years plan. We oppose it, to begin with, on the ground that it is a five-years plan. We do not believe it necessary or desirable that power should be given to the Government to borrow for five years or to borrow at any period which may be convenient to them during the five years. This point was raised previously in the course of these Debates, and the Chancellor of the Exchequer, in reply, suggested that it was of vital importance that the rearmament plan which the Government were carrying out should be a coherent and consecutive plan worked out not over one year but over a longer period. We are prepared to agree, but the fact that the actual armaments plan is to be a long-period plan does not necessarily mean that the method of financing it must also be approved by this House over a long period. When the Chancellor of the Exchequer was questioned during the Committee stage as to how this loan was to be effected and the rates of interest that were to be charged, he said it was impossible for him to give any details of what might happen in the future because the financial circumstances might change and the whole situation might be different in a year or two from what it is to-day. That is exactly the reason why we oppose the five-years plan. Circumstances may change, as the Chancellor himself has argued, and if the loan is necessary for part of this expenditure, it ought to be sanctioned yearly before the Estimates are approved. We believe that the buoyancy of the revenue will increase considerably and that it may not be necessary for large loans to be taken up in the future. We believe that it may be found possible to finance the larger part of the rearmament programme out of normal taxation.

Apart from the merits or demerits of the rearmament plan itself, we oppose the policy of meeting so large a part of it by borrowing. I have followed these Debates, I have refreshed my memory of them from the official records, and I have tried to find what reasons are put forward to justify the borrowing of this enormous sum—a sum unprecedented in times of peace. It is argued that the money will be used for works of a permanent nature. They may be, to some extent, permanent but by far the larger part of the production which is to be financed by this loan will have fallen out of use long before the period of 30 years over which the loan is to be repaid. Indeed I cannot find any reasoned argument why the period of 30 years has been selected. No statement seems to have been made. Thirty years appears to have been chosen purely arbitrarily, without any adequate reason. As was pointed out by my hon. and gallant Friend the Member for Pembroke (Major Lloyd George), it is certainly a far longer period than the anticipated life of battleships, far longer, of course, than the anticipated life of aeroplanes, and longer than the anticipated life of most of the things for which the loan can be used.

The argument has been put forward that the expenditure is non-recurrent, but that does not seem to me necessarily to be a good ground for making it capital expenditure. The Chancellor also advanced as an additional reason that it was work which must he undertaken in order to make up for arrears in the past. I think no business firm would put forward the argument that work must be carried out on borrowed money merely on the ground that that work should have been done previously. In any case, I do not wish to go further into that matter. The arrears are not the responsibility of any hon. Members on this side of the House, but are due to the fact that the Government, apparently for electoral reasons, did not think fit to undertake this rearmament in 1933 and 1934. Why should the generations of 25 and 3o years hence be compelled to pay simply because the Government did not make up its mind quickly to undertake a rearmament policy, not in the national interests, but apparently in the electoral interests of the Conservative party?

It is interesting to compare the arguments put forward in the past as to why capital work and borrowing by the Government should not take place and the arguments now advanced as to why part of this rearmament should be met by loan. Dealing with this question the other night, the Chancellor of the Exchequer said that the only reason why borrowing had not taken place at the time when some of us pressed the Government very hard to do so—during the period of slump, when we believed that Government borrowing would have lessened the duration of the slump—was that works of economic value could not be found, and that any work of economic value, was, in fact, undertaken by borrowing. Consequently, a different test is applied. The test for that special borrowing which was undertaken during the slump was whether it had an economic value. I believe that the whole argument as to whether the expenditure is due to arrears of work, whether it is permanent, or whether it is non-recurrent cannot be compared with the argument that was advanced by the Chancellor of the Exchequer and others when some of us on this side of the House tried to persuade the Government to undertake a policy of national development based on the raising of loans.

These armaments cannot be compared to works of national development and public utility. They serve a useful purpose in the life of the nation and they are in my opinion an unfortunate necessity; but they do not enrich the country, and they do not provide any possibility for the future development of the country. It seems to me that the only justification for borrowing at the present time is that the largest possible armament programme is desired, and that it is desired to carry out that programme irrespective of whether it is possible or convenient to pay for it now. The position appears to be that it is a matter of expediency as to whether the whole of the armaments programme should be paid for out of current taxation or not, that the other arguments are entirely beside the point, and that the Chancellor of the Exchequer has decided in his own mind that taxation on not too high a scale can bring in so much and that the remainder must be found by borrowing. The position is a very peculiar one. Apparently we can afford to make these armaments, but we cannot afford to pay for them, and I believe that to be fundamentally wrong. If one bought any other industrial plant, it could be bought with borrowed money on the ground, to use a common phrase, that it would pay for itself as it worked. But armaments will not pay for themselves, they will bring in no income, and one is merely postponing the regrettable necessity of having to pay to later generations.

But the situation is worse than that. There is already a rise in prices and a tendency for the consumption of other commodities to be checked. We fear that this borrowing will increase that tendency, and that by so doing will move the weight of payment for this enormous programme partly off the backs of the direct taxpayers on to those of the community at large. I believe that borrowing will tend to raise prices now. When we were pressing the Government to borrow money with which to carry out works such as road-making, housing and land settlement, the reason we advanced was that the raising of a large loan would increase prices at that time. Then it was very desirable to raise prices; now it is not. Our criticism of the Government is that they do the right thing at the wrong time and the wrong thing at the right time. It was the right thing to borrow money during the slump, but it is the wrong thing to do so now. If I may stray for a moment to complete the analogy, the Government had an opportunity of doing the right thing on the Abyssinian question, but they missed the right time. Mr. J. M. Keynes has been quoted once or twice in the House, and I fail to understand how his recent statements can be regarded as supporting a policy of borrowing. In his article in the "Times" newspaper on 13th January of this year, he used the following words: In view of the high cost of the armaments, which we cannot postpone, it would put too much strain on our fiscal system actually to discharge debt, but the Chancellor of the Exchequer should, I suggest, meet the main part of the cost of armaments out of taxation. His whole argument in that article, as I understand it, is that this is not the time to borrow, that to borrow now will hasten the danger of a slump following the present minor "boom," and that the right policy is to pay for armaments out of taxation. I am obliged, however, also to refer briefly to another remark which he makes in the same article. There is another side to this question. It is that in the attempt to raise prices during the slump—and on many occasions during the depression we heard the Chancellor or the Exchequer speak of the importance of raising wholesale prices—many measures, such as quotas and tariffs, were introduced to restrict imports with a view to raising prices. Mr. Keynes said: Just as it was advisable (from our own point of view) to check imports and to take measures to improve the balance of trade during the slump, so it is now advisable to shift in the opposite direction and to welcome imports even though they result in an adverse balance of trade. He went on to say: I should like to see a temporary rebate on tariffs wherever this could be done without throwing British resources out of employment. At the present time, when the Government is becoming a large purchaser of such raw materials as steel and base metals, with the prices going up, the present tariff policy of the Government must involve indirectly a very considerable addition to the costs to the taxpayer of these armaments.

There is a further point I would like to make with regard to this Bill. There is a widespread feeling that this huge sum of money which is to be spent on armaments is to be spent almost entirely on what one may describe as aggressive weapons. There is, I believe, a growing feeling in the country that the Amendment—if I may refer to it, as it was found to be out of order—which would have made it possible to use some of this money for what has come to be known as the Home Front, would have been a very desirable thing. There is a very widespread feeling that sufficient attention has not been given in this country to the protection of the civil population from air raids, from gas and incendiary bombs. There is a feeling that the French, for instance, have gone very much further in this direction, and that Paris is far ahead of us in the measures that that town has taken to protect the civil population. Such measures can be an exceedingly expensive item in the Defence budget of the country.

The creation of effective bomb-proof and gas-proof shelters is an enormous item, and one which I feel might very well be treated as capital development and for which money might be borrowed. If there is such a thing as a permanent asset, it must surely be a bomb-proof shelter made of concrete, which will last far longer than 30 years; it will last indefinitely. We oppose this Bill on general grounds, not because we oppose rearmament as a whole. We recognise some necessity for rearmament, given the present foreign policy of this country and of others, but we oppose the Bill because we believe it will tend to diminish the care with which the expenditure is scrutinised. In addition, we believe that the private manufacture of armaments is a method which under present conditions is not in the best interests of the country. We have received during these Debates no answer to our demand that the commission's report on this subject should be given consideration and that we should be told what is the Government's policy. Lastly, we believe that this Bill is another Measure which will enable the tendency towards armed isolation to be carried further, and we do not propose to support armed isolation bought on the hire-purchase system.

5.32 p.m.

Mr. Loftus

I do not propose to follow the last speaker into the details of a speech which covered such a wide ground. I listened to the speeches on Second Reading of this Bill, and to most of the speeches on the Money Resolution, and I noticed what a vast field they covered—foreign policy, strategy, co-ordination, and so on. I propose to deal with one point only, and that is the accusation that has run through all the speeches of the Opposition side of the House, both above and below the Gangway, that this Measure will cause a great rise in prices and that it must, therefore, cause harm to the country. I heard the suggestion put forward on various grounds. My right hon. and gallant Friend the Member for Ripon (Major Hills) pointed out that the hon. Member for East Edinburgh (Mr. PethickLawrence) spoke of additional money in circulation. The money, however, is already in existence. There are great deposits in the banks, in the savings banks, in the building societies, and so on, and even if this expenditure does put fresh money into circulation, it does not of necessity mean a rise in prices. Hon. Members possibly do not realise that in the last five years there has been provided in this country additional money to the tune of £500,000,000, consisting of £50,000,000 bank notes new currency and £450,000,000 new bank credits. That is, of course, new purchasing power, and the marvellous thing is that there was no rise in prices until a few months ago in respect of that enormous increase in the circulation of money. The reason was that, commensurate with the increased circulation of money, there was an increased output of consumable goods. Because the output of goods kept pace with the output of money, there was no rise in prices.

Will the proposed expenditure on armaments cause such a rise? I think it is possible that it may have that effect. As the years go on we shall be putting more and more men to work on the output of non-consumable goods—goods which we all hope will never be used—and these men will naturally require currency for wages. Therefore, I think it possible that the ratio of the output of consumable goods will fall compared with the circulation of money and that there will possibly be a tendency towards a rise in prices. It is assumed on the Opposition side as a fundamental thing that a rise in prices is of itself an evil. Do they not realise what the policy of the British Empire is? It was clearly laid down at Ottawa and was reaffirmed in 1933 after the failure of the World Economic Conference. It was signed by the Chancellor of the Exchequer and by South Africa, New Zealand, Australia and Canada. The first point of that policy was to continue by every possible means, within the limits of sound finance, the raising of prices. That is accepted by every democratic Government in the British Commonwealth. There were four points in that policy. The first is to raise the price level until equilibrium has been reached between debts and other fixed interest charges and a remunerative price achieved for producers of primary commodities. The second is that once you get that equilibrium price level it will be stabilised and it will be kept stable. The third point is the provision of an abundance of short-term money. The fourth is the maintenance of low rates of interest. I want to pay particular attention to the Bill we are discussing in connection with that policy. I would like to point out to the hon. Member for Chesterfield (Mr. Benson) that the policy of raising prices is not only approved by the British Commonwealth, but by President Roosevelt—

Mr. Benson

And by me.

Mr. Loftus

But the hon. Gentleman did not fight an election on it. President Roosevelt fought an election in which his main plank was the raising and the maintenance of prices, and he won an overwhelming democratic victory on it. I would, therefore, ask hon. Members opposite to realise that when we hope for a rise in prices and work for it, we are not reactionary individuals plotting against the people, because the greatest cruelty that you can inflict on the working classes is a period of deflation and falling prices. We know how the working classes of this country suffered in the years 1922–32 when prices were falling. In the years 1922–29 the price level was kept stable in the United States and there was a continuous rise in wages and in employment. I wish to emphasise that point, because we have had this denunciation of any rise in prices from the benches opposite. If I may say so with respect, I think my right hon. Friend the Chancellor of the Exchequer is right in placing £400,000,000 of this expenditure to loan spread over five years. Had it all been placed on taxation I believe that it would have had a deflationary effect and would cause a general set-back. I certainly agree with my right hon. Friend the Member for Hillhead (Sir R. Home) when he said that this nation can take it in its stride, for in the 10 years 1919–29 we lent overseas £1,000,000,000, if my memory serves me right.

There are four steps which I suggest might be taken to minimise any inflationary effect. Some of us have a fear that the recent rise in prices is possibly proceeding too quickly, that it is beginning to get out of hand, and we feel that it should be checked without any sudden check, well in advance of equilibrium level. The first point is that we must be careful not to have unrestricted foreign investments. We shall be importing great additional masses of raw material. We want to pay for them by our exports. Foreign investments mean the export of goods on credit. Exports are paid for by imports or by gold, or by bonds but now we want to export in order to pay for the import of the goods required. There may suddenly be a pressure on sterling owing to such a demand for imports that we ought to reserve all our exports to pay for them.

Mr. Boothby

Does not my hon. Friend realise the necessity of this country building up markets overseas so that we may have an outlet when the rearmament programme is over?

Mr. Loftus

I recognise the desirability of markets overseas, but I want to build up genuine markets where we export in order to import for the use of our people, and where we do not export to increase the over-heavy burden of world debt which helped to cause the last slump, and which would apparently cause another. Another point about foreign investments is that if there are bonds offered like the Rhodesian Railway bonds the other day, at 4½ per cent., the effect of unlimited issues like that may be to force up the rates of interest in this country. That is one of the contingencies we must avoid. The second point is that I suggest it would be dangerous, while this period of five years is before us, to have fixed rigid rates of foreign exchange. We must keep power to maintain stable our own internal price level at the most suitable level. If we fix rigid rates of foreign exchange and the exchanges go against sterling, it would mean some amount of deflation at home to maintain the sterling rate. I suggest we should go on as we are without any fixation of the rates of foreign exchange.

My third point, which I put forward with a great deal of diffidence, is that in this period, when we have to import raw materials, and all kinds of materials, on a largely increasing scale we ought to consider very carefully whether in any instance a tariff on a particular article may have been fixed at a level which, while it was suitable three or four years ago, may be unnecessarily high to-day. That should be part of the financial management and control to keep our internal price level from mounting. If there were, by any chance, as I hope there will not be, any depreciation of the pound in relation to other currencies, I suggest that that alone would have the same effect as raising the tariff. If the pound depreciated 10 per cent. compared with other currencies it would have the same effect as raising the tariff to 20 per cent. The fourth point is that we should consider seriously increasing our agricultural output, not from the point of view of defence alone but from the point of view of our financial position. We shall be importing more and more raw materials and there will be pressure on the sterling exchange. The best way to prevent that is to increase our agricultural output so as to lessen the pressure from increased imports. My fifth point, which has been suggested also by other speakers, is that we should lessen our capital expenditure where it is possible to do so without detriment to the social services, and reserve as much as possible for the period when this programme is at an end.

In conclusion I must express my regret at having to vote for this colossal expenditure, as I am sure every single Member in the House regrets it, but I am comforted by the reflection that I am sure nobody regrets it more than my right hon. Friend the Chancellor of the Exchequer. I have two definite hopes. The first is that by the demonstration which this country has given to the world we may, as I think, restore sanity to Europe, we may make the nations of Europe think and think again, and stop this appalling expenditure of treasure which should be used to raise the standard of life of their peoples. We may have accomplished that by this programme. My second hope is that if this race in heavy expenditure comes to an end the nations of Europe, under pressure of this vast expenditure, may have learned methods of financial management which will enable them, when happier times come, to utilise their national productive powers to the fullest possible advantage in order to give a permanent and continuously increasing higher standard of life to their peoples.

5.50 p.m.

Mr. Maxton

The hon. Member for Lowestoft (Mr. Loftus) has managed, on this Third Reading Debate, to convey to the House some of his own more or less unorthodox ideas on finance—

Mr. Loftus

What I said was quite orthodox.

Mr. Maxton

—but I am sure that he would much rather see his financial ideas arrive at a state of national acceptance by some less expensive experiment than the financing of a European war. I do not propose to follow him into realms in which, I must admit, I am very much of a novice, but I do want to take up one of his generalisations, that in which he said that the working class are always better off in a period of rising prices. In my experience, which goes back now a good number of years, the working class have never been well off at all. I will admit that certain sections of the working-class community are sometimes better off in a period of rising prices, but certain sections are infinitely worse off.

Mr. Loftus

The whole of my emphasis was laid on securing a stable price level.

Mr. Maxton

That is true, but the hon. Member did say that in a period of rising prices the working class are better off than in a period of falling prices.

Mr. Loftus

indicated dissent.

Mr. Maxton

Then I misunderstood the hon. Member. He does not hold that view?

Mr. Boothby

He did say it, and he is right.

Mr. Maxton

I am glad to have the support of the hon. Member for East Aberdeen (Mr. Boothby) on the first part of the hon. Member's statement. The hon. Member did say it, and I say that he is not right, if he makes a generalisation of it. The hard fact of the matter is, as both hon. Members know, that if a man on unemployment benefit of 17s. a week has to face a rise in the price of his bread and butter and everything else, he is not better off. His 17s. remains stationary, but everything he uses costs him more. The same observation applies to Members of Parliament, with their fixed salaries. Admittedly, anybody who happens to be in a trade that is participating in the rising prices and is making increased wages does benefit, but that huge section of the working-class community who are on either fixed wages or fixed public assistance or fixed unemployment allowances, or fixed old age pensions, cannot possibly be better off, because their money goes a much shorter distance, and it goes a short enough distance as it is.

Having finished with the hon. Member I want to turn to the right hon. Member for Epping (Mr. Churchill). I congratulate him on his speech. He was entitled to make that speech to-day, because he was the chief propagandist and agitator who propounded the ideas which are embodied in this Measure. I understand from the newspapers that important Governmental reconstructions are to take place very shortly. I do not suppose that I have any right to offer advice as to the form those reconstructions should take, I do not suppose that if I offered advice it would necessarily be accepted, but I do suggest that the Government should consider taking in the right hon. Gentleman as Minister of Propaganda and Education, a new post, because he says the week before what the Government say the week after. I was surprised to hear him complaining that there was a lack of information on these matters, that we did not have information on many things which we ought to have, because I remember that when we were discussing the Government of India Bill he had information long before the Government had it, and he had information about German armaments long before the Government had it. While I might make some complaint about being kept in ignorance, the right hon. Gentleman, on his own showing in this House, cannot make any complaint that information is not available to him. I only suggest that the information which gets to him ought to be available for every single member in this community. After all, that is the essential difference between a democracy and an autocracy—the fact that the mass of the people have information as to what is happening in their own country and in the world.

It was a somewhat alarming thing in the months preceding the recent constitutional crisis that the mass of the people could, by some collaboration between the Government and the Press, be kept in complete ignorance of the things that were happening and were known in every other nation in Europe. I am not complaining very much on that particular issue, but if it can be done on an issue of that description, if the nation can be kept in complete ignorance of a thing of that sort, while the whole world is talking about it, we have here all the power which the authoritarian States have to keep their peoples in ignorance of the knowledge which they ought to have in order to give intelligent judgment on important issues which confront a nation in its daily life.

The right hon. Gentleman congratulated the Government on what they are doing in this Measure, and told them that they had the nation at their back. [Interruption.] The Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor) is misinformed as usual. The Government may have done what, in the view of the right hon. Gentleman, is the right thing, they may have taken steps which he regards as absolutely necessary, but I am afraid they will have to be content with the consciousness of having done a right thing, because they are not necessarily going to earn the gratitude of the nation over this business. During the last five or six weeks I have been in the country every week-end, and in every big industrial centre, including Plymouth, where, in spite of the fact that there was a reign of terror among the dockyard workers—

Viscountess Astor

Oh. Does the hon. Member know that he came down there expecting a reign of terror and said it was perfectly surprising that there was no reign of terror. He said the dockyard workers ought to be up in arms against the Government for what they had done. Instead, the dockyard workers were delighted with the Government for what they did. The hon. Member knows that his meeting was an absolute flop from start to finish.

Mr. Maxton

I have no doubt the Noble Lady's agent, like other Members' agents, told her the things he thought she would like to hear. In spite of the fact that there was a reign of terror in Plymouth, the biggest hall in the place, which I gather the Noble Lady has never been able to fill, was filled from top to bottom by people who had done for us what they had never done for her, paid to get in, and in addition they subscribed very handsomely to the campaign in which we were engaged.

Viscountess Astor

With a Communist in the chair.

Mr. Maxton

In every big industrial city which we have visited we have seen nothing to indicate that this rearmament programme is finding acceptance among the mass of the people in this country. I ask the right hon. Gentleman and the Noble Lady to consider what has just happened at the University of Oxford, which is not one of the rebel centres of Great Britain. The election there was carried on when this matter was the principal item of discussion and argument among political people. Whatever lessons may be drawn from the result of that election, it does not indicate that the Conservative-thinking, academic people in Oxford, and other parts of Great Britain, regard the programme of the Government as calling for overwhelming support. I say that the indications are that the new policy of the Government is not being accepted by the mass of the people.

