§ 4.8 p.m.
§ Mr. Shinwell
Since the war began we have heard several interesting reports on the naval, military and air policy of the Government. Those reports were welcomed by the House and the country and were received with satisfaction. But so far we have heard nothing about the Government's economic policy. That is 906 a subject less spectacular but not less important. Indeed, it may be urged that the intelligent direction of our economic policy might do more to win and shorten the war than any other weapon. We raise this Debate not so much to embarrass the Government as to assure ourselves and the country that all is well. I am bound to add that if the Government are unable to satisfy us we shall be forced to pursue the subject until the Government are more fully seized of its importance. Whoever is to speak for the Government to-night must do so with the utmost candour. If there is any defect in our economic policy it must be exposed and corrected. If there is a lack of coordination we must find the remedy, and no Departmental difficulty should be allowed to stand in the way. To begin with—here I address myself to the right hon. Gentleman who presumably is to reply for the Government—we ask for a statement of the principles on the basis of which the economic effort of the country is being organised.
Is there an effective liaison between the various Ministries responsible for supply, economic warfare, exports and imports, production of food, and, above all, what is the position of the Treasury? What is the policy underlying that effort? Is there any coherent plan or settled policy, or are we merely drifting? This is a vital question upon the answer to which the fate of this country may depend. I have asked these questions early in my observations so that the Government might, before the conclusion of the Debate, be in a position to give a clear and definite reply to the House. Unless there is plenty of initiative on the basis of accepted principles, even co-ordination will be of little value and may result in disputes among Departments in which one or the other may prove victorious. There must be initiative and drive for which an intelligent staff must be made responsible, a staff able to think and plan and, if necessary, after Cabinet approval, give instructions which must be implicitly obeyed. Moreover, it must be a staff which is able to consider every aspect of our economic life and assist in mobilising every economic activity in order to win the war.
I propose to examine the present position so that we may realise where we stand. There is a Ministry of Supply 907 responsible for the production and purchase of war materials. We have a Ministry of Food charged with the task of maintaining and increasing our food supplies and which is responsible for their efficient distribution. Then we have a Ministry of Economic Warfare whose duty it is to prevent the enemy from obtaining supplies. There is also the Department of Overseas Trade which is supposed to be occupied—I say that advisedly—with overseas trade. The Board of Trade seems to be employed, so far as one can ascertain, in deciding whether or not traders should be permitted to receive licences for export or import. Obviously, in the circumstances some considerable overlapping is unavoidable, but that does not account for the numerous complaints about the difficulties experienced by traders in exporting or importing goods consigned from neutral countries, nor does it explain why industrial firms are sent from one Department to another in a fruitless search for information. It certainly does not account for the delay in making up our minds whether or not to purchase goods from abroad, or what we can afford to export, or why there is so much unemployment in important industries like coal and cotton, or, furthermore, why there should be any unemployment at all.
I will first address myself to the position of the Board of Trade. This morning there appeared in the Press a lengthy statement of the Government's intentions in connection with exports. We welcome any considered statement from the Government but it should be noted that the statement which appeared this morning appeared six weeks after the war began, and, apparently, was the result of the intimation that this Debate was to be raised. I offer no comment on the action taken by the Government, except to say that it is no good either to the Government in this House or to the country that the Government should always wait to be pushed into action. We expect initiative from the Government, and certainly, as regards trade and exports, that initiative has been lacking. But when we examine the statement what do we find? I might sum it up in a sentence: Business is to be conducted as usual. I say with the utmost seriousness to the Government that the policy has failed. There is no 908 indication of what goods are to be exported and there is no evidence that the Board of Trade have conducted an economic survey embracing every Department.
It is apparent that what the Government are proposing in relation to export is to get individual traders to bear the responsibility. For example, it is suggested that no appreciable difficulty confronts traders in respect of exports and they may export as and how they please; the goods are there, or if they are not there they may be produced. But nothing is said about priority. I am bound to say to the Minister of Supply that there is a good deal of vagueness surrounding this question of priority, and there is a suspicion in the minds of many people that there is, in fact, no legal priority but that there is a kind of higgledy-piggledy arrangement—I cannot call it a system—on the basis of which the Ministry of Supply are determining whether or not goods of this kind shall be exported.
§ Mr. Shinwell
I mean priority which has the force of Statute or the force of a Department of the Ministry of Supply behind it. According to the statement—I will not waste the time of the House by quoting the exact language—it is certain that for the next three months there should be no difficulty. What is to happen after the three months have expired no one is able to say. While several commodities are exported—that is to say, while we can afford to export certain commodities—there are commodities which we are not permitted to export. We can afford to export coal, and we ought to export it in large quantities. I will say something further on that point at a later stage. We ought to be exporting cotton goods, and we should be considering whether or not we can standardise the production of certain kinds of cotton goods for exporting purposes. It may be urged in regard to wool and cloth that the essential needs of the nation at this time prohibit their exportation, but there are certain qualities of woollen goods which are in constant demand abroad and which ought to be exported.
909 Moreover, there appears to be no appreciation by the Government of the fact that in determining our export arrangements we must have regard to the question of price. We must be exceedingly careful that manufacturers are not permitted to raise the prices of exportable goods against other nations if it means that there is to be a diminution of exports. We have to remember the experience of the last war, particularly as regards coal. All these matters should be taken into the purview of the Government, so that a scientific policy may be adumbrated and executed. I observe that it is the intention of the Government to consult with trading and manufacturing firms. There is no advantage in such consultation until the Government have first determined their policy. When the policy is determined, consultation is essential and inevitable, and can be of value.