I have no doubt that it is being accepted by the House. The Government have their supporters behind them at the Moment, but I am inclined to think that when the methods for paying this bill are discussed here, after the Chancellor of the Exchequer has made his Budget speech in a few months' time, and has got down from the airy region of £400,000,000 and £1,500,000,000 (which are beyond the comprehension of the ordinary person, who may think that they are fine and grandiose sums which will impress the world) to something on the Income Tax, a different bit of thinking will come into operation. This £1,500,000,000 is in the realm of fairy tales, but another 1s. on the Income Tax will be something real and concrete which the ordinary man can figure out. I put it to hon. Gentlemen that when that occasion comes there will be a definite hostility. The right hon. Gentleman the Member for Epping, has said already in this House that people will pay for a war when it is on and when the danger is imminent and pressing, knocking at their doors, but that in a cold-blooded, detached way, when the danger is not imminent and the guns are not firing, the right hon. Gentleman, as an ex-Chancellor of the Exchequer, knows that the wealthy people of this country are most reluctant to open their purses. That reluctance finds expression in their political activities. While the spreadover takes a period of five years, the amount that will be demanded from the taxpayer in each one of those years will undoubtedly be a substantial addition to what he is paying just now.

I shall not go into the question of the methods by which the Chancellor is raising the money for this purpose, because I do not think that is a matter of very serious moment. In the ultimate, the burden will have to be borne by the mass of the productive workers of this country, whether it is obtained by loan or by taxation; it will have to come out of the bone, sinew and muscle of the men and women who toil and produce things. I do think, however, that as a set-off against these huge demands on the services of the workpeople of this country there should be what there has never been before, a very genuine attempt to see that the workpeople of the country have decent standards of life. There is an indication that this programme is to be paid for by sacrifices on the part of the workers. We remember a joke in the last War. In the early years there was a recruiting poster showing a beautiful little cottage with a fine garden round about it, and the legend: "Is this not worth fighting for?" To us in the West of Scotland that was merely a matter for cynicism because no worker there occupied that sort of house. He lived in Gorbals, Shettleston or Springburn, in a miserable, single apartment without sanitary conveniences of any description, yet he was asked that question about something that he had never had, and which he has not got now.

The speech made by the Prime Minister on the Second Reading of this Bill indicated that this sort of Measure could be put through without any cutting in upon the social services, but that is not good enough. Merely to say that you think you can manage this programme and still maintain the existing social services takes no account of the fact that the people are not properly housed, are not fed and are means-tested. They are on miserable unemployment allowances, and miserable old age pensions, and yet you tell them to make sacrifices for those things, and that they have something worth fighting for. You must say, on this occasion, that you will give them something worth fighting for. You have to say not merely that the social services will not be reduced but that they will be expanded and developed so that every citizen of this country, whom you are going to ask to risk his life in this business, has a life that is reasonably worth living while he still has it to live.

Secondly, we have the right to demand for the men who are called into the armed forces that they shall be decently treated while they are there and after they come out. I received a letter at the beginning of last week from a constituent of mine who said that he was one of the soldiers who came out of the Boer War. The medical men at that time had told them that after the privations they had endured in the seige of Ladysmith they had probably, only seven years to live, at the outside. He said that that was probably true about the majority of them but that he was one who survived, and that he went out in the next War and served in France, Palestine and India. He said: I came through unscathed and with a service pension of is. 6d. a day. I, in my heart, felt that I had earned just a little more than that for my old age and the services and suffering I had gone through but I had come to accept it. Under the operation of the means test every penny of that service pension was taken away. This man served in Ladysmith, Palestine, France and India, yet, under the means test, every penny of the money he had earned by those sacrifices and services has been taken away by the action of this House, and now hon. Members are coming again to ask that man and his sons to prepare for another struggle and for sacrifices of the same sort without any guarantee that their treatment will be better than it was on the two previous occasions.

Mr. Gallacher

There are better promises.

Mr. Maxton

Two things are essential if the Government are to get any acceptance of these things from the mass of the people. I come to the merits of the programme itself. My opposition to it is direct and frontal. The logic is all wrong. The Government say: "If we are a well-armed nation, we can parley about the peace of the world and we shall have a better chance of establishing world peace than if we were an unarmed and negligible nation, so far as force is concerned." Precisely the same sort of argumen was used about tariffs. They said: "When we get a tariff we shall have bargaining power. While we are a Free Trade nation we have nothing with which to bargain, and we are at the mercy of all the other nations of the world. The establishment of a tariff will tend to make this a more Free Trade world than it is." In just the same way the Government are now saying that the new armaments will give them bargaining power and tend to make this a more disarmed world than it is. I do not think there is anything in the experiences of tariffs that leads us to believe that they are a way of establishing Free Trade. The process is just as wrong in the matter of armaments.

I was surprised at such a realist in politics as the hon. Member for East Aberdeen talking about the time when this programme of rearmament is over. Why should he talk so foolishly as that? When you begin things like this, they do not come to an end, especially when you have begun on such a colossal scale as this. There is no end along the road of competitive armaments. You have to go on. Germany has to go on, and Italy has to go on. The response has been shown immediately to what has been done. Germany and Italy are both announcing to the world the extra things that they are going to do because of the extra things that Britain is going to do. There is no end to this sort of thing. I have said that this meant war, and I repeat it here. In the last War you had the complete encirclement of Germany. You had practically all the nations of the world allied against Germany. You had Germany crushed, defeated, beaten to the dust and humiliated, bankrupt, financially ruined and starving. Not 20 years ago that was the position, and that was the position of Germany To years ago. Now Germany is the menace against whom—

Viscountess Astor

Russia.

Mr. Maxton

The Noble Lady's interruptions are sometimes of the stupidest. She now interrupts me with the word "Russia." Does she tell me that the British Government are arming against Russia? I will give way to her.

Viscountess Astor

That is one of the things I want to speak about. Why do we always mention Germany when Russia has twice as many arms and aeroplanes, and is one of the greatest dangers in the world to-day?

Mr. Maxton

I am glad to have that from the Noble Lady, because it justifies what I am going to say further on. I believe that in certain circumstances the workers of this country would not only be ready to arm but would be ready to put everything into struggles of a particular kind. The Spanish people have shown that, and the Russian people showed it in 1919–20. The working-class population is always ready to fight when certain things are involved. The Noble Lady tells us that this armament is against Russia; the working-class of this country would never lift a finger against Russia. The Noble Lady knows—and the Government counts upon it—that Russia is one of the peaceful nations of the world. Hon. Members opposite may fear the propaganda of Russia; they may fear that the form of organisation of the Russian State may spread into other countries; but no sensible person has any fear that the Russian State is thinking in terms of making war on this country, or, indeed, on any other country. Everyone realises that the armament of Russia is armament for defence, and everyone realises that the armament of Germany is armament for offence. The philosophy of Fascism is a philosophy of offence, a glorification of war as a necessary thing in national life. Everyone knows that. Hon. Members opposite were tremendously pleased when the control of the German Republic began to move out of the hands of social democracy. They were tremendously gratified when the Communist menace in Germany—

Mr. Speaker

I am afraid the hon. Member has been led away from the Third Reading of the Bill.

Mr. Maxton

I certainly do not want to go astray, but I will not be led astray. I leave the point, merely saying that, whether it is expressed or whether it is not expressed, the fear in the minds of right hon. and hon. Members opposite is not fear of Russia so far as arms are concerned, but fear of Germany. I do not think there is any way out of that difficulty through competitive armaments or through war—even successful war. The way out of the troubles of the world, and the way to collective security, is not through any written covenants or rules of the League of Nations, however carefully drafted. The way to world security and to permanent peace is along a different road. It is along the road of the struggles of the peoples against their own masters in the various countries. If the people of Germany had been successful in their struggle against their masters, if they had carried it right through to its logical conclusion and established a Socialist State in Germany, the House of Commons would not be facing this menace to-day. Hon. Members, while they did not actually assist, generally approved of the changes in control in Germany four or five years ago, and now to-day we have to face the present situation, not because Socialism is in the ascendant in Germany, but because capitalism is in the ascendant in Germany. At the present time hon. Members opposite are exuberant in the hope that Franco will win in Spain—

Mr. Gallecher

But he will not.

Mr. Maxton

—regardless of the fact that a success for Fascism in Spain adds another menace and another few millions to our war preparations. We on this bench will cast every vote we possibly can against this armament expenditure—first, on the ground that the working classes have nothing to fight for under a capitalist government; secondly, because this expenditure offers no hope of bringing peace into the world; and, thirdly, because the workers of a country, having made armaments, having paid for armaments, have no guarantee in these days that the armaments will not be used against themselves.

Imagine men and women fleeing from Malaga, shot down by the guns that they themselves had provided for the Government, that they had provided their Army with. If there is one lesson that we of the working-class point of view have to recognise in these latter days, it is that standing armies officered by people of the upper classes will never do the work of working-class governments, and that for generals, for admirals, for senior officers to be false to their oath is approved by hon. and right hon. Members of this House. If these officers refuse to obey a working-class government, and say that it is always the honourable and the patriotic thing for officers to refuse to fight against the possessing classes in their own land, to me that is the biggest reason of all for refusing to vote against the armament proposals of this government—the knowledge that, should a working-class government come to those benches and endeavour to make fundamental changes in the social system, the Army, the Navy, and the Air Force could not be relied upon to give loyalty and support to a government of that description.

It may be said that in this country that sort of thing does not happen, but this country is not essentially different in these matters from other countries. If hon. Members approve of the operations of Franco in Spain, as they do; if they approve of the operations of Hitler in Germany as long as he is merely downing the people of his own land—if they are prepared to approve of these things in other lands, these things are not impossible in our own land. On these grounds we who sit here oppose fundamentally this Measure, and will at future opportunities cast our votes against the rearmament proposals of the Government.

6.24 p.m.

Mr. Mebane

This Debate must have convinced the Chancellor of the Exchequer that the opposition to the proposals of the Government is very lifeless. To-day we have heard three points of view—the point of view of the official Opposition, the point of view of the Opposition Liberal party, and now the point of view of the hon. Member for Bridgeton (Mr. Maxton). Notwithstanding the fact that the hon. Member for Bridgeton has, with his usual eloquence, talked about a lot of matters not directly concerned with the Bill—

Mr. Maxton

The hon. Member has no doubt been present throughout the Debate, and heard the other speeches, and he will probably agree that my speech was no different from the others in that respect.

Mr. Mabane

I entirely agree with the hon. Member. His irrelevance, as I was going to point out, was not greater than that of the other Opposition speakers who have taken part in the Debate, but in so far as it was possible to distinguish a point against the Bill in the speech of the hon. Member, it was that he said that there is m the country no evidence of any support for the Bill. He gave, however, no evidence of any opposition to it, and I think there is no evidence at all of any opposition to the Bill. At a later stage he reiterated the old argument in favour of unilateral disarmament. He referred to the matter of tariffs, and I gathered that he desired the House to believe that, if this country rendered itself completely defenceless, that would be the most likely way of achieving universal disarmament. I do not think that that is what he meant, but that is precisely what he said.

Mr. Maxton

I was not making that positive point, but was merely saying that the attitude of the Government was quite illogical.

Mr. Mabane

Later on he referred to the armaments of Russia and Germany, and said with great fervour that the people of this country would never lift a finger against Russia because the armaments of Russia are for defence. I expected him to go on to say that the armaments of this country were for defence, but I did not hear him say it. He said he believed the armaments of Germany were for offence. Does he suggest that the armaments of this country are not for defence?

Mr. Maxton

indicated assent.

Mr. Mabane

He suggests now, by the inclination of his head, that he desires to put before the people of this country the argument that they are authorising the Government to engage in this rearmament programme for purposes of offence. I notice that he seems rather more 10th to indicate assent to that.

Mr. Maxton

No; it is because I have difficulty in understanding what the hon. Member means.

Mr. Mabane

Perhaps the House will permit me to try to make it clearer. I desire to know, and I think the House will desire to know, whether he is endeavouring to convince the House that the purpose for which the people of this country are prepared to authorise a rearmament programme is the purpose of offence.

Mr. Maxton

I do not think the people of this country are ready to authorise a rearmament programme at all.

Mr. Mabane

Very well. I rather expected that reply and so I will proceed to my next question, which flows from it. Would the hon. Member suggest to the people of this country that the Government are undertaking a totally unauthorised form of expenditure which is offensive in character and intention? He is not, I observe, so eager to reply. I think these questions will indicate that, when we discount the eloquence of the hon. Member, the real points he has made in his speech against proposals of this kind have absolutely no substance whatsoever.

Mr. Maxton

If the hon. Gentleman will take the trouble to read the speech tomorrow when he has had time to see what I said, he will be in a better position to criticise it. Obviously, he has not got it now.

Mr. Mabane

I agree that the hon. Member clothes with such eloquence the points that he makes that it is difficult to distinguish them at the moment. Perhaps the House will be in a better position to do so to-morrow. I should like now to refer to the speech of the hon. Member for North Cumberland (Mr. W. Roberts), who, unfortunately, is not now here. I find it difficult to understand the point of view of those who occupy the Opposition Liberal benches—

Mr. Messer

May I ask the hon. Member whether bombing planes will defend this country at all?

Mr. Mabane

If the hon. Member had made his speech, perhaps I might attempt to reply to it, but his interjection is not relevant to what I am going to say. No doubt other speakers will deal with it later. The hon. Member for North Cumberland indicated that the Opposition Liberals intended to support the Estimates but to oppose the Bill. He did not indicate, and I shall be interested to see, whether the Opposition Liberals mean to vote against the Bill in the Division Lobby to-night. I observe that the official Opposition do not intend to vote against the Bill to-night. I gathered from the speech of the hon. Member who opened the Debate, and from the dissent expressed by the hon. Member for Jarrow (Miss Wilkinson) and by the hon. Member for Ebbw Vale (Mr. Bevan) behind him, that the Labour Opposition did not intend to vote against the Third Reading of the Bill.

Sir Robert Young

The hon. Member is quite wrong. Did he not hear my hon. Friend who opened the Debate say that he moved that the Bill be read a Third time this day six months?

Mr. Mabane

If I may turn for a moment to the Bill itself, I feel that it has not perhaps received the attention it deserves in the Debate so far. I do not feel that the House can quarrel with the amount of money that the Government ask for. It is, surely, the duty of the Government to tell us what amount is needed for Defence.

I am sure that the country, contrary to what the hon. Member for Bridgeton says, accepts the proposals of the Government but, in accepting them, wishes to feel that the Government is compelled to this action "with feelings of disgust and shame," to quote the powerful phrase of the Chancellor of the Exchequer; it wishes to feel that if conditions in Europe improve we shall be readily prepared to abandon this programme of rearmament; it wishes to feel that there shall be no exploitation of the programme for the purpose of private profit, and it wishes to feel that, first and last, the purpose of rearmament is to endeavour to make international law more of a reality than it is at present. I am fairly satisfied that there is no fear of inflation resulting from this proposal as was said by the right hon. Gentleman the Member for Hillhead (Sir R. Horne). There is no reason to suppose that the country cannot take the loan in its stride. Eighty million pounds a year, if the amount is borrowed equally over the five years, is, as the evidence of recent years proves, not in the least sufficient to disturb markets or to have any serious inflationary influence. But, if it is the duty of the Government to state the amount required to finance the necessary programme of rearmament and to provide for that defence which it is the duty of the Government to give the country, it is the duty of the House to look very closely into the manner of the expenditure, and to lose in no degree that House of Commons control over expenditure which I regard as one of the most important of our functions. Therefore, if it is not considered to be an unnecessary vulgarity, I will talk a little about the Bill itself, I know that in these days it is considered rather bad form to boggle at millions here and there, but I feel that the House might be fulfilling its functions a little more properly if it paid more close attention to the financial details of a Bill of this kind.

It is very difficult to discover the precise purport of financial proposals in a somewhat complicated Bill of this character, but I should like to ask one or two questions on what appear to me to be points of substance deserving attention. If I am wrong in any of the points, I can only say that it is because of the difficulty of appreciating intricate financial proposals in a Measure of this kind. I want to ask for a little explanation about Clause 1 (3). At first sight it appeared that the Bill provided that any realised surpluses on the national accounts in the five years concerned would be applied to the purpose of rearmament. In other words, it seemed that the provisions of the Sinking Fund Act, 1875, would be completely suspended for the purposes of the Bill. I should very much have welcomed such a proposal. I think it would be a very good thing if any realised surpluses during this period were applied to rearmament expenditure. But, if I correctly interpret Clause 1 (3), that is not so at all. The proposal of this Sub-section differs from the proposal in the Act of 1896, to which the Chancellor did not refer. Instead the effect of Clause r (3) is that any surpluses that are realised on the national accounts are paid into the Consolidated Fund and, while the money may then be used to provide part of the loan money, nevertheless, if it is so used, then, under Sub-section (4, d) it must ultimately be repaid out of the Service Votes. That is to say, the surpluses are not applied absolutely and finally to supplement the Service Votes but are added to the loan. I may be wrong in my interpretation of the Clause but it appears to me that that is the effect. It is somewhat unfortunate if that is so, because the position of the Service Votes would then appear to depend a good deal on the fortunes of finance. In any case, surpluses may be large. In the past there have been surpluses of £100,000,000, and in the last few years they have been substantial, and it might mean a very considerable lowering of the amount that had to be borrowed if any surpluses that accrued were not added to the loan, but were applied absolutely and outright to the purpose of rearmament.

I should like to raise one further point with regard to the finance of the Bill. The Chancellor very definitely refused to use the Act of 1895 and 1905 as precedents, and of course in that he was justified, because those Acts related to expenditure on permanent structures of a quite different kind. In the ordinary way it would have been deemed prodigal finance to borrow for purposes of the kind suggested in the present proposal. Nevertheless, we recognise, and the House has recognised, the real force of the Chancellor's suggestion that in this case the money should be borrowed. Nevertheless as the money is being borrowed, not for permanent assets but for assets which will waste, it is a very questionable proposal to lay the burden of this borrowed money upon the Service Votes. It appears to me that the money that we are now undertaking to spend for rearmament ought more properly to be regarded as expended to increase the goodwill figure, so to speak, in the national balance sheet. That being so, is it not a little unfair to the Services to place the whole burden of both interest and sinking fund for this loan upon the Service Votes? I should have preferred to see the whole burden of the loan included in the National Debt charge as a national responsibility. The implication of Clause 1 (4, d) is that for 35 years from now there will be an additional sum added to the Service Votes each year to provide for the interest and sinking fund on this Loan.

That is a very serious matter. It means that five years from now the Service Votes will be increased by about £20,000,000 a year to meet the loan interest and sinking fund and, in consequence, the House at that time might take a rather wrong view of the position of the Services. Estimates will be presented and they will appear to be £20,000,000 greater than they really are. The result might be that the House would tend to cut down the Service Votes and, while we have suf- ficiently provided for our rearmament by this five years' programme, at the end of that period we might be disinclined to spend the money that we ought to be spending on the replacement of various items. I feel, therefore, that the House is entitled to know for what reasons the Chancellor proposes to place this additional burden upon the Service Votes in these years to come. I feel that, unless the House has an explanation on these points, then, in the years to come it might regret not having paid such close attention to the manner in which the money is to be expended and is to be imposed as a burden upon the various Service Departments.

6.40 p.m.

Lieut.-Commander Fletcher

The Noble Lady the Member for Sutton (Viscountess Astor) is obviously in a state of corked up effervescence and restrained emotion which seems to be making her dangerous not only to herself but to anyone who happens to be sitting near her. I hope that the time for her to speak may soon come and that the threatened explosion may be thereby averted. I only follow the hon. Member for Bridgeton (Mr. Maxton) so far as to say that I, like him, have frequently felt the same surprise that he feels about the extremely accurate information that the right hon. Gentleman the Member for Epping (Mr. Churchill) possesses. If that extremely full and accurate information only represents the application of his own talents and industry to information which is available to all of us, I must indeed congratulate him upon his ability and industry.

We have had many days debate on this Bill. In fact, I think the proceedings are almost in the nature of one of those timeless Test matches that take place in Australia, although the Opposition seem to be standing up to them rather better than Mr. Allen and his not so merry men have stood up to their Test. The Bill has afforded opportunities to economists, soldiers, sailors, airmen and our amateurs of foreign affairs to add to the knowledge of the House. I am not going to entrench very far upon the soil of the economists, who seem to me to have done what economists always do, and that is to leave their audiences in rather more profound darkness than they were when they began.

The only precedent that I have been able to find for these loans is that we once raised £45,000,000 at a time when the Income Tax was 8d. or 1s. 3d. in the pound. We are now proceeding to borrow £400,000,000 at a time when the Income Tax is 4s. 9d., and the whole expenditure contemplated is £1,500,000,000. In other words, we are going to lay £15 on every milestone from here to the sun. Of course, the Chancellor of the Exchequer would not call that midsummer madness. I remember that the late Lord Asquith criticised borrowing of this nature as likely to make the spending departments more extravagant. It is clear from the Chancellor's speech on 17th February, that we are not arming in accordance with any plan. The Government are simply saying that, where rearmament is concerned, the sky is the limit. In this game competitive armaments represent a game of strip poker and nothing else, and the effect is seen already in the fall in gilt-edged stock which has taken place. The Chancellor says that it may cost more than £1,500,000,000 and that we can afford more, and that indicates again that the sky is going to be the limit in this business and that the Government are going to adopt the policy of the American railroad magnates where freights are concerned. Their motto is, "All that the traffic will bear." The Government's motto is, "All that the taxpayer can be stripped of." The right hon. Gentleman the Member for Hillhead (Sir R. Horne) says we can take this expenditure in our stride. It is very regrettable that we can take an expenditure of £1,500,000,000 in our stride and yet always stumble over the distressed areas. It seems to be a great pity to be able to take such a giant staircase in our stride and then to trip over such a very little mat at the bottom of the staircase.

I noticed that in his speech on 17th February the Chancellor of the Exchequer, as usual, attempted to have matters both ways. He told us that the Government programme is based upon information which is not accessible to the Opposition, but he then went on to ask the Opposition to say what they thought should be cut out. This is a very strange sort of examination in which the examiner sets problems, gives no data, and yet expects the examinee to supply the answer. For instance, how can we, in that position, say if the proposals about the Army are extravagant, when the Government themselves have told us that they do not know for what the Army will be used in the next war, or how it will be used? My hon. Friend the Member for Kingswinford (Mr. A. Henderson) very properly pointed out that we can give no answer when we do not know whether the Government are relying on unilateral armaments or collective security, and the Chancellor of the Exchequer could make no reply to my hon. Friend, but simply rode off by drawing an imaginary picture of an opposition which wants no armaments at all. Surely the Opposition, in debating such a Bill and such proposals as these, are entitled to know what principles of foreign policy underly these proposals, and, what is equally important, if there is an agreed imperial policy upon which these proposals are based.

I thought that I had never heard the voice of Pecksniff speak in such authentic accents as when the Chancellor of the Exchequer in recommending this Bill gravely rebuked civilisation and told us of his "disgust and shame" because countries do not settle their differences by "give-and-take." I wonder whether he was thinking of the give-and-take of the Hoare-Laval proposals—[An HON. MEMBER: "That was put and take."]—when the whole country felt disgust and shame when a British Foreign Secretary proposed to take Abyssinia and give it to the Italians. Why should we be expected to support this Bill when the Government are completely ambiguous about their foreign policy, and when the work of the Minister for the Co-ordination of Defence arouses such mistrust and criticism, and excites the liveliest fears that the money which we are discussing tonight will be wastefully and inefficiently spent? The White Paper presented to back up these proposals is simply a hotchpotch of old stuff, roughed together in a hurry, to enable the Government to say they have given us something. There is no moneylender in this land who would lend £1 on such a promissory note as that White Paper, and yet we are expected to advance £400,000,000 on the strength of it. There is not a word in the White Paper to conciliate those who believe in the League, those who believe in collective security, or those who believe in the limitation of the profits on armaments. There is not a word in the White Paper to conciliate those who believe in the effective and efficient planning of defence. As an instance, a Royal Commission has reported that the system of Government price control is weak. We have not heard one word from the Government as to what they propose to do concerning that report of their Royal Commission.

If the Government will not define the foreign policy upon which this Bill is based, they really must not object if the Opposition make a diagnosis of it. The only explanation that I can see in the face of events is, that the Government have completely abandoned the League and collective security, and we are back at the old Salisbury policy of isolation and opportunism. Their armaments programme is based upon no plan whatsoever, except to build everything we can afford, and then to throw in our weight as and when it suits our own selfish interests to do so. Great Britain, under the National Government, has become one of the countries outside the League, and it has been very noticeable recently in Debates in this House that any reference to the League, or to collective security, has more often than not met with bursts of contemptuous laughter from hon. Members who sit on the benches opposite. What emerges is, that we are back at isolation and opportunism. I remember the right hon. Gentleman the Prime Minister, once speaking of Lord Rothermere and Lord Beaverbrook, used a phrase about the harlots of the Press, but the harlots of the Press seem to have won, and we are back at isolation.

I noticed—and this is very strange—that while the Foreign Secretary says that we will honour our League obligations, the Chancellor of the Exchequer, speaking on 17th February, while the Foreign Secretary was out of the country, dismissed all that by what he called just "setting out a theory." It is all very well to sneer about theory, but unless the Government put as much drive into establishing the collective security system as they say they are putting into their armament programme, then, in addition to soaring prices, a lower standard of living and every sort of industrial and social unrest, we shall find that the unilateral armaments to which they are committing this country will prove powerless to save us. Can we have no evidence now as to how this money will be spent? Let us have a brief look at the work of the Minister for the Co-ordination of Defence. The "Observer," commenting on his speech in last Sunday's issue, said: The Minister for the Co-ordination of Defence is going to be a first-rate Minister of Supply"— and it then went on to say: If he is not really the Minister co-ordinating Defence, that is not his fault, but the fault of insufficient power. In any case, he is not the type of man who has either the equipment or the character of a Minister to decide between the competition of the Departments for the national purse, or to clear up contentious questions of strategy and tactics. That is the "Observer," a friendly organ of the Minister for the Co-ordination of Defence, and yet it is upon him, apparently, we have so largely to rely for the spending of these huge sums which are being considered. His speech in the Debate on this loan proposal consisted chiefly in telling us that a great many strictly routine matters were being attended to. Take the question of coast defence? The Minister took half a column of the OFFICIAL REPORT to tell US this about coast defence. We devise the general principles on which the coast defences of ports are to be based. Then we work out for each individual port the actual defences that were required. Then we discuss the exact location of the different forms of armaments. And he asked: Is that or is it not an example of the co-ordination? Really, what nonsense. What was done about coast defence before the Minister was appointed? All that is simply the A.B.C. of routine work, and it took half a column of the OFFICIAL REPORT to tell us that. Then there was air defence. Listen to this lucid plan of action on air defence: The first stage was to settle the general principles, and the second stage … a full examination into the precise degree of protection to be afforded to any particular locality. On this terrific research work the total amount and the character of the defences were calculated and the estimated expenditure followed. This was solemnly given to the House as an example of planning and co-ordination. Did we really appoint a Minister for the Co-ordination of Defence in order to get routine work of this nature done? If so, there must have been very grave neglect of duty on the part of people in high places and of authority before he was appointed. But I think that the Minister's masterpiece was his remarks on reserves of ammunition. He said: Does anybody think that we are planning this matter regarding supplies of ammunition regardless of other things? The reserves of ammunition are calculated with a view to a possibility of an emergency which may take place. Really, that sentence is worthy of the Lord President of the Council. And then the Minister went on: The organisation of this form of supply is in itself a revelation of the planning which has been completed. A revelation? Is it not marvellous that the Minister and his merry men do actually order the ammunition on the basis of what will be wanted. Well, is it not terrific? I really wonder we were not told that they took the utmost care to order 6-inch ammunition for 6-inch guns that when they order shrapnel they do not forget to order some fuses to go with it and that there is a special committee which he has set up and which is working under his direction to see that 9-inch guns are ordered to fit the 9-inch ammunition. He went on to say: It has not been haphazard, panic planning, but a deliberate calculation.. And he gave an example of this. They thought of supplying the Army with some particular requirement, and, believe it or not, they acquired a factory that the Army might be supplied, and then, having given us that example of planning, he asked permission to present a "concrete idea" to Members. I take it that that came straight from the head. I remember hearing of a man who had a concrete mind, thoroughly mixed and firmly set. The "concrete idea" which he wished to present to hon. Members was this. He said: Why are we building Government factories for the purpose of producing ammunition and explosives? The answer was because in the last War we found that factories were necessary for the production of supplies. To that he added: Is that an example or not of planning and preparation?"—[OFFICIAL REPORT, 18th February, 1937; cols. 1421–23, Vol. 320.] Really, we on these benches feel that it is the greatest impertinence that the Minister should come to the House and talk in this way about elementary and routine work which must have been going on long before his appointment was thought of, and to help the Government bolster up a bad case by representing all this as something he has set going. Whenever the Minister does speak about his work, he always tries to disarm criticism by saying that he is a babe in these matters. I understand that the father, both of the new office and of the appointment that was made to it, was the Prime Minister. I can only say that I am afraid we cannot issue the statutory bulletin that both "are doing well."

There is not the slightest evidence that the prime duty of a co-ordinating Minister is being carried out. That prime duty is the allocation of the functions of the three Fighting Services. There is no sign that that is being done. A very distinguished officer said to me a week or two ago that the chiefs of the three Fighting Services were, in the words he used, "Longing to have their heads knocked together at this moment, and want someone to take the responsibility of knocking their heads together." There is no evidence to show that that is being done by the Minister for the Co-ordination of Defence. Events in Palestine recently proved it. All responsibility in that area has for a long time been turned over to the Air Force, but when there was some trouble there the Air Force was unable to deal with it, and the Army had to be called in. That is an example of the complete lack of allocation of functions to the three Services at present.

Another most important point in Defence which the Minister has neglected, and which, I think, does not brook delay, is the question of the location of industry, with which the most intimate and vital factors in defence are bound up. There is talk of the Government appointing a Royal Commission to inquire into this question. But that is a means of shelving it. The Government did not like the recommendations of their late Commissioner for the distressed areas. They made the mistake of appointing an intelligent man to that job, they have never liked him for what he did, and they have not repeated the mistake in appointing his successor. It is not a Royal Commission that is wanted, but an ad hoc body to be set up at once under the Minister for the Co-ordination of Defence. I submit that the extracts from the Minister's speech which I have read are sufficient evidence that the work of the Minister for Co-ordination is not being carried out in such a way as to give us any hope that these vast sums of money will be wisely or efficiently spent.

The Prime Minister has also spoken in this Debate, and of his speech the "Observer" said: Mr. Baldwin was not free from ambiguity when he came to explain how re-armament might serve peace. I should think not. He said in that speech: Deterrence is our object. We do not appear to have deterred Italy much, for all that our programme has achieved in Italy is to make them come out with a new programme, and they preface it by saying that disarmament is dead, that the whole nation from the age of 18 to 55 is to be pressed into service, and, most important of all, that the civil life of the nation is to be subordinated in every way to military requirements. That is the Italian reply to the Prime Minister's statement that deterrence is our object. The Prime Minister said some months ago when there was an Election in the air, "I give you my word there will be no great armaments," and now it is £1,500,000,000 that we are being asked for. Even now, like the housemaid, he is trying to make us believe that "it is only a very little one." He said on 18th February that the Navy will be far from being a great Navy."—[OFFICIAL REPORT. 18th February, 1937; col. 1507, Vol. 320.] How does he reconcile that with the statement of the First Lord: Our lives depend on free passage through the Seven Seas, and the Navy must be strong enough to go anywhere and do anything, and it is our determination to have such a Fleet. Who is right, the Prime Minister or the First Lord? If the First Lord is right, it is no good saying that the Fleet will not be a great Navy as the Prime Minister said. This programme just announced by Italy is interesting for another reason. Speakers on the other side have been assuring us since this programme was announced that our rearmament programme gives great joy in Europe and makes for peace. If that is so, why do we not reply to Italy at once, and mobilise the whole nation up to 75 instead of 55? Why do we not announce that we are going to have an Army twice as big as the new Italian Army, and by doing so cause more joy and peace in Europe? Government supporters are delighted with this programme because they can now repeat all the stale platitudes such as "If you want peace, prepare for war." They are revelling in it. They can dig out their old speeches and make them all over again, with the old perorations. The Government are completely self-righteous, thanking God that they are not as other men, and telling us that the way to prevent an explosion is to cram our cellars full of explosives and then we will never have one. The nation seems to me to be sullen and unenthusiastic about this programme, realising clearly that it would never have been necessary to embark on such a programme had the Government not failed in their task in international affairs. We on these benches can claim credit for this at any rate, that at every step and turn of the road which has led the country into this rearmament programme we have warned the country where Conservative and National Governments were taking us.

I shall vote against this Bill to-night, to begin with, because it is the wrong method of raising the money, and because we have no assurance that an effective peace policy will be pursued while the armament policy is being driven through. I shall vote against it because the Government have abandoned the League of Nations. I shall vote against it because defence is not being properly organised under an effective Minister. Money is being inefficiently and wastefully spent, and there is no limitation of profits being made out of armaments. I feel no confidence or trust in the Government about this matter. An American friend told me the other day that what struck him most in this country was that the country was hopelessly in the grip of old men, and here we see the country being muddled into another war under the direction of men who were already too old to take an active part in the last War. It is that which makes the youth of this country despair, because they feel they are being condemned to die in a war for which the wrong preparations are being made. On 18th February the Prime Minister said "It is a good time to be alive." The only reason he could give for that was because we are now building up armaments which will enable us to die for our beliefs. I have my own beliefs, and I hold firmly to them, but the Prime Minister, the Minister for the Co-ordination of Defence and the National Government are not among my beliefs. I do not want to die for them, or because of them.

7.11 p.m.

Captain Harold Balfour

While the hon. Member for Bridgeton (Mr. Maxton) is here I want to correct a statement he made. He said that we on these benches condemned the Government policy. Let me remind him that on this bench though united we sit, divided we stand. He made a speech in which he said there was no support for the arms policy. He even dragged in the University franchise in support of that argument. It does not need a long memory to recollect a Bill in the last Labour Government for the abolition of the University franchise, and one of its strongest supporters was the hon. Member. I am glad to see he has now changed his view and is a supporter of University franchise which he uses in support of an argument. He made gloomy prophecies of what is going to happen, but we should not take any notice of them because out of his own words he is a political ghost, and should be politically dead. In 1923 the hon. Member said that we had only two or three years more to live under the capitalist system, that we were about to crash, that there were tremors in the system, and that at any moment there might be an earthquake and collapse. I am quoting from a report in the "Glasgow Herald" of one of those speeches which perhaps the hon. Member has forgotten now, a speech made to the Vale of Leven Labour party on 8th September, 1923. If his prophesy has been proved so false, and if the country is in a better state now than it was in 1923, we can discount those further gloomy prophecies he has made to-day regarding the armament policy.

It seems to me that this Debate has shown clearly what is proposed, and for what purpose we need that defence. These armaments are for our defence and for our international obligations so clearly defined by the Foreign Secretary in his speeches at Leamington and Bradford. I want to ask for one more clear declaration by the Government, to round off the presentation of the case to the country for the justification of these proposals. The Prime Minister has said, and the White Paper has emphasised, the flexibility clauses in the armaments proposals, in that, if the situation became graver the programme could be speeded up, and if it became easier the programme could be slowed down. I want to ask if the Government will define the conditions under which we would invoke flexibility downwards. The Chancellor of the Exchequer said he did not despair that new factors would stop the prolongation of this mad race and prevent it going to its bitter conclusion. The speech of the Foreign Secretary at Leamington and his speech at Bradford helped to steady opinion in the country. It was a clear declaration of policy, and has been accepted as such by the rest of the world. I would ask for a statement of the Leamington clarity as to when and under what conditions we should be able to stop or to slow down this programme. If a statement were made which indicated such an objective as could not be achieved at the present time and the programme must proceed, as seems probable, at any rate such a declaration would define the outer limits within which we are determined to proceed. There has been a large measure of agreement on both sides of the House. Our differences are largely matters of degree, and I believe that such a declaration on the part of the Government might help to give a still greater measure of unanimity on the need for rearmament than exists at the present time.

There seems to be general agreement that we are never going to use these weapons for aggression, but that we are going to use them for international obligations, and our differences are differences of degree as to what those obligations are. The only exception to the view that these armaments will never be used for aggression is the hon. and learned Member for East Bristol (Sir S, Cripps), who said that they would be used for "the continued domination of subject peoples." I wonder whether he spoke as a Labour Member or not. He is in a state of suspended animation. "To be or not not to be," is the question for him. We are entitled to ask whether he speaks for any authoritative section of the Labour party or whether he speaks as someone outside the Labour party. [An HON. MEMBER: "What does it matter?"] Whether he is a Member of the Labour party or not may not affect the argument, but it affects the views of the country as to what are the opinions of His Majesty's Opposition, and the country is entitled to know whether the views expressed by prominent back benchers are the views held by any section of the Opposition Front Bench or whether the real views of the Front Bench are those which we have heard expressed that these arms will not be used for aggression, and that they repudiate the views of the hon. and learned Member for East Bristol.

I have said that there is difference of degree in our agreement as to the use of force for meeting international obligations. It seems to me that the right hon. Member for West Birmingham (Sir A. Chamberlain) stated very clearly what our obligations are, and pointed out that those obligations can only be as far as public opinion in this country allows. In the last War perhaps 5 per cent. of the population were against the pursuit of hostilities, and even they could seriously embarrass the country. It is obvious that with conditions as they are to-day no Government could pursue a policy that would lead us into the use of force unless they had the almost unanimous support of the voters of the country. Twenty per cent. of the populace could wreck the pursuit by the Government of any policy for the use of our armed forces. In the Abyssinian dispute we saw what political divisions could do. Even those who condemned what the Government did and said that we should have gone to war must realise that if we had tried to do that there would have been a tremendous political difference in the country which would have wrecked any successful pursuit of hostilities.

I see the hon. Member for West Fife (Mr. Gallacher) present. I believe that he is an advocate of pooled international security. Under a pooled system it is an elementary assumption that everyone must be thought at sometime to be a possible aggressor and also everyone must be considered to be a unit in a system of pooled security, ready to take sides against an aggressor. Therefore, we can assume that a reformed Germany might possibly rejoin the League and be one of the countries subscribing to a system of pooled security. There is division be- tween Soviet Russia and Esthonia, as anyone who has been on their borders know. Let us suppose that hostilities broke out and that Russia was technically the aggressor. Would the hon. Member for West Fife join in a great cry: "Workers of the World: Unite to fight against Soviet Russia." That is a perfectly logical question to ask and a perfectly logical assumption to make under a system of pooled security. I only make that point for one reason, and that is that we must all realise that pooled security can only go as far as public opinion in the country at the time will allow.

I think that the Foreign Secretary by his Leamington declaration has helped tremendously the development of the system of pooled security in this country. He has helped to steady foreign opinion and has gained support for this Defence Loan Bill, and if we could get the further declaration for which I have asked, indicating the conditions under which we might slow up our arms programme, the picture would be complete and that we might gain an even greater measure of support than we have at the present time.

7.23 p.m.

Viscountess Astor

This has been a very interesting Debate, but it has not been according to the Rules of the House of Commons. The hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher) talked about bottled effervescence. His was not bottled; it was written, and he read it—every word of it. He was exactly like the right hon. Member for Epping (Mr. Churchill). I want to make a complaint. I thought that this House was a debating Chamber and that we could not go in for written speeches; but we have had two written-out speeches. As I cannot write my speeches and cannot make a written speech, I feel very bitterly against those who can. I do think that that practice is against the Rules of the House.

I want to commiserate with the Chancellor of the Exchequer upon having to bring this Bill forward. No man in the country has been more interested in the social services. No man has done better work for the social services and he, like thousands of other people, deeply deplores the reason for rearmament. One hon. Member opposite asked why the Government had not done this sooner. I should have thought that by this time most of the women in the country, if not the men, know that there is no country in the world that has fought harder for the League of Nations than this country. It has been the backbone and basis of the League. What has been the consequence? We have wakened up to the fact that we have been the one country in Europe that really believed in the League of Nations. In every town and village in this country there is a League of Nations Union. There is hardly one in France. I was horrified last year in going through France to meet a very big man interested in infant welfare who knew really nothing about the League of Nations; he had hardly heard of it. In Germany and Italy the people know very little about the League of Nations. What the women of this country realise is that the women of Europe have no say whether they want war or peace. The hon. and gallant Member for Nuneaton said that this country is ruled by old men. Let us thank God that that is so, when we see what the young men hate done in other countries. They have put in Stalin, Mussolini and Hitler. Thank God we have some old people with heads in this country, otherwise we might be under dictators. The hon. and gallant Member talked about old men, but I would remind him that there is not a bald head on the Government Front Bench.

Mr. Pritt

That is because the Minister for the Co-ordination of Defence, who ought to be here, is not in his place.

Viscountess Astor

I would not have made that personal allusion had it not been for the statement about old men. If the hon. and gallant Member wants to follow young men, he will have to come over to this side. Hon. Members opposite talk about this Government not standing by the League of Nations. They may put that over to the men, but they cannot put it over to the women. The regrettable thing is that the women of Europe have no say in their Governments. As to the League of Nations you have not an honest League of Nations. You have only to go there to see that. I believe in the League of Nations and have fought for it, representing as I do a naval constituency, and my whole heart is in the League of Nations, but when hon. Members talk about pooled security, I think the country will call it fool security.

Miss Rathbone

The Noble Lady needs to get into touch with a certain organisation in France, and she would find out that whether there is a League of Nations Union in France or not, this organisation is an exceedingly effective peace organisation. Moreover, if she had taken part, as I did, in the meeting at Brussels last September, she would have seen that there is not a country in Europe that has not a strong organisation working for peace, and growing day by day.

Viscountess Astor

May I remind the hon. Lady that the women in France have not the vote? What effect would the women of this country have had on the Government if they had not the vote? Nobody knows better than the hon. Lady. In how many towns and villages do those organisations exist?

Miss Rathbone

Lots.

Viscountess Astor

The hon. Lady cannot say that. It is no use telling me about these organisations for peace, composed of women who have not the vote.

Miss Rathbone

They have voices.

Mr. Noel-Baker

The Noble Lady has overlooked the fact that there are two women Ministers in France, and that there are not any in this country.

Viscountess Astor

Two women Ministers, who are put there to keep them quiet. That is the humbug of the whole situation. I believe in domocracy, but it is not democracy making women Ministers and denying them the vote. I am an internationalist up to a point, but I am also a realist. We have not let down the League of Nations, but we have been let down by the League of Nations. And then hon. Members talk about pooled security. The reason why we are in this mess to-day is because the League of Nations has been used by European nations for political purposes, and no country has done it worse than France. If we had brought in Article 19 to redress the wrongs of Europe—France was the great country that kept us from doing that—Germany would have been in the League of Nations, and there would not have been the present position. Hon. Members talk about Germany as the great aggressor. The real trouble is that we have followed in the footsteps of France too many years. We have helped France for many years. We have been the great friend of France. I say, do not base your foreign policy on that of a shell-shocked nation. That is what we have been doing. We have been really in earnest about the League of Nations. We might have pressed the League for the application of Article 19, but we did not, and no country did. Then we are told that we are the country that has failed because we could not get France or other countries to agree. Very few countries have stood up to France. If we do that, then we are told that we are going back on one of our great allies. I think we have gone back on the League of Nations.

Mr. Gallacher

Why does not the Noble Lady write out her speeches? She would then know what she was going to say.

Viscountess Astor

The hon. Member, who is a Communist and very lucky to be in a capitalist House of Commons, should never interrupt anyone. He is very fortunate indeed to be allowed to live in a capitalist country, because here he can say what he likes, without going to Siberia. We have been let down by seeing the rest of Europe not taking any part in the League of Nations in the spirit in which we have taken part in it. [Interruption.] I do not expect the hon. Member opposite to believe in the League of Nations. I do not believe that any country in the world could really satisfy the hon. Member. He does not want to live under a democracy or under an autocracy, but I do not believe he minds where he is as long as he is in the House of Commons—he and the other "corner boy" here.

Mr. Maxton

On a point of Order. Perhaps your attention, Mr. Speaker, was too much taken up by the right hon. Member for Epping (Mr. Churchill), but I want to ask you if the Noble Lady's remarks are really in order?

Mr. Speaker

I am rather loath to interrupt, but the House will remember what I ruled in regard to hon. Members being out of order in raising the whole of our foreign policy. I am afraid the Noble Lady is really erring too much in that direction, and it would be better now if she returned to the subject of the Bill.

Mr. Maxton

The point that I was raising was not the general tenor of the Noble Lady's remarks, but an offensive epithet which she used in reference to the right hon. Member for Epping.

Viscountess Astor

I was referring to the hon. Member for Bridgeton (Mr. Max-ton).

Mr. Speaker

Naturally, if I had heard any offensive remark, I should have called the Noble Lady to order, but certainly, for the way in which the remark was received, there did not seem anything offensive in it.

Viscountess Astor

The hon. Member for Bridgeton is the last man in the world to whom I would be offensive, and I apologise for anything that I may have said that he thinks offensive, but always in these great debates you have these two "corner boys," and they both make brilliant speeches, but they do not represent anything very much in the country. What I was saying was that our having to rearm is so tragic, but to tell me that we should not rearm seems to be utter madness, and I feel that when we talk about rearming it is absurd only to talk about the menace of Germany. Why, only to-day we see in the papers that in Russia they are beginning to arm and train children eight years old. Russia has an army far greater than Germany's, and she has an air force far greater than Germany's, and furthermore Russia has a policy of an international world war. An international world war is what she wants. When I hear the hon. Member for Bridgeton talking about our Government wanting Franco to win in Spain, I have not seen any signs of it. The people here are divided, and whichever side wins, it will be disastrous to Spain.

Anyhow, here we are, living in a world like this, and you talk about the working men asking for freedom. There are no workmen in the world who have ever had less freedom than the working men in Europe to-day. The old-fashioned Kings and Emperors were like liberators compared with these autocrats on the Continent to-day. We had a War which it was hoped would make Europe safe for democracy, but we have made it safe for autocracy, and if hon. Members opposite had their way, we might get the same thing here. I thank God we have a Government whose financial policy has been so sound and safe that now, when we are driven to rearm, at least we can do it without cutting down our social services. That was the reason why we had to get rid of the Labour Government, because we saw our social services going down. That was the whole reason. Let hon. Members opposite go to the country today and tell the people to look at Europe, at Russia—mainly at Russia—at Germany and Italy, and even at what is going on in Spain, and then tell them that England should go on backing collective security and turning the other cheek. Try that on the women!

The hon. Member for Bridgeton talked about this awful class war that is going on in other countries and said that it will come here. Why should it come here, when 90 per cent. of our people can read and write, but look at the people in Italy and France. We have always had a population, we Anglo-Saxon people, that has fought and died for freedom. We have had the Bible in the common language, and the people have read it, and our English civilisation is based on that. We are a protesting country, we are the heart of Christendom, and to compare the working people of this country with those in Europe is an absolute farce. You will never get class hatred in this country. How can you, when one minute you are a manufacturer of tins, or beer, or whatever it may be, and the next minute you are in the House of Lords? How are you going to get class hatred here? There is no such thing here, and you cannot get it. I feel that, bad as it is to have to spend all this money on rearmament, Europe will be much safer when England is strong; and, after all, why should we have armaments for aggression? We have got more now than we almost know what to do with, but at least we are a Commonwealth of free nations.

Mr. Gallacher

What about India?

Viscountess Astor

It would not be a Commonwealth of free nations if the hon. Member had his way, and we did not arm, but turned the other cheek to Europe. I am deeply distressed at the Chancellor of the Exchequer having to ask for so much money, but I am certain that the men and women, and the working men and women, of this country will be grateful that we have a Government which has common sense and also a great deal of common humanity, in saving our social services and trying to control profiteering as much as it can, but that is not so easy. [HON. MEMBERS: "Hear, hear."] Well, it is not confined to any one class. I saw it during the War, when there were great lines of people waiting in queues, and some of them with two or three packages under their aprons already. Hon. Members know, or ought to know, that the evils of the world come from the hearts of men and women. I agree that these proposals do not mean peace in the world. I do not believe you will get peace in the world until people become more spiritually minded and less materialistic. I have never seen any party in this country that could throw stones at any other party, so do not try to put it over about class hatred and capitalists on this side of the House. Hon. Members opposite know very well that all of them are capitalists, and that all the time they are yelling against capitalism they are trying to make as much money as they can themselves.

I hope I have not been offensive. I do not mean to be offensive, but I cannot help being frank, and I will not be a humbug or a hypocrite if I can help it, and when I hear hon. Members opposite talking about this capitalist system leading the world on to another war, I am sure that in their hearts they do not believe it. I ask them to travel abroad and to look at the condition of the people there and compare their aspirations with ours. The only chance of real peace in the world is in the British Commonwealth of free nations and the United States of America holding the ring, and then, sooner or later, these other countries with their class and other hatreds will come into this great Commonwealth of nations. The hon. Member for West Fife (Mr. Gallacher) smiles, but let him go to Russia. He can smile here, but if he goes to Russia, he will come back here rejoicing that he is "a voice crying in the wilderness." I believe that hon. Members opposite are just as sound in their hearts as we are, only they have believed in claptrap so long.

7.41 p.m.

Sir R. Young

I do not intend to follow the Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor) into the details of her speech, which was interesting though somewhat irrelevant. I am sorry that the hon. Member for Huddersfield (Mr. Mabane) and other hon. Members thought we were not going to divide against the Bill. They evidently did not understand that my hon. Friend who opened the Debate had moved that the Bill should be read a Second time upon this day six months. The Bill before the House is to put into effect the terms of the Money Resolution passed by a Committee of this House some two weeks ago. The Government, having got their Money Resolution and the Second Reading of this Bill by a large majority, will probably also get its Third Reading by a somewhat similar majority.

Some of us who remember the experiences of the Great War, and who shared in the hope that was felt and expressed at the end of that War, never expected that in our lifetime we should be up against the problem of preparing for another world war. Still less did we expect that Parliament would be told that the country would not be able to meet its armament requirements out of its annual income and expenditure. That is the position that we are in to-day—abnormal war expenditure in peace time. When we realise the possibilities for world peace that presented themselves during the 14 years following the War, possibilities frittered away by narrow-minded, nationalistic politicians at home and abroad during the past four years, many of us are amazed and reduced to dejection, and even to despair, at the lack of political sagacity and statesmanlike prevision which has characterised the rulers of the world during the last few years. £400,000,000 in five years for war purposes, by what might properly be called extraordinary taxation, plus the annual Estimates for war purposes totalling, we are told, probably £1,500,000,000, is not only a colossal sum, but a staggering amount to be incurred by a country, a nation and an Empire that has declared its desire to be at peace with every other country under the sun. A sum of £400,000,000 of abnormal expenditure for war purposes instead of for peace purposes indicates very clearly the great financial wealth of this country, but at the same time it advertises the political folly and the economic madness of the rulers of the world and especially of those responsible for our own country.

We live in a very grave time indeed. Those who have come into the world since 1914, those to whom urgent appeals are being made to join the Army, the Navy and the Air Force, those who are being marshalled into the armies of all nations for the purposes of war destruction, might well say, "All hope abandon ye who enter here." Last Thursday I heard the Home Secretary say that he thought this expenditure would have a restraining effect on the war expenditure of other countries. If this threat of enormous war expenditure would have the psychological effect of making other nations engaged in similar expenditure pause in their work and cause them to think on its ultimate results, we might yet retain a glimmer of the hope held out to us in 1918. But will it? Judging from recent experience on the Continent I very much doubt it. This is the kind of unproductive expenditure which creates a competitive appetite for more, until like an insatiable glutton it belches forth its nauseous accumulations in disease, disaster and death.

We are committed to this expenditure of £1,500,000,000 for the next five years, £400,000,000 of which is to be raised by loans. We want to ask several questions about this expenditure, and the answers to these questions will determine whether our criticism in the future is minimised or not. At any rate, if answers cannot be given now they should be given as speedily as possible. We want to ask: how the money is to be used and what steps are being taken to prevent profiteering? Is there to be a check on the farcical competition arranged by rings and combines and subsidiary companies to exploit the community? Are the Government's costings organisations fully equipped for their work? This last ought not to be difficult to arrange, because we have our war-time experience to fall back on, when the lowest tenderers for war materials were found to be charging prices which, even when reduced by 50 per cent. or more, gave the manufacturers financial profits which left fabulous war wealth in their hands. We should like an answer to these questions. I cull from a recent newspaper this enlightening information which shows what happened in the past: The Government are going to borrow large sums of money for rearmament. In this country lending money to the Government is good business. The patriotic citizen who wanted to help the Government to pay for the peace in 1919 did so by subscribing to Victory Bonds. In return for £850 he got scrip to the value of £1,000 Since then he has received in interest £720, and to-day his scrip is worth £1,120. Is that kind of financial ramp to be repeated on a worse scale? Are the War profits of 1914–18 to be made in peace time? Surely the Chancellor of the Exchequer will take every means to prevent a repetition of the scandal of the profiteering which was rampant during the War. He cannot have forgotten how great it was. If it is right to curtail and limit profits on war materials during wartime, it cannot be less right to limit profits on war materials produced in peace time for the next war. Furthermore, a wise Government would learn from the experience of the past and take steps to conscript wealth as well as manhood. Do not let us make the mistake in preparing for the next war or a possible war of allowing pre-war wealth to be as scandalously accumulated as was the war wealth of the last War. I am sure it is not necessary to tell the Chancellor of the Exchequer how vast was the wealth which some people enjoyed at the end of the Great War, but it may interest some hon. Members to know, and it is just as well that the country should know. Not a few people felt after the Great War that it was something more than a shame, that it was, and would ever be, an unpardonable offence, an unpatriotic action, to acquire riches when millions of our fellow subjects, the young manhood of the nation, were sacrificing their lives for their country's safety. We ought to remember that in relation to the matters now before us.

Indeed that feeling was so strong in 1919 and 1920 as to induce the right hon. Member for West Birmingham (Sir A. Chamberlain), who was then Chancellor of the Exchequer, to appoint a select committee to inquire into and report on the advisability of a war levy on what was called post-war wealth. That committee was almost entirely Coalitionist. It had a Tory chairman. It reported that a war levy was feasible, practicable and just. I will quote from a Board of Inland Revenue paper on the matter. Three scales were proposed. The paper shows how the war wealth was accumulated and states that the committee was in favour of a levy. In relation to one of the scales it said that, it was put in in order that there might not be undue hardship on anyone, in order to meet the cases where the duty might press heavily on the taxpayer with small resources. It was suggested that the charge of duty under each scale should be limited to such an amount as would not reduce the post-war wealth below £5,000. They gave some examples. They gave the case of a taxpayer whose pre-war wealth was £500,000 and whose increase of wealth was £300,000. He would pay £72,000; and this was how it was calculated. On the first £100,000 there was to be no tax, on the second £100,000 only 50 per cent. was to be taken into account; and then of the whole £300,000 only 20 per cent. was to be charged. That meant that out of the £300,000 war wealth £210,000 was to be exempt and £90,000 was to be taxed. Duty at the rate of 80 per cent. would bring in on that particular case £72,000.

This is the astonishing, the remarkable, thing, that taxpayers who would have had to meet war-wealth charges on this scale would have brought into the Exchequer no less a sum than £450,000,000. There were two other scales, but I will not trouble the House with the details., The second scale would have brought in £550,000,000 and the third scale £700,000,000. It was the second scale which the committee recommended—namely, the scale which would have brought in £550,000,000 to the Exchequer. The House at the time was Coalition almost to a man. They turned the recommendation down, and said that they were not prepared to have their war wealth taxed in that way.

It is sometimes impressed upon me that Members of the Conservative party arrogate to themselves too often the distinction of thinking that they are the only patriotic party in the country. I am sure they are wrong. This Bill will undoubtedly get a Third Reading by a large majority. It is the kind of Bill which commends itself to hon. Members opposite. It is a patriotic Bill because it is a gift of gilt-edged securities to them. It is for them a preparation for war without financial loss. It is for them a preparation for war bringing increased wealth. I claim to be as patriotic as any hon. Member opposite and I would be in favour of a really patriotic Bill. Dictators loom large in the world to-day and no one knows where their nefarious policies may lead us. It is wise to be prepared and if the Chancellor of the Exchequer had said "We must prepare for a national emergency. The security of the country demands it," I would have given him a ready ear. If he had said "In the last War those who were declared A.1 and physically fit had to occupy the front-line trenches and go over the top when the call came. I now call on those who are monetarily A.1 and financially fit, to man the front-line trenches, in making preparation against the danger of a future war "—then he might have startled the world into a sense of the realities of the situation.

If the right hon. Gentleman had said "I want £80,000,000 a year for five years and I propose to take it by a levy, each taxpayer, from the highest to the lowest, paying his quota according to his Income Tax payment," then I think I would have held up my hand—or both hands—in favour of the Chancellor's proposals. If he had done so, he would have had much greater support than he will have for his present proposals. I think that nearly every liberty-loving man and woman in the country, realising the situation abroad, would have considered that the Chancellor was making his demand in the right way instead of placing the burden, as I believe these proposals ultimately will be placed upon the poor people of our country. If he had taken the line I have indicated, even those who do not pay Income Tax, whose securities are, at the best, only copper-edged and not gilt-edged, would have accepted without a murmur any just increase in the prices of necessary commodities which the Chancellor's proposals might entail. That method, at all events, would have involved no new burdens on the National Debt. There would have been no interest to pay and the expense incurred would have been very small, compared with what will result from the issue of these loans.

I have one more general observation to make. We protest not merely against the way this money is being raised, but against the way in which it will be used and the way in which it will be paid. We protest to Government and to the world at large our abomination of all this war expenditure. The House is voting to-night a great sum for war purposes. A friend of mine, a member of my trade union, a distinguished Member of this House at one time, a man who was a Cabinet Minister up to the time of the last War—Mr. John Burns—is reported to have said: War is hell in harness. It is no longer that. The harness has fallen off; the restraints are gone; the chivalry of war, if it ever existed, no longer exists. Instead of being hell in harness, war is hell run loose, with no forgiveness and no mercy. Innocent men, women and children are its victims. There is no discrimination. It is, in fact, the jungle in its civilised form, "red in tooth and claw." No man is free, no woman is safe, no child is protected in war. The submarine drowns, the aeroplane poisons, the machine-guns spit fire and death, murdering civilisation. That is the result of the progress of mechanical and chemical science, misapplied and misused. That mechanical and chemical science, so misapplied and misused, threatens, as the Prime Minister has said, to destroy civilisation. It will hurl mankind back to the Dark Ages of ignorance, superstition, persecution and cruelty.

The Government will get their Bill. The Government will get the money they want and even more than they want, if they apply for it. But this is also to be said, that the Government will be damned by posterity if they lose any opportunity of using their influence and power to rehabilitate the League of Nations and create security for the world at large, or, failing that security being obtained, if they lose the opportunity at any rate of making any aggressor who, in the future, attempts to trespass on his neighbour, realise that he can no longer do so with impunity.

Notice taken that 40 Members were not present; House counted, and 40 Members being present—

8.9 p.m.

Mr. Magnay

On a point of procedure. May I ask your direction, Mr. Deputy-Speaker, on this question? Can nothing be done by way of protest from the Chair to stop these attempts to obtain cheap notoriety by calling counts in the House? The impression which is given to the country is that we are not attending to our duties. At dinner time—and even ordinary Members of Parliament must have their food—and when hon. Members are attending to correspondence or other business, the opportunity is taken for these provocative attempts to count out the House. It does Parliament no good. The public think that there are no Members in the House when a count is called, whereas the other night when a count was called, there were 200 Members upstairs engaged in important Committee work and every Member in the House knew it. Yet the attempt is made to give the impression that we are not attending to our duties.

Mr. Messer

May I draw your attention Mr. Deputy-Speaker to the fact that when the count was called there were only four Members on the opposite side and that the Members on this side of the House are not at dinner?

Mr. Deputy-Speaker (Captain Bourne)

That has nothing to do with the point. It is the right of any hon. Member to draw the attention of the Chair to the fact that there are not 40 Members present at any time except between the hours of 8.15 p.m. and 9.15 p.m., and if any hon. Member does so, I am bound to take notice of the fact. I should say in reply to the hon. Member for Gateshead (Mr. Magnay) that although there may not have been 40 Members in the Chamber when the count was called, it is obvious that there are many hon. Members present in the precincts of the House.

8.12 p.m.

Mr. Boothby

After that interlude, I should like to say that with the concluding remarks of the hon. Gentleman the Member for Newton (Sir R. Young) on the horrors of war, and the desirability of putting an end to war and achieving security, no hon. Member on this side would disagree; and in spite of the fact that hon. and right hon. Gentlemen opposite propose to vote against the Third Reading of the Bill, those who have carefully studied these Debates must have been impressed by the extent of the agreement which has been revealed in the House regarding the principles which underlie it. Two main issues are raised by the Bill. The first is whether it is necessary or not for this country to rearm on a considerable scale. And the second is whether, if that is necessary, the financial methods proposed by the Government are the best. There have been complaints about the irrelevance of some of the speeches, but it is true that the first question raises the whole issue of the country's foreign policy, and I think hon. and right hon. Gentlemen opposite have been right, from their own point of view, to stress that aspect of the matter, and ask the Government to state clearly the purposes for which this enormous expenditure is to be undertaken, and the policy which they intend to follow.

I do not propose to deal at length with that side of the question. It is on the financial aspect that I wish to make certain observations. But I would say that the very announcement of this expenditure has already achieved one of its main objectives. It has profoundly affected foreign opinion, particularly in Europe, and in those countries where it was most desirable that opinion should be affected. The question of collective security has been repeatedly raised. I believe that the present Government are committed to the principle of collective security in their foreign policy. So far as resort to war is concerned, I think the Government are right—and after all they represent the whole of the people of the country—to be rather cautious in the light of past experience. It is easy to say that we are prepared to go to war, for this or that reason, with any country which becomes, technically, an aggressor. But we heve had experiences in the past which were bitter for both sides of the House, in Manchuria and Abyssinia; and we do not want further experiences of that kind, whatever happens. We are at the moment committed to go to war at once, in defence of France and Belgium should they be attacked. Beyond that we cannot, at present, prudently go. [An HON. MEMBER: "It is too much!"] No, in my opinion it is right, but it is a more direct military commitment than any this country has taken for many years. Indeed, I think it is the most direct military commitment we have ever taken in our history.

I do not think that at the present time the majority of the ordinary people of this country, male or female, would wish to see this country further committed; and when hon. and right hon. Gentlemen opposite jeer at the Government as they do for what they call the Government's contemptuous attitude towards the idea of collective security, I wish to address a straightforward and very practical question to them. Do they wish the Government to carry their support of Geneva and of the principles underlying collective security to the point that if, for example, this summer Germany were to invade Czechoslovakia, our Government should announce that immediately and without further ado they would declare war on Germany? That is a direct question which I think is a fair one, considering the continual attacks that are made on the Government by hon. and right hon. Gentlemen opposite for their alleged weakness in support of that principle of pooled security. The only absolute military commitment we have is towards France, and everybody knows that at the present moment France and ourselves, with Russia, are not only the backbone but the sole support, as far as the great Powers are concerned, of the League of Nations. I maintain that the Government can perfectly well support the principle of collective security without at present committing this country absolutely in advance as far as military action is concerned.

Mr. E. J. Williams

They have already done so.

Mr. Boothby

That is why I support the policy of the Government. Meanwhile the stronger this country is, the less chance there is of the final collapse of the League system and the greater the chances of peace.

Mr. Ellis Smith

May I ask the hon. Member a question? Supposing the League decides that a certain Power is an aggressor, what does the hon. Member consider should be the duty of the Government in face of that decision?

Mr. Boothby

I consider it should take a hostile attitude towards that particular country, but not necessarily go to war in the first instance. It is for that reason that I favour the idea of regional pacts. I do not think humanity has reached the stage at which every country will go to war all over the world at once in defence of the victim of an aggression when its own interests are not affected. There is other pressure that can be brought to bear, and that pressure might ultimately end in war, but I say frankly that I am prepared to face that. I do not think we have gone far enough along the road to be able to have an automatic commitment, because we cannot depend on other countries. I do not think that, in the modern world, one can expect countries to commit themselves to go to war at once where their immediate vital interests are not at stake.

Duchess of Atholl

Is it not the case that Article 16 requires all members of the League immediately to impose economic and financial sanctions on any country declared to be an aggressor by the League, and does not that involve the possibility of war?

Mr. Boothby

I agree. I am prepared to face that and to take the risk of that possibility. I am prepared to agree that economic and financial sanctions should immediately be imposed, with the risk of war behind them; but if we are to do that we have to be adequately armed. I think that sentiment is fundamentally shared by many people on all sides of the House, and in many countries of the world, as well as our own. I hope I have made clear to hon. Members opposite where I stand, and where I believe the Government stand. I support absolutely the Leamington declaration of the Secretary of State for Foreign Affairs, who seemed to me to have made the position of the Government abundantly clear. And I cannot help feeling that the Opposition, for party purposes, have deliberately confused these issues, and certainly have misinterpreted in public all over the country the speeches and intentions of the Secretary of State for Foreign Affairs.

I would like now to say a few words on the method, that of loans, about which the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) made what I thought was a very interesting speech on the Financial Resolution. It is an old-established economic principle that recurring expenditure should be paid out of revenue, but that loans may be raised for capital expenditure without departing from the straight and narrow path of financial orthodoxy. How much of this expenditure that we are discussing on this Bill to-night is technically capital expenditure? I venture to suggest that the greater part of it is purely capital expenditure. The whole of the munitions factories, the whole of the barracks, which are sadly needed and overdue so far as the Army is concerned, the aerodromes, and last but not least, what amounts to the complete reconstruction of the Fleet, all represent capital expenditure and not recurring expenditure.

The First Lord of the Admiralty was quite right the other day when he said that we were in fact rebuilding the entire Fleet. Hon. Members who study the Naval Estimates will see the enormous amount of money we have spent and are spending in reconstructing not only comparatively modern cruisers but comparatively old battleships; and this has really amounted to rebuilding these craft altogether. The "County" class of cruisers has been, or is in process of being, completely reconstructed, and ship after ship of the Battle Fleet is brought home from the Mediterranean or the Home Fleet to undergo large repairs. What do those repairs mean? Virtually rebuilding the ship, re-engining it, re-armouring it, remounting it with new guns, and making practically a fresh ship. That is very necessary, but it is certainly not recurring expenditure. We held on to obsolete ships as long as there was any chance of disarmament, and by the time we found ourselves faced by this crisis in European affairs, and the temporary end of all hopes of disarmament, we were faced with the necessity of practically rebuilding a new Fleet. I do not see that it could be justified on any grounds that that particular expenditure should be paid out of revenue; and I suggest to hon. Members that it will amount to well over £400,000,000.

Having regard to the enlarged volume of the nation's new savings, the borrowing of a maximum sum of £400,000,000 over a period of five years cannot be regarded as very serious for a country such as this, in any circumstances; and it is pretty safe to assume that expanding revenue—and the revenue is expanding very rapidly—plus reduced charges for unemployment, will take care of the annual increase in the Estimates up to the £220,000,000 maximum per annum. Therefore, the increase of 1s. in the Income Tax which was so gleefully predicted by the hon. Member for Bridgeton (Mr. Maxton) is really a bogy with which he is seeking quite unnecessarily to frighten the bourgeoisie. At the risk of anticipating the Budget statement, I would say that I do not think there is either any necessity or any risk of such an imposition. Compare the expenditure in the United States of America with the expenditure in this country. I do not wish to weary the House with the figures of the amount of money which has been spent, and is projected to be spent, on every kind of public works under the Roosevelt administration. I will content myself with saying that the figures are mountainous, and I would only point out that to-day money in the United States, despite all that expenditure, and all that supposed inflation, is cheaper than it is in this country. If the United States of America can do it, we can; for with the National Government here, I venture to say that, from the capitalist point of view, we have even greater confidence in this country in the Administration than they have in the United States of America.

I have no fear of the inflationary or financial effects of this policy; and I suggest that the recent fall in market securities in this country was much overdone and completely unnecessary. I feel that the House, the Government, and the Chancellor of the Exchequer ought to appreciate the full significance of certain new factors which have arisen in this connection. They are the devaluation of currencies all over the world; and the enormous increase in the production of stocks of gold available for monetary purposes—not least in the country in which the hon. Member for West Fife (Mr. Gallacher) takes so much interest, Soviet Russia, whose gold production is increasing by leaps and bounds. We are now working in this country a free and independent monetary system backed by an immense gold reserve, and that gives us a position of financial strength which I do not think we have ever enjoyed hitherto. I do not know whether hon. Members realise that during last year £227,000,000 worth of gold was retained, making the total added to our stocks of gold during the last three years £430,000,000.

Mr. E. Smith

We could afford to abolish the means test.

Mr. Boothby

I go so far as to say that we might go some way in that direction. In the circumstances, a fall in gilt-edged securities from a 3 per cent. to a 3½ per cent. basis in so short a space of time cannot possibly be justified. It was due, I think, largely to psychological causes; and a quite unnecessary wave of panic which swept over certain people when they saw this tremendous figure of £1,500,000,000 without having examined in any detail the proposals of the Chancellor. There was also a slightly more definite cause for this flurry in the market which might have done damage to the industry of this country, although damage of a temporary nature. The banks of this country normally try to maintain a minimum ratio of 10 per cent. between their cash reserves and their deposit liabilities. They can expand or contract their deposits at will, but their cash reserves are controlled by outside forces, and determined by them. During January, just before this proposal of my right hon. Friend, there was an unusual shrinkage of the cash reserves at the banks. This very soon reveals itself, and, indeed, it did reveal itself in this instance in a shrinkage of bank deposits up to 10 times the amount; because the banks are obliged to sell their assets and call in loans, especially loans to the money market. A rise in interest rates then begins, and the fall in capital values which follows in turn brings in a whole lot of nervous holders—many of them quite small—of gilt-edged securities who, confronted finally by this large sum of £1,500,000,000, say "Let us get out."

In the early part of every year there is a temporary shrinkage in bank cash reserves, due to the requirements of the public to provide Christmas presents and so on; but it can be offset by the purchase of securities by the Bank of England. It was not so offset this year. The Bank of England, on the contrary, sold securities until, on 10th January, they held only £74,900,000, which is the lowest holding they had had for several years. A month later bankers' deposits had inevitably fallen from £98,400,000 to £90,600,000. Meanwhile, however, the Bank of England had started to repurchase securities, with the result that today bankers' deposits are once again over the £100,000,000 mark, and there has been an appreciable improvement in the capital value of gilt-edged securities. Therefore, I would beg the Chancellor of the Exchequer to watch the cash reserves of the banks and see that they are ample, because they are one of the factors which undoubtedly determine the value of gilt-edged securities and the interest rate. Nobody can deny that, from a technical point of view, the handling of the monetary policy of this country by the Treasury and the Bank of England for the last three or four years, under unusual conditions, has been magnificent and the envy and admiration of the whole world. From a financial point of view, however, the Bank of England is naturally teetotal.

Mr. Deputy-Speaker

I would remind the hon. Member that on the Third Reading he can discuss only what is in the Bill.

Mr. Boothby

But it is a matter of vital importance raised by this Bill as to whether this borrowing policy, which hon. Members have condemned, is going to increase or cheapen money rates in this country, and whether it is going to have a deleterious effect upon the future of industry. I am now submitting that the Chancellor of the Exchequer has it in his power to keep money rates reasonably cheap, at least as cheap as 3½ per cent., in spite of all borrowing, and, at the same time, to use the powers which this Bill gives him to borrow on short-term or medium-term at reasonably cheap rates, and that that will be a great advantage to industry at the present time. I only want to remind my right hon. Friend that at the time when we came off the Gold Standard we gave the Bank of England a nip of whisky which was passed on to industry, and that since then, under his wise guidance, the industries of this country, through the Bank, have been given nips of whisky—never too much, but just enough to carry them on to a big revival in trade. But the natural inclination of the Bank of England is still towards financial teetotalism, and they have an occasional itch to get back to deflation. They want to be watched from that point of view. For we are no longer, as Mr. Keynes has said, under a compulsion to do what is ruinous.

Subject to confidence being retained, the powers of the Chancellor of the Exchequer at the present time are almost unlimited. He can get interest rates below 3½ per cent., and he can issue loans on what terms he will. After all, 3½ per cent. was the average interest rate in this country over five-year periods for nearly a century before 1914. It is, therefore, nothing unusual to suggest that we should keep money cheap, and facilities exist for doing so to-day such as never existed before. Therefore, I see no danger in this method of borrowing, no danger of inflation, or of an unduly sharp rise in prices, or of a check upon industry. I would like to quote one passage from "The Economist," which nobody can call an unorthodox newspaper, in this week's issue: The market, indeed, has—rightly or wrongly—come to regard the authorities in the light of a self-appointed director, controller and oracle; 'the unseen guest at every meal, the silent listener to every conversation.' Indeed, the degree to which the market has come to look to the Treasury for guidance makes it particularly important that some indication of the official view should be given at this moment. Of course, if there is a real shortage of savings for the needs of the gilt-edged market, manipulation by the Treasury will not avail to reverse the upward trend of interest rates. But is it not far too premature to assume that this is so? The sum of £80,000,000 per annum is by no means large compared with the volume of the national savings. And British investment may very well vary by this amount between one year and another. It may be that the recent fall in prices has been due not to any calculation of the exact effect of a Defence Loan, but to a purely psychological feeling that the tide has turned, and that, for the moment, there is no criterion by which to judge how far the fall may go. If so, it lies well within the powers of the Treasury to check it. Coming from "The Economist," that is a very remarkable admission. It is the first time that this newspaper has ever gone so far as to admit that, in present circumstances, while the Chancellor of the Exchequer enjoys the confidence of the country to the extent that my right hon. Friend enjoys it, he can practically tell the market what he wishes the rate of interest to be, and the market will accept it. I believe that to be profoundly true.

I would like to say a few words, in conclusion, on the general question of efficiency which was raised by the hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher). He indulged in the very easy practice, but he did it very wittily, of extracting certain sentences from their context in the speech of the Minister for the Co-ordination of Defence, and then making fun of them. I wonder how many speeches of hon. Members would stand up to that sort of treatment? Not many, I am afraid. There are, however, one or two points on which there is some anxiety in the House which was forcibly expressed by my right hon. Friend the Member for Epping (Mr. Churchill).

I would like to make a reference to the question of food supplies, which this House cares about particularly because it is constructive expenditure. It is not expenditure for destruction. I think many hon. Members on both sides would welcome a more aggressive policy to restore the productivity of the land of this country, and to put as many people as possible back on to the land. This is a vital measure of Defence, and also a vital economic measure from the point of view of the welfare of our people. My right hon. Friend knows my personal views and the views of my constituents on the subject of oats. I think oats are a valuable form of food which can be grown in great quantities in this country and might come in very useful in a time of stress, in a time of war. I would point out that the price of oats is now above the cost of production, and I would like to suggest—

Mr. Deputy-Speaker

Does the hon. Member suggest that any part of this loan will be used to increase the production of oats?

Mr. Boothby

I wanted to bring that point in, and I should not have done so if the question of food supplies had not been frequently referred to in the Debate. I bow to your Ruling; but I should have thought it possible that some part of the loan might be spent on stimulating agriculture, food production, and the storage of supplies, if the Government were so minded. To come to the actual fighting Services, I think everybody in the House is anxious about the number of actual front line machines for air fighting which we are producing, and are likely to produce; and would very much like an assurance from the right hon. Gentleman that we shall get information from time to time as to the number of first-line machines which are actually being delivered and the number projected, because that is probably the most vital question of all. The only other question, only a little less vital, to which I wish to refer, is the technical equipment of the Territorial Army, especially for Defence purposes. Among hon. Members on both sides of the House I have heard many conversations expressing great uneasiness about the speed with which this equipment is becoming available, although it is vital from the point of view of Defence.

Lastly, I think that the answer to hon. Members who complain of profiteering on the part of armament firms in this country is not a grandiose scheme of nationalisation, or virtual nationalisation of armament firms, but may well be found in something in the nature of a Ministry of Supply, to control all contracts, and to organise the supplies of raw materials and of other essentials for all the three Services. I have always thought that here was a great lack in our organisation. The Minister for the Coordination of Defence ought not to be asked to co-ordinate the functions of the three Services both on the supply side and on the strategical side. Surely that is beyond the power of any one man; and I feel that sooner, rather than later, we must have, in addition to a Minister to co-ordinate strategical problems, a Minister to co-ordinate supplies for the three Services, and to see that everything is done as efficiently as possible, as cheaply as possible, and with no profiteering.

If that be done, and we are given adequate information on the subjects I have ventured to suggest, I believe the House can be satisfied about two things; first the efficiency with which the programme will be carried out; and, secondly, the fact that it will not affect adversely, and need not affect adversely in any way, the financial position of this country.

8.38 p.m.

Mr. Simpson

I do not propose to follow the hon. Member for East Aberdeen (Mr. Boothby) in his financial reflections, either teetotal or alcoholic. Coming as he does from a Scottish constituency—

Mr. Boothby

I lean to alcohol.

Mr. Simpson

I think it was Sydney Smith who described that country as the land of Calvin and oat cakes, so one can appreciate his interest in the food problem. I think the hon. Gentleman has to-night been rather less provocative in his attack on the policy enunciated from these benches than other hon. Members opposite. Possibly that is partly explained by the fact that he is, on occasions, himself critical of the Government's policy, so much so that under the pressure of an interruption he has already made an offer of some sort of contribution towards our social services such as has not been forthcoming from the Government itself. It is easy for hon. Members opposite to endeavour to attack the policy stated from these benches, not because of any weakness in the policy itself but because of a rather confused situation. They ask us what we are prepared to do in the matter of Defence. We say that we are prepared to do something, but not prepared to do everything that the Government desire, and then it is represented that because we are not prepared to support everything we are prepared to do nothing. What we are prepared to do must be conditioned, first, by service needs and second, by the kind of international policy the country is pursuing. The amount and kind of defence required is essentially a problem for experts and the Services. For my own part I certainly believe that those who have to bear the brunt of the fighting, if any, should have adequate means at their command, and I think it is nothing short of contemptible on the part of anybody in this House, or outside, to ask men to fight if we are not prepared to pay and to provide equipment for any policy that we impose upon them.

The realm of defence and technical requirements is one thing, and the realm of diplomacy and conception of policy is another. As to the first, that, of course, in existing circumstances, is of immediate importance, but notwithstanding that I believe the second is of greater import and a matter of fundamental concern. While we are considering for the moment ways and means for war we must still consider ways and means for peace. Those two things are separate as functions but inseparable as policies. The ways and means for peace must, from my point of view, still be the dominating issue, because there must be a necessary relationship with policy and defence requirements. I believe that ideas and purpose must, in the long run, be the real dynamics and bulwarks of peace. The right hon. Member for Epping (Mr. Churchill) referred to somnolent authority. I think it is still more dangerous that there should be dormant idealism or uninspired peace leadership.

The immediate amount of force required and the precise financial requirements of the moment will always be difficult to determine. We cannot be precise. But in criticising the policy from this side of the House the Government are singularly obtuse and unimaginative. In the main they are endeavouring to deny one of the simplest propositions of Euclid, that the whole is greater than the part. We say that in so far as we consolidate the strength of the League, and the alliances against aggression within the League, to that degree and in that proportion the extent of national arms required should be reduced. It may be that in a particular situation it is necessary to increase a specific country's arms for the time being, but that proportion must necessarily be relative. Throughout the whole scheme of policy we pursue we must keep this question of collective security and control over armaments uppermost. Whatever may be the demands of the present situation, occasioned by the presence of dictators in Europe, we sincerely hope they are only phenomena, and not any permanent feature in European politics.

In conceding something to the general pacifist principles which we advance from this side of the House, it would be fatal if we lapsed, in so doing, into any discredited safeguards or old military turns of thought. We must not surrender faith in the League and in collective peace effort. It is sometimes necessary to strengthen the police force. It is imperative that we should still further cultivate the police force theory in international relations. If we could get the nations of the world to bring themselves to this conception of international law and order, at the precise moment when we agreed to have an international police force that force would become largely unnecessary. Any increase in arms to which we were willing to agree or to support from these benches should, therefore, not be detached from League policy and purpose. That is the only justification for agreeing to any additional armament. If we continue to rely upon national arms for safety, we not only involve ourselves in overwhelming costs, but we have no real security.

Want of faith in the League and in the ultimate triumph of reason and law over force are our greatest danger. I believe that there are only a few mad, antediluvian militarists in this country, and possibly they are to be found in West End clubs rather than in the fighting Services. What is more sinister in relation to the Bill is the fact that it is possible to make war and provision for war profitable. Whatever we do in connection with this extended provision, we should endeavour to withdraw the profit incentive. It is not less unfortunate that any proposals of this kind offer opportunities for work that would not otherwise be provided, because of lack of financial resources for worthy social ends. The worst enemies of peace to-day are those who discredit the League. Faith is the first essential in peaceful and democratic communities. The only alternative is fear and force. I am not concerned with whether the denial of faith comes from the Right or from the Left. An hon. Member below the Gangway referred to Russia in the Debate the other night, and described the League as the thieves kitchen. I was sorry that the hon. Member had to go to Russia for authority and sorrier still that he had to go to a dead Russian. The live Russians are still keen members of the League.

In attempting to build a fabric of peace and world civilisation, we must have some kind of scaffolding and outer defences. If we endeavour to remove those defences or that scaffolding prematurely, we may imperil the progress that has been made; but there are some people who become more enthusiastic about the scaffolding than about the structure. They are more concerned with the ugly, outer defences than with the real purpose behind them. Some appearance of inconsistency must inevitably appear on the surface. It is the eternal conflict between present necessity and categorical ideals. In supporting some arms extension we are not supporting the Bill to-night, because we are not satisfied with the Government's policy as a whole—we must keep uppermost the ultimate pacifist ideal of the principle of collective security and the consistent authority of the League. I hope we can do that to such good purpose that we can impress the world with a conviction of our sincerity, in order that money, such as we are devoting to this Bill, may be devoted to social needs. Otherwise, if the unfortunate catastrophe of war comes upon us, we shall be called upon to spend, not only this money, but further sums.

8.52 p.m.

Lieut.-Colonel Moore

I do not propose to follow the argument of any of the speeches delivered by the Opposition in to-day's Debate, partly because few of them have touched upon realities, and partly because they were almost entirely removed from the subject of the Amendment which we are discussing. That Amendment seeks to postpone the Third Reading of the Bill for six months. I want to show why, in my opinion, and in the opinion of the country, the Bill must get its Third Reading to-night, not only for the safety of this country, but for the peace of Europe and the general appeasement of the tense situation existing in the world to-day. It was not always thus with me. For 15 years past, and while still a serving soldier, I have preached, supported and believed in disarmament. I did everything that it was possible for a man to do to propagate his views, because I think it was the only ideal, and the only method by which civilisation could be saved from the horrors to come and the kind of horrors that had just been passed. I have changed my mind. I am sorry. I believe still in the ideal of disarmament, but I am forced to think that it is no longer practical politics—at any rate as yet. I feel that so many resentments, fears, greeds and hates were left by the late War and by the peace treaties, that were supposed to have satisfied the defeated countries and to have brought security to Europe generally; but instead of being appeased, those feelings became more bitter and acute. Until we can change the feeling in the peoples of Europe and remove those stresses and strains to which the European countries are at present subjected, we cannot be convinced that disarmament is possible.

Just as the great ideal of Free Trade when it failed had to be discarded and we were forced to adopt economic protection, so now in this world, menacing and dangerous, we have to resume physical protection. We, as a nation and as a party—though I will not stress that fact—did all we could by precept and example to lead the world away from "man's inhumanity to man." Unfortunately our example was not followed. At the time we showed that example we went too far.

We ignored the advice of Lord Monsell and Lord Hailsham. We went below the knuckle, and we subjected ourselves to a position where we became the target of a world of menacing forces. What I believe and feel about this Bill is—I know that many Members have already referred to the fact—that it is the first real step towards a genuine disarmament. Europe has noted our determination; and alone among the nations of the West, with the exception, perhaps, of the United States, are in a position to stand the pace. As the pace becomes increasingly fast, and the cost increasingly heavy, Europe will inevitably be driven to realise that it would be better to gain something now by giving, that it would be better to save some of this vast expenditure for the betterment and easement and improvement of the social conditions and the life of the people than to go into national bankruptcy. I admit that I was somewhat startled by the amount when I heard the Chancellor make his opening speech, but I now realise that, if Britain's word is to carry weight, and if Britain's word runs for peace, as we know it does, then Britain must have adequate physical force behind her word to ensure that these other countries will listen to her, and that those who might seek to destroy peace will be warned in time.

From the Debates to which I have listened during the last three days, it has seemed to me, and, I think, to many other Members who have been listening, that Germany is the one country which is constituting the danger to peace, and I ask myself, will Germany, can Germany, make war? I have come to the conclusion, with some little knowledge—not very much, but from such little observation as I have been able to make—that, whatever her will may be, she cannot do it, certainly within the period of the programme covered by this Bill. Let me explain. In 1914, Germany was at the peak of her power, at the peak of her grandeur. She had, I suppose, the greatest and most efficient army in the world; she certainly had the second greatest and most efficient navy; she had a close alliance with the great and powerful Austro-Hungarian Empire; she had a prosperous Colonial Empire; she was rich; she had immense reserves of men and materials; and yet, with all these immense assets, all these tremendous advantages, she lost the War. To-day Germany is undoubtedly strong, but only by comparison with her previous weakness. She has no aggressive alliances; she has an army and a navy which I must say—and I wish the right hon. Gentleman the Member for Epping (Mr. Churchill) were here—are still largely on paper; she has an air force, I admit, but she has not the pilots, at any rate to anything like the extent which was feared in this House, and about which the right hon. Gentleman has so frequently alarmed us. She has a moderate navy, as navies go; and she is practically bankrupt. Therefore, it seems to me that she has nothing except her honoured, trusted and admired Leader and a spirit that is still unconquered.

Why, therefore, should there be all these doubts and all these suspicions? There was a time, in 1914, when no Power or combination of Powers seemed to be able to withstand her. Why do we entertain these fears? Even though her ethical outlook may be at its lowest, even though she may regard the Kellogg Pact and the Locarno Pact as further scraps of paper, is it to be conceived that, comparing her present state with her previous position in 1914, she would commit herself to such another disaster as had left her shattered for 15 years? I cannot believe it. Before I leave that subject, I would like to make one comment on some statements that have been made during the last day or two with regard to Germany's attitude towards her former colonies. Listening to her reported threats, what have we to say about it? Is there any danger there? I am very sympathetic to Germany's claims, and feel that some form of readjustment of the colonial territories under mandate to various Powers will have to be considered sooner or later—

Mr. Deputy-Speaker

I cannot see what connection this has with the Third Reading of the Bill.

Lieut.-Colonel Moore

The point I hoped to make was that, while there are certain very dangerous and menacing features in the world to-day, Germany is not one to which we need attach immediate importance or from which we need apprehend immediate danger, but I propose to show that the £1,500,000,000 which is to be raised during the next five years is a supreme necessity, and will be required to save us from other dangers, though not from the German one. However, I will leave that point, only remarking that I deprecate the methods by which these claims of Germany in regard to her former colonies are being submitted. We in Britain are a very objective people; we judge disputes by one standard, that is to say by the standard of justice and I do not believe we shall be hurried or pushed into a decision through fear. I do not believe that Germany is going to make war; I do not believe that she can make war; and I certainly think that, during the period in which we are expanding our armed forces, we need have any fear from that source. Other people may say that in the last few days Italy has indulged in some very provocative actions, and has used some very provocative words, but I do not believe that we need have any fear of Italy. I believe that the Italians have bitten off more than they can chew; I believe that the new Italian Empire will demand far more than the Italian nation is ready or prepared to give; I believe that for 10 or 15 years Italy will neither have recovered from her exhaustion nor acquired sufficient wealth by exploitation to undertake any war of aggression. I hope I have now eliminated from our consideration the most aggressive and best armed nations in Europe. I am not going to enter into the question of Spain or of Russia, because it is out of the question that Russia would ever have any quarrel with us, and, moreover, she has too much to do in her own country to bother about outsiders. She has a country that is half-developed, that will require—

Mr. Deputy-Speaker

The hon. and gallant Member now appears to me to be trying to deliver the speech that he failed to deliver on a previous occasion.

Lieut.-Colonel Moore

No, Sir; I have re-written it several times since. I am now trying to re-orient it to the conditions in which these Debates have taken place, and I must say that it has caused me many sleepless hours. I trust that I shall not again fall within your Ruling. What I wanted to bring home was that, although from the remarks I have made it might be assumed that I think there is no reason for this Bill, that there is no reason for the rearmament that we have undertaken, that is not the case, and I would like to make it quite clear that in my opinion there are two very sinister factors which force that conviction upon me. There are two factors which have lately arisen in regard to international politics. One is an irresponsible section of the Press which believes that money must be made so that dividends can be paid. These newspapers do not exist primarily for the purpose of giving news or educating their readers.

Mr. Deputy-Speaker

This is a Third Reading Debate, and the hon. and gallant Gentleman must keep to the contents of the Bill.

Lieut.-Colonel Moore

I am sorry to have caused you so much trouble, Mr. Deputy-Speaker, but, as far as I can see, the Bill is for the purpose of giving final implementation to the proposal of the Chancellor that £1,500,000,000 be placed at the disposal of Parliament during the next five years. I want to show how intensely I am in support of that money being voted and that power being given to the Chancellor, and to show the dangers that we are exposed to if we do not pass this Measure. I hope that my argument in regard to the Press, which is a very potent one—

Mr. Deputy-Speaker

The hon. and gallant Gentleman cannot argue that tonight. We are not arguing the question of the whole of the Defence programme, but merely whether £400,000,000 should be borrowed.

Lieut.-Colonel Moore

Then I would pass from that factor of the Press, and come to the second, which, I think, is particularly germane to my argument, and that is the attitude of the Socialist party. For generations past it has been an admirable tradition that this country should present a united front, and I believe that that tradition has been on the whole followed, but to-day we see the Socialists in the country and in the House refusing to vote for this Measure or to support us in our various Defence Estimates, and also, of course, discouraging recruiting by their speeches and actions, so that they are giving the impression to the world that we are not united behind this rearmament programme. That is the danger, and that is why I feel that I must make special reference to it. We know that there are ambitious, greedy nations in Europe which, if they read the papers and see that we are not united and that we have wealthy territories scattered all over the world which have not got adequate protection, may say that, although they are unwilling to strike at strength, they may be tempted to strike at weakness. [An HON. MEMBER: "Who are they?"] I need not quote them. There are countries which are heavily armed, which are short of territory and which have a growing population. I do not need to educate the hon. Member. He should know these matters for himself.

Here is His Majesty's Opposition—after all, that is a better term to apply to them in this case than Socialists, because that is how they are looked upon in foreign countries—here is the other section of the House of Commons who are withdrawing their support from what is regarded as a national necessity, and I suggest that before they go into the Lobby they will have full regard to the dangers that they are possibly incurring for the sake of the country to which, I believe, they are as patriotically devoted as we are. If they give full value to the arguments that I have advanced, I do not believe that they will go into the Lobby to-night. That is all that I have to say except to suggest something which, I am afraid, would come under your ban, Mr. Deputy-Speaker, so I am not going to say it, but I should like to say how much the country owes to the Foreign Secretary for the clear declaration of policy that he made at Leamington. As my hon. and gallant Friend the Member for Thanet (Captain Balfour) said, I should have liked to hear it a little further developed in order to see under what conditions the armaments programme could be slowed down, and the necessity for embarking on this large expenditure obviated. I believe that could be done with the same clarity that my right hon. Friend has shown in all his statements on foreign policy, and it might be the means of devoting this money which is so badly required to giving us better homes, increasing our wages and giving a better chance of a future to our children rather than spending it on armaments which, after all, are weapons of destruction, and must mean, ultimately, weapons of death.

9.12 p.m.

Mr. de Rothschild

The hon. and gallant Gentleman's last few words have brought me to my feet. I was very pleased to hear him say he would like a further elucidation of the Government's policy in order to know what could lead us to a diminution of armaments in the future. I was particularly glad to hear this view also propounded by the hon. and gallant Gentleman the Member for Thanet (Captain Balfour), because the other day the Chancellor of the Exchequer said that this £1,500,000,000 was only an approximate sum. He hoped, if things took a satisfactory turn, that armaments need not be piled up in such quantities. I noticed that hon. and right hon. Gentlemen on the other side remained absolutely silent. The right hon. Gentleman went on to say that, if it was found necessary, we should be prepared to spend more, and all the hon. and right hon. Gentlemen opposite started to cheer in a way that I do not think the Chancellor has ever experienced and would be likely to experience only if he took the Beer Duty off in his next Budget. This is the reason which brings us Members of the Liberal party on these benches to disapprove of this method of raising the capital that is required to be spent on rearmament. None of us disagrees with the Government on the question of rearmament altogether. It is obvious that when Europe is an armed camp, and there are countries headed by dictators with new ideologies based on war and extolling military virtues, it is time for us to look to our safety and to engage in some measure of rearmament. What we object to is the method by which the money is going to be raised. We would sooner see it raised by taxation. After all, when my right hon. Friend the Member for Caithness (Sir A. Sinclair) asked the Chancellor why he was extending the period of borrowing over five years, the right hon. Gentleman did not give any reply.

Mr. Chamberlain

The hon. Member must not assume that because he did not listen to or hear my reply, I did not give a reply in the speech I made in the evening.

Mr. de Rothschild

I apologise to the right hon. Gentleman if I overlooked the reply which he made in the evening. Anyhow, it does not impair the argument which I am trying to put forward. I should imagine that it is very difficult for the Chancellor of the Exchequer to say to-day what his taxation is likely to bring into the Exchequer in two, three, four or five years' time. It is quite impossible to-day, for instance, to state what Income Tax at 4s. 6d. in the £ will realise in four years' time. We have seen such huge Budgets, such as the one brought in by the right hon. Gentleman the Member for Hillhead (Sir R. Home) in which we had an excess of something like £100,000,000. It is impossible at the present time to gauge what the revenue is going to be. We would like to see the money for armaments raised on revenue and not on loan. Our chief reason is not so much that we distrust the finance of the Chancellor of the Exchequer, but we think that it would bring the country to its senses on the subject of armaments. If the people of this country were called upon to pay for this armament out of taxation, it would make them more war-conscious and more peace-conscious, and they would look more closely into the manner in which the Government are carrying out their foreign policy. It would bring them closer to the ideals of the League of Nations and to the objects of pooled security, especially if they realised the manner in which the money was being expended.

I was much struck by the speech of the right hon. Gentleman the Member for Epping (Mr. Churchill) and the appeal he made to the Chancellor of the Exchequer and to the people of this country to be ready for more sacrifices. If we can be asked for any sacrifices in case a war should break out, we can be asked to make sacrifices in peace time also. I feel quite certain that all the huge profits which are undoubtedly made by the armament manufacturers at the present time should in a certain measure be foregone. During the War I had the honour, for a few months, of serving in the Ministry of Munitions, and I realised what immense savings were effected by the succession of Ministers who were at the head of that big Department. I am certain that if a measure of taxation was introduced in order to carry out this huge programme—I do not say that some of it should not be financed on loan—and it was brought home to the people of this country, they would be prepared to make the sacrifice and would see to it that the money was not spent improperly, and also that a peace policy was carried out that would bring us appreciably nearer to disarmament.

9.19 p.m.

Duchess of Atholl

I cannot pretend to speak upon international matters with the knowledge of the hon. Gentleman the Member for the Isle of Ely (Mr. de Rothschild), but, if he will allow me to say so, I think he has overlooked the psychological effect of the proposal of my right hon. Friend. The effect of the Loan seems to give a guarantee of the continuity of our rearmament policy which might otherwise be lacking. If my right hon. Friend had contented himself merely with bringing forward proposals for increased rearmament for this year only, however considerable the increase might have been, there would have been no guarantee that the rearmament would be continuing for several years to come. If there are countries in Europe feverishly rearming, countries which too often seem to give evidence of aggressive aims, the effect of that assurance of continuity in the rearmament of our country must be something much more considerable than the knowledge merely that we are carrying out rearmament this year but without the guarantee of a continuity of policy next year or the year after.

Mr. de Rothschild

The Loan is only a proportion of the total to be spent, and therefore only in regard to that proportion should there be rearmament.

Duchess of Atholl

I do not think that that really affects my argument. It means, anyhow, that as long as the Government continue in office, there is the prospect of very considerable measures, the utmost possible rearmament continuing for the next five years, and that should have a very considerable psychological effect. Having returned from visiting the countries of Central and South-Eastern Europe, I have seen a little of the effect which the Loan has had on opinion there. I believe that it has been very considerable. One prominent man spoke of it to me with very deep feeling and appreciation, but I feel bound to say that I did not find equal assurance as to whether the great amount which we are spending on rearmament was to be used for the peace of Europe. There is anxiety lest our efforts should be directed merely at our own safety in the West of Europe, or in our Empire as a whole. Having listened very carefully to what my right hon. Friend the Foreign Secretary has said on different occasions, and particularly a few days ago, I do not feel convinced that the Government have made it sufficiently clear that the great armies of ours will be used to try to prevent any breach of the peace in Europe as a whole.

The Foreign Secretary gave us a very clear interpretation of Article 16 of the Covenant the other day, though he omitted to remind us that the Article pledges all members of the League immediately to impose economic and financial sanctions against any nominated aggressor. It has been said by those who speak with authority, that economic and financial sanctions—and this is obvious to all—involve the risk of war. If we are really trying to prevent war, as I am confident that every Member of this House desires to do, and as all political parties without exception would wish, surely, we have to ask ourselves: Would the knowledge that this great country would impose economic and financial sanctions on any country nominated an aggressor, say, in Europe, be any detriment to any country that was contemplating aggression? There is reason to believe that if in 1914 the British Government of the day had made clear that, if Germany attacked France or Belgium she would have to reckon with ourselves, there would have been no German invasion of those countries, and my right hon. Friend the Foreign Secretary very rightly said that we wished to avoid the mistake that was made on that occasion. He has taken one great step towards avoiding that mistake in the agreement which has recently been made with France, but has he taken a sufficient step to prevent aggression further East when all we are committed to is the imposition of economic and financial sanctions? In other words, do any of us believe that if the Government in 1914 had said to Germany, "If you attack France or Belgium we shall immediately impose economic and financial sanctions on you," that would have prevented the invasion of those countries? It seems evident that it would not.

If we believe with the Prime Minister that if war breaks out anywhere in Europe it will be practically impossible to prevent it involving the whole of the Continent, surely it follows that it is the duty of the Government to take every step which they can to prevent war breaking out anywhere. Can we feel that every step towards the prevention of war has been taken as long as all that we are pledged to do should there be aggression in Central Europe is to impose economic and financial sanctions? There is still this ambiguity—whether or not we should use force in the case of an attack on Czechoslovakia, for instance. That uncertainly might mean that we just failed to take the preventive action which is necessary as we did in 1914, Czechoslovakia, as everyone knows—

Mr. Deputy-Speaker

The Noble Lady, again, appears to be trying to deliver the speech she failed to deliver on Tuesday.

Duchess of Atholl

There has been a good deal of discussion on foreign policy in the course of this Debate. I have no desire to stray into any question of foreign policy which is not intimately bound up with national defence, and with whether we are to use this great Loan to the best purpose. There is much propaganda in Germany against Czechoslovakia. My right hon. Friend the Member for West Birmingham (Sir A. Chamberlain) the other day, when Members of both sections of the Opposition expressed the view that the commitments of the Government were not sufficiently clear to do their utmost for the prevention of war, asked whether the country would be ready to endorse a policy which meant we should be pledged to use force against aggression anywhere in Europe. With all due respect I say that it does seem to me to be the duty of the Government to put before the country any policy which after mature consideration, and in the light of all the facts, seems to be the best in the country's interest and especially for the safety of the country; and my right hon. Friend did not hesitate to involve the country in a military obligation under the Treaty of Locarno II years ago.

Mr. Deputy-Speaker

We really cannot have a Foreign Office Debate on the Third Reading of this Bill.

Duchess of Atholl

The country warmly and unanimously endorsed the action which the right hon. Gentleman took. There is still the element of uncertainty in Europe as to how far we are prepared to use the armaments which we are building up, and in that lies a possibility of war which we have a good chance of being able to prevent. Far the best possible chance of averting war is the knowledge that the arms of Britain will be used against an aggressor anywhere in Europe, and therefore I earnestly hope that the Government will consider that matter, and will not forget the speeches which have been made by several Members of both sections of the Opposition. There is reason to believe that if the Government are prepared to adopt that policy they will have considerable support on all sides of the House. I can imagine no better guarantee of peace for Europe than a Britain rearmed, united and resolute in the determination to use its arms in the cause of peace.

9.30 p.m.

Mr. Pritt

I hope that you and the House will forgive me if my voice makes a much more unpleasant sound than usual. I cannot help it; I must endure it, and so, I suppose, must those of the House who are in the Chamber. It has been constantly said in the course of the Debate that there is a wide measure of general agreement between the Government and the Opposition. I hope that there is no foundation for that statement. I desire to show that there is not, and to show that anyone studying the declarations of policy of the Socialist party would see that there is not. Of course we admit on this side of the House the necessity for armament. We do not admit the necessity for a large armament and we do not admit the necessity for small armaments. We admit the necessity for such armaments as can be shown to be necessary to fulfil the policy which this Government ought to pursue, and which—to do it credit or discredit, whichever it is—this Government is constantly saying it does pursue.

The hon. Member for East Aberdeen (Mr. Boothby) posed the question, is it necessary for this country to rearm? That is not quite the whole question. On the policy on which this Bill is based the question is, is it necessary for the country to carry through the large measure of rearmament which this Bill represents in part? We oppose this proposal and the policy on which it is based, because on the facts such as they are which are known to the House this provision brought forward at the instance of this Government, whether for this particular quantity of arms that is foreshadowed or indeed for any particular quantity of arms at all, should be rejected by the House for three reasons. The first reason is that the Government really puts forward no clear policy or plan on the footing of which its armament programme can be seen to be necessary, neither more nor less than necessary, consistent with the League policy or justifiable in any other manner. I do not mean that the Government have no policy or plan, but no sound or justifiable policy or plan.

Secondly, the Government have apparently abandoned any effort to avoid mere armaments competition and any effort to deal with the causes of war. The third ground on which we oppose it is that this Government, with its record, if it has these armaments cannot be trusted to use them for the proper purposes, all the proper purposes or for nothing but the proper purposes. What is the policy or plan which the Government put forward? I can most fairly deal with that by looking at it under two heads. The first is, for what purpose are the Government proposing to arm, and the second is, how have they calculated the arms necessary for this purpose? The purposes were defined by the Chancellor of the Exchequer when the Bill was introduced, when he said that we have vast responsibilities to defend in all parts of the world and that we have many vulnerable points. The Minister for the Co-ordination of Defence described the task as the defence of those parts of the Empire from which we obtain so much of our raw materials. Those two Ministers and others have made it plain that the Government are prepared to fight for our trade routes, and for every little bit of British territory, including, I suppose, that bit of territory which we were prepared to give away to Ethiopia in order that we might give away Ethiopia to Italy. That is a programme which is not calculated to soothe a great many foreign countries, and it is a programme which most critics would say is utterly hopeless to carry out in isolation. We should have to take every bit of metal we have in the country to get munitions for anything of that sort. And that is the programme for which the Government calculate that £1,500,000,000 is needed.

How have the Government made the calculation? The Chancellor of the Exchequer has told us. Their calculations are rather like the calculations of a couple of eighteenth century petty grand dukes, in the middle of Europe, calculating how they would fight each other with money borrowed from eminent Jewish bankers. I hope I am not doing the policy an injustice if I summarise it in this way. The Chancellor of the Exchequer says that it is based on counting up various hypotheses—who may be with us and who may be against us, and then, with the assistance of experts, arriving at some figure which, taking one thing with another, may be considered to be a reasonable figure with which to face such a problem. The calculation necessarily is so vague that none of the right hon. Gentleman's colleagues from the industries which he defends in this House would spend £10 in the building of a factory on the strength of it. It is much too vague for that, but it is good enough to spend these vast sums on it for the purposes of destruction. No wonder that the right hon. Member for Epping (Mr. Churchill) says that the Government are studiously vague on every point, and that it is impossible for us to form any real judgment. Still, that is the system—working out who is likely to be with you and who is likely to be against you, and then coming to an estimate.

This is the Government which is said never to forget its allegiance to the League of Nations. In that marvellous calculation of odds, have the calculators thought for one moment that we might ever have the assistance of an active League of Nations, brought into activity by honest support and encouragement from the Government of this country, or have they acted in their calculation simply and solely on the basis of the continuity of a programme of isolation? The hon. Member for Kingswinford (Mr. A. Henderson) asked the Chancellor of the Exchequer pointedly that very question, whether in making these calculations he acted on the basis to which the Government continuously pay lip service, or on a totally different policy, and out came the magic words: "It is not in the public interest," to set out whom we might fight or who might be our allies. That is a new form of shyness, for in the previous White Paper potential enemies were mentioned by name, and in the famous speech by the Prime Minister, which has been cited so often that it is now commonly known as the frankness speech, there was no difficulty in referring to one particular country as the potential enemy which was worrying the Prime Minister.

However, we have this calculation. How much confidence can that calculation inspire in anybody except somebody suffering from panic, militarism run mad, or just plain profit? There is no League of Nations in it. There is no hope in it. There is no constructive element in it. It is just naked egoistic isolation. It is the spirit of the fine old English gentleman, prepared to fight to the last working man. It reminds one of the Secretary of State for War who, if correctly reported in the Press, said the other day that the will of Britain must prevail. If he wants the will of Britain to prevail his way, the working classes are not going to be stripped of what little they have, to let his will prevail. We know the inevitable result of the Government's pronouncement. There is a feeling among Germans that the Germans are the unique and perfect people, but right hon. Gentlemen opposite know that to be quite wrong, because they themselves are the unique and perfect people. When you get two countries suffering from the presence of that sort of attitude, in the absence of a sense of humour, you get armaments.

What was the immediate reaction to the Government's policy? Hon. Members opposite have stated that the immediate reaction to this programme in some cases was a feeling of relief. I do not deny it. A feeling of relief inspired, no doubt, by the realisation that after years and years of being prepared to run away from anybody or anything, the great British Empire has at last said something. It is no use telling us that some people are pleased if the net result of the whole transaction is that the armaments race turns from a trot to a canter and from a canter into a gallop. The first result has been that Italy has announced that she will turn herself into a war machine to somebody else's last centesimo and her own last bambino. There are not wanting Frenchmen and Englishmen anxious to explain that Italy cannot stand the pace. There has never been a nation that could not afford a thing when it has been a question of ruining somebody else by an arms race. I am afraid that until we have a Socialist world that will be so. That is what Italy has done by way of reaction. What has Germany done, apart from lengthening the period of her conscription? She has contributed a most modest statement by Herr Von Ribbentrop who, for the moment was not visiting the country to which accredited, but was at home at Leipzig. He declared: I do not believe in a limitless armaments race. He was patting us on the back. Every country's armaments will find their natural limits in the extent of the possibilities at each country's disposal and its geographical necessities. Therefore, Italy believes in arming everything and everybody, and Germany believes in arming everything and everybody, only to the limit of the utmost that you can possibly do. Perhaps the difference between the two will be clear to hon. Members opposite. I have heard the magic word "Russia," which always gives an automatic quiver to hon. Members opposite. I will deal with the possible menace of Russia's armaments at a later stage. This immediate reaction by the warlike Powers, if I may so describe them, is not merely a tragedy in itself; it raises an immediate question which is vital to this House in considering whether it should support the Government in this armaments race. The Government have told us that they made a calculation, and I have no doubt they did. No Government, not even this Coalition Government would embark on an expenditure of £1,500,000,000 without making a calculation, even if they did it in the terms described by the Minister for Co-ordination of Defence, but what one wants to know is whether, in making the calculation of this possible enemy and this possible friend, and in relating that to the armaments of other Powers, which the Government naturally and properly did in the White Paper last year, did they take into calculation the fact that the Italian and German armaments would be immediately increased? If they did not, then I really think some psychological inquiry into the mentalities of their experts should be begun, because surely anybody, any council school child or sixpenny primer on history, could have made it clear that the immediate result would be counter-efforts in Italy and Germany; but if they did not, they have got to revise their calculations at once, and it will not be £1,500,000,000, but perhaps £2,500,000,000.

It is quite plain that this country has been committed by the Government to an unlimited arms race. Approval of that course in other countries that are not going to arm against us, while no doubt very encouraging to hon. Members, does not assist the international armaments situation in the least. The immediate reaction in certain countries can be found by taking from our own White Paper the description of the reaction to Germany's armaments as likely to aggravate the existing anxieties of their neighbours and to imperil peace. It is a complete fallacy, proved to be a fallacy by history over and over again, that to increase armaments can ever bring security, can ever bring peace, can ever bring anything but an armaments race and the inevitable war, either in the middle or at the end of it. The right hon. Gentleman the Chancellor of the Exchequer described that as creating in him a feeling of disgust and shame. I accept the complete sincerity of his statement, and I share the disgust and the shame. I hope everyone in this House shares the disgust and the shame, but the point is that the Chancellor is not deterred by his disgust and his shame. He is going straight forward in what I hope I shall not be thought to be offensive in describing as his disgusting and shameful course.

I do not want to be thought to be speaking offensively. The facts speak for themselves. But let me concede at once that the Chancellor, the Government, and hon. and right hon. Members opposite want peace every bit as sincerely as do hon. Members on this side. We on this side, however, think that the party opposite are pursuing a policy which is bound to lead to war. It is a curious feature of this last stage of capitalist civilisation, at once so apparently prosperous and so completely self-poisoned, that anyone who can see clearly what he is doing, like the right hon. Gentleman, is bound to declare at any time that he does anything that he is disgusted with himself for doing it. They want peace, but one trouble is that they want a tremendous number of other things inconsistent with peace. They want peace, they want the trade routes of the world, but they cannot have them both. They want every Colony that they took in 1920 and every Colony that they had before and they want peace, but they cannot have both. [An HON. MEMBER: "Would you give them up then?"] I will not shirk explaining what I should advise hon. Members opposite to do, but I will do it in its proper place.

The right hon. Gentleman has stated with the most complete sincerity that what he really wants in a distracted Europe is, among other things, freer trade, a general decrease of trading restrictions, fewer quotas, lower tariffs, and so on, and he has created more of those things in five years than any other statesman in 100 years. He is perfectly sincere and honest, but if he tells me, when he replies, that it was utterly impossible at each moment when it came along to do anything but put on tariffs, I respectfully agree. The only trouble is that they are working a system that is cutting its own throat and theirs all the time. They want a well-nourished nation—they are beginning really to want it now, because they think it may have to fight—and they burn the world's food. They want ships to sail the seas and they form companies to root out all the shipyards and put shipwrights out of work. It is all sincere and honest and all perfectly damnable. You cannot make your shipyards work unless you destroy some of them. You cannot make any of your trade work unless you destroy half of it. You cannot make profits from the people's food unless you destroy some of it. You cannot try to keep the peace without creating a war.

Let me concede this at once to hon. Members. While, if we are right, the present policy of the Government is bound to lead to a war, we respectfully agree that if the Government did not in this distracted world get a large measure of armaments, it would have to face the problem either of continuing to run away from everybody so that it was actually giving up its Empire and its trade routes, or it would have to face a war. If you rearm, you will have a war; if you disarm, you will have a war. That is not our dilemma; it is yours. It is not Socialism's dilemma; it is the dilemma of the auto-intoxication of capitalism.

Mr. Mabane

Would the hon. and learned Member therefore vote against a proposal for disarmament on the ground that it would lead to war?

Mr. Pritt

I should vote unhesitatingly for disarmament if there were any Government in power which I could trust for five minutes to do two things, first, to try to carry it through, and, secondly, to establish such relations with Europe that there would be a chance of carrying it through. I have tried to the best of my ability to deal with two of the three points I want to put to the Government; that they are starting an armament race without attempting to deal with the causes of war, and that they have no consistent or clear policy on which to base these armaments. I will deal with the third point very shortly. We do not trust this Government. One of the oddest features of the whole situation is that you would expect—and you would not be disappointed—that when a terrible, disgusting and shameful proposal of this kind was brought forward, the Government would at least bring it forward after much heart searching and inquiry. I concede that at once, but the strange thing is that two things happened as soon as it was brought forward, there was great indignation that it was not immediately subscribed whole-heartedly to the last penny, a naive surprise that anybody should oppose it and, secondly, an inability on the part of hon. Members opposite, including some of those on the Front Bench, to realise that if hon. Members on this side oppose this measure of armaments, they are not necessarily opposed to all measures of armaments. The truth is that the Government in attempting to set up a war psychology in the country have created a war psychology inside their own followers. I hope it will fail in the country.

Why do we not trust the Government? It is acting for Defence; it has made that very plain. I have never heard of a country yet which embarked on any war except for Defence. It was made extremely plain to everybody by Mussolini that the Ethiopians had committed a wanton and unprovoked attack on the forces in Italian Somaliland, who happened to be there in large numbers. I remember an American humorist explaining that the real trouble in North China was that the Great Wall of that country had made a wanton and unprovoked attack on poor little Japan. When the Government says that they are arming only for Defence, they are saying precisely nothing. All Governments say that; and quite a number of them believe it. But what is Defence? Are there no offensive weapons being prepared by the present Government, no bombers? It is quite easy to describe them as defensive weapons. I can understand that line of reasoning. You always defend, you never attack; and if you do something which everybody regards as an attack, I think it is called a defensive offensive or perhaps it is an offensive defensive.

The Government are preparing exactly as the Government did in 1912, 1913 and 1914, with an equally sincere desire for peace, an equally direct and sturdy march towards war; and the tragedy is that it will be the same war, the same Defence of an Empire threatened and attacked by other Powers. The only difference is that the Empire is now very much bigger. It will be just the same unprovoked aggression. There will be just the same destruction of what is left of our individual liberty. There will be just the same insidious attack on trade union standards, and just the same bribing of other Powers to come in with us by promises of sharing the loot—promises which will afterwards be broken. Theta will be just the same idle military hope of emerging at the end the least battered of a collection of bruised and ruined nations. That will be done in the defence of trade routes and the command of the seas. I wonder whether it will also be accompanied this time by an expenditure of £200,000,000 of our money in an attack on an infant Socialist State established on the ruins of one of our Allies. That was the case last time. We have no confidence that these are one-way guns or that they will always be pointed at genuine foreign enemies in defence of a genuine free Empire. These weapons may be used to explain to our fellow citizens in British India that they cannot read the publications of the Left Book Club, or that they cannot hold public meetings. They may be used to defend the system in British Somaliland, whereby under the free Union jack you are not allowed to defend yourself on a criminal charge unless you can first show that you have a good defence. They may be used in Ashanti, where if you are tried for murder you are not allowed to have counsel or solicitor to defend you.

An Hon. Member

What about Russia?

Mr. Pritt

I will deal with Russia at the proper time, but if I should now deal with what the hon. Member probably believes to be Russia I should be told that it had no relation to the Bill. Indeed, these guns may be used to hold up British citizens. An hon. Member has been explaining to the House that 5 per cent. of anti-war people in the last War w ere a nuisance, and that if there were 20 per cent. in the next war they would spoil the war. There will be 20 per cent., there is no doubt about that, and then the friends of hon. Members opposite who get their money in this £400,000,000 at only 3½ per cent. will be able to think that their dividends will be accompanied by inquests on their fellow citizens who did not want to fight the working classes of another country. The Chancellor of the Exchequer put some questions to hon. Members on this side, drafted if not by the Home Secretary at any rate on the Home Secretary's lines. They are carefully framed questions to which the only possible answer is the one which the witness does not like. I have known the Home Secretary a long time and I quite recognise the technique. I could take refuge under the Chancellor of the Exchequer's own statement, that the Government alone have access to the necessary information and only the Government can answer the questions. Still I would like to try my prentice hand at being cross-examined. The first question we were asked was, in what respect is this programme excessive? One answer is that the programme is not so much excessive as irrelevant, for until it is explained what it is really for no intelligent answer can be given. Let me illustrate it. Wherein is it excessive? Wherein is half a bottle of medicinal brandy excessive? If you have fainted and can be reasonably trusted with it, half a bottle of medicinal brandy is not excessive.

Viscountess Astor

Oh, yes it is.

Mr. Pritt

I apologise to the Noble Lady. I should have said not excessive for anybody except one who is already inebriated by the exuberance of her own verbosity. But if the same half-bottle of medicinal brandy is put in the hands of a drunkard, who has already drunk three, it is excessive. Any rearmament entrusted to this Government, on the facts as they have put them before the House and the country, is excessive because although the Government is perfectly sober and knows what it is doing it is not to be trusted with arms. A much more important series of questions put by the Chancellor was, "Do you think that our arms should not be used for any of the purposes enunciated by the Foreign Secretary, or do you think they should be used for any additional purpose?" Again it would be easy to say that we have no confidence whatever that the Government will use them for the purposes which the Foreign Secretary lays down, or that they will not use them for other purposes and therefore that our answer to the question is simply that we have no faith in them. But I would like to answer that question more fully.

While I do not want to make an attack on the Foreign Secretary, I do want to take exception to the suggestion that his speech at Leamington was an epoch-making and statesmanlike declaration. I think the right hon. Gentleman himself would probably agree with me about that. It seemed to me a very ordinary speech. He has made many better speeches both in Moscow and in London. But we heard afterwards from Member after Member that this speech was a clear declaration of policy, a statesmanlike act, something which had been welcomed throughout Europe as showing exactly where Britain stood last Friday week. His first declaration was that our arms would never be used in a war of aggression. Nobody has ever used any arms in a war of aggression. There has never been such a war. The only possible definition of "war of aggression" is that "any war in which I am taking part is not a war of aggression by me, but any war in which my enemy is taking part is a war of aggression against me." There is no other definition and there never will be. That is not cynical; it is sad and sober fact.

I would like to know whether, if that is the head and front of a great and statesmanlike declaration of policy, it is a new declaration of policy? Does it mean that the arms of England will never again be used in a war of aggression? If so, it is remarkable but not too credible. What is there in the policy, conduct, and record of the Government to make us believe that it has suddenly departed from the practice of aggressive wars and is taking to non-aggressive wars only. If, on the other hand, the declaration means that Great Britain never has taken part in an aggressive war and never will, then, of course, one understands it. But it does not help us in the least. All it means is that Great Britain will continue its own course and if it wants a war with the Chinese people for the profit of British or Indian capitalists it will have one, and if it wants a war to break an infant Socialist republic it will have one, and if it wants a war to smash up South African republics it will have one there too.

What was the next statement by the right hon. Gentleman the Foreign Secretary? He said that the arms would only be used in our own defence. All arms are always used in one's own defence only and there is nothing very much in that. When I say "defence" I am using the expression broadly. The right hon. Gentleman stated various things that we would do and I have stated them already and need not repeat them. Then there was a statement of the various treaty obligations which lie upon this country and the assertion that we would stand by them. That is perfectly satisfactory as far as it goes. This useful record, I have no doubt, came out of a very efficient card-index into the right hon. Gentleman's notes of his speech but there is nothing epoch-making about it. Lastly came the statement that the arms also may be used to give assistance to the victims of aggression. Of course they may and they may not. The right hon. Gentleman did not say in terms that they would be used to protect the victims of aggression if the League of Nations said so. Perhaps he did not think it was necessary in a speech of that kind to mention the League of Nations once or twice but there is not much there to give us any help.

The right hon. Gentleman the Member for Epping (Mr. Churchill) said he wished the House would rouse itself to the seriousness of the situation. Many of us wish the same thing. The right hon. Gentleman said another curious thing which is illustrative of the mentality of the modem State. He was led by someone into discussing the question of re- nouncing the bombing aeroplane and he challenged hon. Members on this side to say whether we believed that, even if the British Government had not allowed Lord Londonderry to achieve what he described as the very difficult task of retaining the bombing aeroplane, European nations would not still be arming themselves with bombers. It is a very interesting study. The right hon. Gentleman understands both this country and others extremely well, and he is sure that however many treaties you made—England, France, Germany, Italy or anybody else—to renounce the bombing aeroplanes, they would go on manufacturing them just the same. That is the mentality, the morality, the ethics of the modern capitalist state. You must not keep your word, if by breaking it and murdering a lot of women and children, you can achieve your ends.

The truth, of course, is that modern European countries realise clearly that they are living under the law of jungle. They cannot trust themselves and they must arm and lie, and lie and arm, until the great final catastrophe. We are being asked to-night, with disgust and shame, to throw the might of this country into the armaments race before it is too late for us to make as big beasts of ourselves as the other people are making of themselves. The world, or at any rate five-sixths of it, is morally and politically bankrupt. [An HON. MEMBER: "Hear, hear!"] I am glad to have at least that measure of support from one corner of the Government Benches.

I am constantly being asked to say something about Russia, and I will just mention it. Most of us are old enough to remember how in the awful days when we were waiting for the last war—rather like the present days—terrible calculations went on. People said Germany had 66,000,000 people and was putting every able-bodied man into field grey, and some citizens of this country said, "But it is all right—the Tsar has 150,000,000 or 200,000,000 people, he is putting them into some colour, and they will steamroller Germany." Germany regarded Russia as a terrible menace and England regarded Germany as a terrible menace, and nobody knew whether to regard Italy as staying bought or selling herself to someone else. I will compare the attitude towards Russia to-day with the attitude towards Germany and Russia then.

Many people in this country, including some hon. Members, do not like Russia. Russia has a very large army of the most devoted, courageous, intelligent, and well-trained soldiers. She has the best tanks and aeroplanes, particularly bombers, in the world. She has the best aviators in the world; she holds most of the world's records in aviation. But there is not really a sober controversialist, or even an intoxicated controversialist, in this country who seriously thinks that we ought to arm against Russia, because everybody in his heart knows that if a cramped capitalist country such as Germany threatens war she may make it, but that an uncramped Socialist country, busy on her own building-up, will honestly not be arming for anything except real and genuine defence. [Laughter.] I invite hon. Members opposite to make a simple test. Let them not take their own indignation at the horrible noise my voice is making as the standard of their judgment of the U.S.S.R. Let them go home, or go to some place where literature is available, and see whether they can find there one page of printed matter, written by a person who knows what he talking about, suggesting that Great Britain ought to be frightened of the armaments of the U.S.S.R. They will not find one. Then they will not laugh; they ought to be glad. The people of the U.S.S.R. have no indirect motive to arm. It is not only that there is not anything belonging to others that they want to take—

Mr. Hannah

They want to take bits off the provinces of China.

Mr. Pritt

It is not only that there is nothing they want to steal—

Mr. Hannah

Outer Mongolia.

Mr. Pritt

Great Britain has the tragic temptation to arm if she thinks she can ease her economic situation and her unemployment situation, at any rate for a time. All the newsreels of this country, which are influenced by people attached to the larger party of this Coalition, are running round the country to-day with shots of munition works, and little pieces about the disarmament programme, and little captions about more work for more men; whereas every time the U.S.S.R. builds another aeroplane she has to sacrifice another tractor which she really wants for peaceful ends. [An HON. MEMBER: "And starves her people."] Russia did starve her people for many years, because this House voted £200,000,000 to try and starve her to death.

I would like to add a few words, not so much about the position of the Government and the League of Nations—that particular problem has been worked out pretty thoroughly—but about one particular aspect of it. It has generally been regarded throughout the years since the League was formed that one of the objects of the control of the pooled collective security of the League was to enable each country under a proper pooling system to have fewer arms than it would have in a mad arms race or in ordinary prewar isolation or treaty groups. It was the ABC of controversy in this country for a long time. At the last General Election the Government rather suggested that they needed just as large arms for pooled security as they needed for isolation. Now there are distinct statements coming from a number of right hon. Gentlemen, including the Prime Minister himself, that you actually need larger arms for the League of Nations than for isolation. If that be really so, I can understand the Government running away from the League of Nations, because they do not want to have an unnecessarily large amount of armaments. No one with any sensible view of the League of Nations, however, would put forward that story for a moment. If the League of Nations will not work, then you are where you were. If the League will work, on ordinary insurance principles it cannot call for as large armaments as the present armaments race, which is three or four times larger than anything that happened before the War.

Another thing that is said by a good many hon. Gentlemen opposite is that there is no antithesis between collective security and national security, and that you cannot defend collective security unless you can defend yourself. I would like to answer the last of those two things first. If you defend collective security, you will automatically defend yourself by the arms of yourself and 50 other nations. [Laughter.] Hon. Members who laugh at any mention of the League of Nations form an interesting illustration of the Government's attitude and a valuable card at meetings. With regard to the suggestion that there is no antithesis between collective and national security, there is a very great antithesis between them, You start without an antithesis, because you start with your first battleship, your first cruiser, your first thousand rifles, which are equally valuable for both. After you get to the point of what you should agree upon for collective security—and if England had supported the League of Nations whole-heartedly, that would long ago have been determined by negotiation—the moment you build beyond that point you are building inconsistently with the League, and upsetting all League calculations; because the moment you do that you as a potential aggressor—and everybody must be regarded as a potential aggressor however unlikely—are becoming stronger than you should be within the League framework, and are theoretically, and perhaps even practically, calling upon all the Powers in the League to readjust all their schedules, with everybody building up a little further in order to deal with possible aggression from you. That is a very serious consideration.

I shall not weary the House very much longer. [HON. MEMBERS: "Hear, hear."] I know that there are a few hon. Members who cannot stand the truth at any price. I threatened at the beginning of my speech that when I came to the end of it hon. Members would realise that they were wrong in thinking they had our support in the armament race. What I have been saying against their policy had already been stated at the Labour Party Conference which they are so fond of quoting. This is what the right hon. Gentleman the Member for Hackney (Mr. H. Morrison) stated at that gathering in explaining the policy which I have been putting before the House. He referred to an earlier speech in which he had said this: It is clear, therefore, that the party continues to be willing, as before, to provide arms for the collective organisation of peace, but, as before, it declines to be a party to the Government's policy of competitive national armaments and complete absence of any intelligible foreign policy. Except that the right hon. Gentleman uses strong language and I do not, we are really saying the same thing. The right hon. Member for South Hackney continued: I went on to say, 'In these circumstances it is necessary for all Labour supporters in the country to be warned against efforts to give a twist to the resolution that is not warranted by its terms.' He went on for some time, but I do not want to weary hon. Members with it anything further. This Bill and the policy of the Government expressed by this Bill, notwithstanding that the Government is sincerely desirous of peace, is in fact, the herald of the next war more surely than Mr. Mulliner's activities and his extra battleships were the heralds of the last War. This Bill and the policy which lies behind it amount to a confession of what every Socialist knows, that unchecked capitalism inevitably means war. I ask the House to recognise and to justify the disgust and shame felt by rejecting the Bill as a first step towards removing the Government and paving the way for the establishment of a Socialist State which can avoid disgust and shame, can seek peace and can ensure it.

10.29 p.m.

Mr. Chamberlain

The hon. and learned Member for North Hammersmith (Mr. Pritt) began his speech by expressing the hope that it would not go forth that there was a wide measure of agreement in the House this afternoon. If I thought that the sentiments expressed by the hon. and learned Member were genuinely those of the majority of hon. Members who sit behind him, I certainly should believe, and indeed hope, that there was no wide measure of agreement. Anybody who has listened, as I have done, to the greater part of the Debate, must have been struck, I think, by one or two features of it. It has been on the whole a rambling Debate, and has been more discursive than any Debate on a subject of this character that I can remember for a long time. No single point in the Bill has been subjected to a concentrated attack, but one hon. Member has taken up one point and another has taken up another, even in the same party. This discursiveness and want of concentration on particular points have been due to the underlying fact that there is a real, general, fundamental measure of agreement in the House upon the necessity for rearmament. That being SO—[HON. MEMBERS: "It is not so"]— I do not think I need stress the points which have been made, although I may, of course, have to meet some arguments which have been used and from which I differ. In view of the fundamental importance of the measure of agreement to which I have referred, that is the point which should go out as the thing that has emerged from this Debate, rather than the differences which, however sharp they may be, are upon points of minor detail.

Such a multitude of subjects has been raised that it is not possible for me to deal with them all. I hope that hon. Members will not think me discourteous if I do not take up a number of the suggestions or criticisms that have been made in the course of the afternoon and evening. There was a very thoughtful and suggestive speech by my hon. Friend the Member for Lowestoft (Mr. Loftus), and my hon. Friend the Member for East Aberdeen (Mr. Boothby) made, as usual, a very valuable contribution to the discussion. Points were raised by the hon. Member for Huddersfield (Mr. Mabane) which I know he would have liked to have made during the Committee stage when, for some unavoidable reason, he had to be absent. I am not going to deal with the points raised by hon. Members, but I shall say something of what seem to me to have been the chief features of the discussion.

The first question that arises, if it be agreed that some measure of rearmament is necessary, is whether the amount of rearmament which we are proposing is excessive. Some hon. Members suggested that it is excessive, although they complained that they had no measure by which they could accurately tell by how much it ought to be reduced. Let me say just a few words about the argument upon which that complaint was apparently based. As I understand the argument which has been used by several hon. Members, if the Government had given more attention and more encouragement to collective security our rearmament might safely have been on a smaller scale. The hon. and learned Member for North Hammersmith found fault with my description of the way in which we had endeavoured to frame our ideas of what armament was necessary. He said that I had declared that we had taken certain countries that might be against us and certain countries that might be with us and, on a general view of the probabilities, we had laid down the armament that would be required to meet those probabilities. I wonder what alternative system exists for finding out what your armaments should be. You must begin with some hypothesis. Hon. Members seem to think that this excludes the possibility of assistance by other States. It does not.

The hon. and learned Member, quoting me, represented that I said that we had to take account of those who might be with us. Those nations that might be with us would be members of the League, presumably; they might or might not; but I say that you must start with some hypothesis; unless you have a hypothesis, you cannot frame any kind of estimate of what armaments you will require. I am quite at a loss to know why any fault should be found with the description I gave of the way in which we had framed our own plans. But, supposing that I have interpreted correctly what I thought was the idea in the minds of Members who spoke of collective security, they base their view that our armaments are excessive on the assumption that we have not taken account of the armed forces of the members of the League–50 nations, I think the hon. and learned Member said—who would come to our aid if we were involved in a war in which somebody else had been the aggressor. I wonder whether hon. and right hon. Gentlemen opposite would feel that they could stake the security of this country upon that assumption.

Mr. Pritt

Not now.

Mr. Chamberlain

But we must not have both of these arguments. The hon. and learned Member may say that we have ruined the League, but, having said that, he must not assume that the League is going to come to our assistance. Let us remember that, if we are going to make the one assumption, we can equally make the assumption that we are going to the assistance of any other member of the League who is subject to aggression. I would ask hon. Members opposite and in all parts of the House to weigh up for themselves whether on balance, taking these assumptions, we are going to diminish or are going to increase our liabilities by resting on collective security. Quite evidently they would be prepared to take on a whole lot of liabilities that we have not now. We have no automatic liability under the Covenant now to go with our military forces to the assistance of other countries which may be the victims of aggression. Hon. Members are always trying to read into the Covenant a great deal more than is to be found in it. I do not, however, want to get into a controversy on this subject, but I want to try to clear up that point, because I hear it so continually made. These words "collective security" are continually brought up as though, if only we had supported collective security, we might have spared ourselves a great deal of the armaments which we are now contemplating. I have put what I believe to be the implications of that view, but in my opinion it means, not a decrease in the armaments that we must contemplate, but an increase.

I come now to one or two other points that have been raised. They are mostly, of course, points that have been discussed again and again. There have been, and I suppose there will continue to be, questions about the possibility of profiteering. In particular, the hon. Member for Newton (Sir R. Young), I believe, put a question—I was unfortunately not in the House at the time—as to what was being done. I can only imagine that he was not present during the Debate on the Second Reading, because I made a statement on the subject and said in some detail what was being done. Indeed, on various occasions in the past the Minister for the Coordination of Defence and I have entered at some length into the very detailed and earnest efforts that have been made, with all the expert skill that we can command, to make certain that the situation is not exploited by contractors and that the taxpayer is not forced to give much greater prices than he ought to do for the materials that the nation needs.

But, when it is suggested that we ought to take all profit out of the supply of materials, I wonder how hon. Members think we are going to have any armaments made at all because, unless we are going completely to alter our social and industrial system and conscript everyone in industry we cannot turn out armaments. At present, without disturbing our present system, we are trying to get a very large quantity of articles made for which those who make them have in many cases to sacrifice the chance of commercial business which I dare say they would very much have preferred, because they could carry on that commercial business without the daily interference with their concerns which is inevitable if they are to undertake armaments. Therefore I say, while, on the one hand, we are doing our utmost to prevent exploitation of the public needs, on the other, I do not think it is reasonable in the circumstances to ask that all profit should be taken out of armament contracts. Contractors are to be asked to set aside other opportunities that they have in order to contract for armaments for the country's sake and not for their own in the first instance, and therefore they must be allowed to receive a reasonable remuneration.

After all, the principle of the Bill is to authorise the Government to raise a certain amount of money for the purpose of providing for the defence services. Very little has been said about borrowing, though something was said by the hon. Member for North Cumberland (Mr. W. Roberts) and by the hon. Member for the Isle of Ely (Mr. de Rothschild), who complained that it was wrong to contemplate powers lasting over five years, because he thought it was impossible for me to forecast now what the revenue would bring in in four years' time. I entirely agree, but he does not seem to have noticed that the Bill does not force us to borrow £400,000,000 in five years. It only gives us power to borrow that sum and, if it should prove that his anticipations are well founded, if the revenue should expand to such an extent that it is not necessary to borrow, it is open to the Government to refrain from doing so.

The hon. Member for North Cumberland came back to the theory, which I think was advanced at a fairly early stage of the Bill, under which borrowing by the Government is made into a policy. You are to borrow when you think it would be good in order to raise prices and pump money into circulation, and you are not to borrow at other times when prices are rising. But in this theory, apparently, there is no consideration to be given as to whether there is anything to borrow for, or whether in fact you have any need to borrow, or whether, on the other hand, you are compelled to borrow whether you like it or not. I think that is rather a topsy-turvy way of looking at it. At the time of the slump to which the hon. Member referred, we did not borrow, because we did not find any work for which borrowing was necessary or desirable, but he would have borrowed, apparently, even if there was nothing to borrow for. On the other hand, as I think I said on a previous occasion, we are borrowing now, not because we think it is a particularly good time to borrow, but because we are faced with an expenditure which, in the opinion of the Government, ought not to be carried entirely upon current taxation.

I was asked by one or two hon. Members, but my hon. and gallant Friend the Member for the Isle of Thanet (Captain Balfour) was the first to put the question, whether the Government could not give some indication as to the conditions which would allow them to reduce the programme of armaments which they at present contemplate. Of course, I cannot lay down a specification for that purpose, but I should have thought that the general conditions under which we could reduce our armaments would be fairly clear. Why are we increasing our armaments? It is not for purposes of aggression on somebody else. The hon. and learned Member opposite might at least allow us to be put in the same class as Russia in that respect. We are arming because we must be safe. If we can be safe and can be satisfied that we are safe with a smaller scale of armaments, we should be delighted to reduce our programme.

The moment you agree that you must have any measure of rearmament at all, it seems to me to cut away a large part of the arguments which were used by the hon. and learned Gentleman opposite, that if you rearm you are beginning an armaments race and that it is bound in the end to lead to war. He said that if you add to your armaments somebody else would add to theirs. He would add to our armaments, but would add something less than we are adding. He does not specify the difference. What difference would that make to other foreign countries? There would still be the armaments race, if other countries thought it necessary to go on with an armaments race.

Nobody in this House thinks that we are proceeding with rearmament for our pleasure. I have expressed my disgust and shame at civilisation which has resulted in such a course. The hon. and learned Member says that I am persisting in my disgusting and shameful course. Would it not be a still more disgusting and shameful course if I were not to rearm and were to leave this country defenceless and open to the attacks of any other country? [An HON. MEMBER: "That is begging the whole question."] If the hon. and learned Member would take that course, I think that I should have no cause to envy him a better reputation that I can enjoy myself. No country would be more glad than we should be if it were possible to put an end to this race. I do not believe myself that you can expect to get a general measure of disarmament when one of the wealthiest countries in the world is herself disarmed. It was not at Washington the possession of superior force, as the hon. Member for North Camberwell (Mr. Ammon) said—

Mr. Ammon

The Home Secretary said that, not me.

Mr. Chamberlain

If the hon. Member will excuse me, he did not say that. That is what the hon. Member said fie said. The hon. Member represented my right hon. Friend as having said that because we had superior force, we were able to overawe others taking part in that Conference with us. That was not the argument. The argument was that unless we had something to give away we could not expect other people to give something away.

Mr. Ammon

That is the same thing.

Mr. Chamberlain

Hon. Members ought not to have forgotten the experience of their President of the Board of Trade, who went around half Europe trying to persuade other countries to agree to a disarmament in the matter of tariffs. He utterly failed, because he had nothing to give away, and it is only since we have armed ourselves with tariffs that we have been able to make agreements with other countries and to come to a partial disarmament in this respect.

It is because I believe that the measure of rearmament which we are advocating to-day is the essential preliminary to a final stage of disarmament that I reject the arguments of the hon. and learned Member for North Hammersmith and ask the House to give the Bill a Third Reading.

Question put, "That the word 'now' stand part of the Question."

The House divided: Ayes, 241; Noes, 117.

Division No. 99.]	AYES.	[10.52 p.m.
Acland-Troyte, Lt.-Col. G. J.	Emmott, C. E. G. C	Morrison, G. A. (Scottish Univ's.)
Agnew, Lieut.-Comdr. P. G.	Emrys-Evans, P. V.	Morrison, Rt. Hon. W. S. (Cirencester)
Albery, Sir Irving	Entwistle, Sir C. F.	Muirhead, Lt.-Col. A. J.
Allen, Lt.-Col. J. Sandeman (B'kn'hd)	Errington, E.	Neven-Spence, Major B. H. H.
Allen, Lt.-Col. Sir W. J. (Armagh)	Erskine-Hill, A. G.	O'Connor, Sir Terence J.
Apsley, Lord	Fleming, E. L.	O'Neill, Major Rt. Hon. Sir Hugh
Aske, Sir R. W.	Fremantle, Sir F. E.	Orr-Ewing, I. L.
Assheton, R.	Furness, S. N.	Palmer, G. E. H.
Astor, Viscountess (Plymouth, Sutton)	Fyfe, D. P. M.	Peat, C. U.
Atholl, Duchess of	Gluckstein, L. H.	Perkins, W. R. D.
Baldwin, Rt. Hon. Stanley	Glyn, Major Sir R. G. C.	Peters, Dr. S. J.
Baldwin-Webb, Col. J.	Graham, Captain A. C. (Wirral)	Petherick, M.
Balfour, G. (Hampstead)	Grant-Ferris, R.	Ponsonby, Col. C. E.
Balfour, Capt. H. H. (Isle of Thaset)	Granville, E. L.	Procter, Major H. A.
Barclay-Harvey, Sir C. M.	Gretton, Col. Rt, Hon. J.	Raikes, H. V. A. M.
Barrie, Sir C. C.	Gridley, Sir A. B.	Ramsay, Captain A. H. M.
Beamish, Rear-Admiral T. P. H.	Grimston, R. V.	Rankin, Sir R.
Beaumont, M. W. (Aylesbury)	Gritten, W. G. Howard	Rathbone, J. R. (Bodmin)
Birchall, Sir J. D.	Guest, Hon. I. (Brecon and Radnor)	Reed, A. C. (Exeter)
Blair, Sir R.	Guest, Maj. Hon. O. (C'mb'rw'll, N. W.)	Remer, J. R.
Blindell, Sir J.	Hannah, l. C.	Rickards, G. W. (Skipton)
Boothby, R. J. G.	Hannon, Sir P. J. H.	Robinson, J. R. (Blackpool)
Bossom, A. C.	Harbord, A.	Ropner, Colonel L.
Boulton, W. W.	Hartington, Marquess of	Ross, Major Sir R. D. (Londonderry)
Bower, Comdr. R. T.	Haslam, H. C. (Horncastle)	Rowlands, G.
Bowyer, Capt. Sir G. E. W.	Haslam, Sir J. (Bolton)	Ruggles-Brise, Colonel Sir E. A.
Boyce, H. Leslie	Heilgers, Captain F F. A.	Russell, A. West (Tynemouth)
Brass, Sir W.	Heneage, Lieut.-Colonel A. P.	Salmon, Sir I.
Briscoe, Capt. R. G.	Herbert, A. P. (Oxford U.)	Salt, E. W.
Brocklebank, C. E. R.	Herbert, Major J. A. (Monmouth)	Samuel, M. R. A.
Brown, Col. D. C. (Hexham)	Hills, Major Rt. Hon. J. W. (Ripon)	Sandeman, Sir N. S.
Brown, Rt. Hon. E. (Leith)	Holmes, J. S.	Sanderson, Sir F. B.
Brown, Brig.-Gen. H. C. (Newbury)	Hope, Captain Hon. A. O. J.	Scott, Lord William
Browne, A. C. (Belfast, W.)	Hopkinson, A.	Shakespeare, G. H.
Bull, B. B.	Hore-Belisha, Rt. Hon. L.	Shaw, Captain W. T. (Forfar)
Bullock, Capt. M.	Howitt, Dr. A. B.	Smith, Bracewell (Dulwich)
Burton, Col. H. W.	Hudson, Capt. A. U. M. (Hack., N.)	Smithers, Sir W.
Butler, R. A.	Hulbert, N. J.	Somerset, T.
Cartland, J. R. H.	Hume, Sir G. H.	Somerville, A. A. (Windsor)
Carver, Major W. H.	James, Wing-Commander A. W. H.	Somerville, D. G. (Willesden, E.)
Gary, R. A.	Jarvis, Sir J. J.	Spens. W. P.
Castlereagh, Viscount	Jones, Sir G. W. H. (S'k N'w'gt'n)	Stanley, Rt. Hon. Lord (Fylde)
Cayzer, Sir C. W. (City of Chester)	Keeling, E. H.	Storey, S.
Cazalet, Thelma (Islington, E.)	Kerr, Colonel C. I. (Montrose)	Stourton, Major Hon. J. J.
Cazalet, Capt. V. A. (Chippenham)	Kerr, J. Graham (Scottish Univs.)	Strauss, E. A. (Southwark, N.)
Chamberlain, Rt. Hn. N. (Edgb't'n)	Keyes, Admiral of the Fleet Sir R.	Strauss, H. G. (Norwich)
Channon, H.	Kimball, L.	Strickland, Captain W. F.
Christie, J. A.	Lamb, Sir J. Q.	Stuart, Lord C. Crichton- (N'thw'h)
Clarke, Lt.-Col. R. S. (E. Grinstead)	Latham, Sir P.	Stuart, Hon. J. (Moray and Nairn)
Clany, Sir Reginald	Law, Sir A. J. (High Peak)	Sueter, Rear-Admiral Sir M, F.
Clydesdale, Marquess of	Leckie, J. A.	Sutcliffe, H.
Cobb, Captain E. C. (Preston)	Leech, Dr. J. W	Taylor, C. S. (Eastbourne)
Colfox, Major W. P.	L'eighton, Major B. E. P.	Taylor, Vice-Adm. E. A. (Padd., S.)
Colville, Lt.-Col. Rt. Hon. D. J.	Lennox-Boyd, A. T. L.	Thomson, Sir J. D. W.
Cooper, Rt. Hn. T. M. (E'nburgh, W.)	Lindsay, K. M.	Titchfield, Marquess of
Cranborne, Viscount	Llewellin, Lieut.-Col. J. J.	Touche, G. C.
Croft, Brig.-Gen. Sir H. Page	Lloyd, G. W.	Tree, A. R. L. F.
Crooke, J. S.	Loftus, P. C.	Tufnell, Lieut.-Commander R. L.
Crookshank, Capt. H. F. C.	Lumley, Capt. L. R.	Turton, R. H.
Croom-Johnson, R. P.	Lyons, A. M.	Wakefield, W. W.
Cross, R. H.	Mabane, W. (Huddersfield)	Walker-Smith, Sir J.
Crowder, J F. E.	MacAndrew, Colonel Sir C. G.	Ward, Irene M. B. (Wallsend)
Gruddas, Col. B.	MacDonald, Rt. Hon. M. (Ross)	Warrender, Sir V.
Davies, C. (Montgomery)	MacDonald, Sir Murdoch (Inverness)	Waterhouse, Captain C.
Davies, Major Sir G. F. (Yeovil)	Macdonald, Capt. P. (Isle of Wight)	Watt, G. S. H.
De Chair, S. S.	McKie, J. H.	Wedderburn, H. J. S.
Denville, Alfred	Maclay, Hon. J. P.	Wells, S. R.
Despencer-Robertson, Major J. A. F.	Macnamara, Capt. J. R. J.	Wickham, Lt.-Col. E. T. R.
Donner, P. W.	Magnay, T.	Williams, C. (Torquay)
Dorman-Smith, Major R. H.	Maitland, A.	Willoughby de Eresby, Lord
Drewe, C.	Makins, Brig.-Gen. E.	Wilson, Lt.-Col. Sir A. T. (Hitchin)
Duckworth, Arthur (Shrewsbury)	Manningham-Buller, Sir M.	Windsor-Clive, Lieut.-Colonel G.
Duckworth. W. R. (Moss Side)	Margesson. Capt. Rt. Hon. H. D. R.	Wise, A. R.
Dugdale, Major T. L.	Markham, S. F.	Womersley, Sir W. J.
Duggan, H. J.	Maxwoll, Hon. S. A.	Wragg, H.
Duncan, J. A. L.	Mayhew, Lt.-Col. J.	Wright, Squadron-Leader J. A. C.
Dunglass, Lord	Mellor, Sir J. S. P. (Tamworth)	Young, A. S. L. (Partick)
Eastwood, J. F.	Mills, Sir F. (Leyton, E.)
Eckersley, P. T.	Mills, Major J. D. (New Forest)
Edmondson, Major Sir J.	Moore, Lieut.-Col. T. C. R.	TELLERS FOR THE AYES.—
Ellis, Sir G.	Moreing, A. C.	Sir George Penny and Commander
Elliston, Capt. G. S.	Morris-Jones, Sir Henry	Southby.

NOES
Adams, D. (Consett)	Griffith, F. Kingsley (M'ddl'sbro, W.)	Oliver, G. H.
Adams, D. M. (Poplar, S.)	Griffiths, G. A. (Hemsworth)	Parkinson, J. A.
Adamson, W. M.	Griffiths, J. (Llanelly)	Pethick-Lawrenoe, F. W.
Alexander, Rt. Hon. A. V. (H'lsbr.)	Groves, T. E.	Potts, J.
Ammon, C. G.	Hall, G. H. (Aberdare)	Price, M. P.
Anderson, F. (Whitehaven)	Hardie, G. D.	Pritt, D. N.
Attlee, Rt. Hon. C. R.	Harris, Sir P. A.	Richards, R. (Wrexham)
Banfield, J. W.	Hayday, A.	Ridley, G.
Barnes, A. J.	Henderson, A. (Kingswinford)	Ritson, J.
Batey, J.	Henderson, J. (Ardwick)	Roberts, W. (Cumberland, N.)
Bellenger, F. J.	Hicks, E. G.	Robinson, W. A. (St. Helens)
Benson, G.	Hollins, A.	Rothsohild, J. A. de
Bevan, A.	Hopkin, D.	Rowson, G.
Broad, F. A.	Jagger, J.	Sanders, W. S.
Brooke, W.	Jenkins, A. (Pontypool)	Sexton. T. M.
Brown, C. (Mansfield)	Jenkins, Sir W. (Neath)	Short, A.
Buchanan, G.	Jones, A. C. (Shipley)	Simpson, F. B.
Burke, W. A.	Jones, Morgan (Caerphilly)	Smith, E. (Stoke)
Charleton, H. C.	Kelly, W. T.	Smith, Rt. Hon. H. B. Lees- (K'ly)
Cluse, W. S.	Kennedy, Rt. Hon. T.	Sorensen, R. W.
Cocks, F. S.	Kirby, B. V.	Stewart, W. J. (H'ght'n-le-Sp'ng)
Cove, W. G.	Lathan, G.	Taylor, R. J. (Morpeth)
Cripps, Hon. Sir Stafford	Lawson, J. J.	Thurtle, E.
Dalton, H.	Leach, W.	Tinker, J. J.
Davidson, J. J. (Maryhill)	Lee, F.	Viant, S. P.
Davies, R. J. (Westhoughton)	Leonard, W.	Walkden, A. G.
Davies, S. O. (Merthyr)	Leslie, J. R.	Walker, J.
Dobbie, W.	Logan, D. G.	Watkins, F. C.
Dunn, E. (Rother Valley)	McEntee, V. La T.	Watson, W. McL.
Ede, J. C.	McGhee, H. G.	Welsh, J. C.
Edwards, Sir C. (Bedwellty)	McGovern, J.	Westwood, J.
Fletcher, Lt.-Comdr. R. T. H.	Maclean, N.	White, H. Graham
Foot, D. M.	MacMillan, M. (Western Isles)	Wilkinson, Ellen
Gallacher, W.	MacNeill, Weir, L.	Williams, E. J, (Ogmore)
Gardner, B. W.	Mainwaring, W. H.	Wilson, C. H. (Attercliffe)
Garro Jones, G. M.	Marshall, F.	Windsor, W. (Hull, C.)
George, Major G. Lloyd (Pembroke)	Maxton, J.	Young, Sir R. (Newton)
George, Megan Lloyd (Anglesey)	Messer, F.
Greenwood, Rt. Hon. A.	Montague, F.	TELLERS FOR THE NOES.—
Grenfell, D. R.	Noel-Baker, P. J.	Mr. Whiteley and Mr. Mathers.

Bill read the Third time, and passed.

The remaining Orders were read, and postponed.