I would direct attention to one aspect of the Board's activities—the issue of export licences. I do not want to weigh down the House with a mass of detail, but almost every hon. Member has had a number of letters—certainly I have—from traders on the restrictions created by the Board in relation to export licences. It is dear that the operations of the Board have led to a serious delay in exports, and there is a serious decline in our export trade at present. The Government must face up to that. It must not be concealed. If there is some defect in the machinery it ought, as I have said, to be exposed. This is happening at a time when it is vitally necessary for us to export in order to supply ourselves with available foreign exchange. We have had several instances furnished to us. I recall one case, which was reported in the newspapers and which I myself confirmed by inquiry, of the secretary of a chemical firm, who applied for 500 export licences and at last managed to secure four or five, or half a dozen. If that firm had been producing chemicals regarded as essentials for war needs, I could have understood the procrastination of the Board of Trade, but they were producing something akin to a patent medicine, which people abroad, apparently, like to consume and which we can afford to export. That is the kind of thing we want to export—a thing that we can do without and that other people apparently want.
910 There has been a difficulty in obtaining imports—that is the other side of the picture. It is true that some of the imports are intended for so-called luxury production. I understand that there have been difficulties in obtaining Japanese silk, and ribbons and other materials from Switzerland. These commodities are turned into manufactured goods and exported. They are associated with what is called the luxury trade, but if there is labour available to produce these manufactured goods and the goods can be exported, and there are people abroad who want them, we ought not to put any obstacle in the way.
It is alleged—and here I address myself to the Minister of Supply—that Departments are placing obstacles in each other's way. I put it no higher than that. One instance was reported to me of a certain manufacturer making parachute parts for the Air Ministry, who had a large stock of raw silk on hand and was told by the Ministry of Supply to keep it in reserve. The Air Ministry want the parachute parts; what is the manufacturer to do? He says to the Air Ministry, "I am told to keep this stock in reserve. You had better go to the Ministry of Supply. "They say," That is not our business. You go and fight it out with the Ministry of Supply. "And so the silk is held in a state of suspended animation, hung between the Ministry of Supply and the Air Ministry, but not converted into parachute parts. I am credibly informed that there are many cases of that kind.
Let me turn to the Department which has, perhaps, the key to the situation—the Department presided over by the right hon. Gentleman opposite, the Department of Overseas Trade. I am informed that the right hon. Gentleman has lost half his staff. Where have they gone? Clearly, if he has lost half his staff, he cannot be so busily engaged in stimulating exports as he was before the war began—and he was not doing any too well then. I understand that part of his daily task is to assist in granting licences for exports. One thing is certain: he is doing very little. I am not disposed to blame the right hon. Gentleman altogether; it is a question of machinery; but it is clear that he is doing badly in his job of encouraging export trade.
I come to the Mines Department. There are far too many pits in this country on short time. What does the 911 Minister of Mines say about it? He says that conversations are now taking place between the coalowners and the miners' representatives about production. That has nothing to do with it at all. He offers the lame excuse that there are shipping difficulties. But there is nothing to prevent the production and storage of coal at the present time. If there is difficulty about securing the necessary accommodation at pitheads, there is plenty of land in the country and there are plenty of facilities for transport, so we might store the coal for the future. I will go beyond that, and say that the Government might consider whether it would be advisable to produce coal and other commodities, and, within shipping and other limits, transport these commodities abroad, perhaps to the Colonies, perhaps to Canada, and keep them on tap, so that they may be used in the future. It is clear that the Minister of Mines has no justification for delaying the production of coal. If the responsibility is on the coalowners, all the more reason why the Government should exercise control over the industry.
I admit that shipping is a difficulty. We must pay due regard to our shipping facilities. But that is precisely why we have urged the Prime Minister to create a Ministry of Shipping. We anticipated a difficulty of this kind, but he delayed the creation of that organisation, and what has resulted? Ships have been taken over at fabulous prices. That was mentioned in the House yesterday at Question Time. There is no co-ordination, and owners are complaining that unsuitable ships have been requisitioned by the Government for various purposes, while there is other available tonnage which might be utilised by the Government if they so desired. We realise—I speak for the Labour party, and, I believe, for many other Members of this House—the importance of the Ministry of Shipping at this time, but do the Government? Something has been said about the appointment of the Minister of Shipping. While I agree with the right hon. Gentleman the Prime Minister, in the reply which he gave to-day, that the right hon. Gentleman the Member for Pollok (Sir J. Gilmour) is a man of character—that is recognised, and he is also a man of infinite charm—I do not agree with the Prime Minister that the right hon. Mem- 912 ber for Pollok has experience. He certainly has not experience of shipping, and, to the best of my recollection—and I knew him long before I came to this House—he has no experience of business. If he had been engaged in the daily task of conducting business affairs, there might have been some justification for his appointment.
I am not going to occupy the House in discussing the personal issue; the right hon. Gentleman is there. I am concerned about the structure of the Ministry of Shipping. The right hon. Gentleman announced yesterday that he was going to seek the advice of men in the business, and a director has been appointed who is himself associated with a well-known shipping firm, and other shipowners are to be brought in, but there is not to be a single representative of the other important elements in the shipping business, namely, the officers and men. Does not the right hon. Gentleman appreciate the importance of introducing in the administrative tasks of the Ministry-men who have a thorough knowledge of the business and who can not only speak on labour questions, but on the coordination of shipping?
§ Mr. Shinwell
The hon. Member opposite says, "Give him a little time." Is not that the real defect in the: policy of the Government? We cannot afford to give them a little time. These matters ought to have been thought out before war came, and certainly they ought to have been considered very carefully in the last few weeks. The hon. Member opposite procrastinates and asks for time. I am afraid that if we put off this important consideration we may find ourselves overwhelmed with difficulties.
§ Sir P. Hannon
I am not procrastinating in asking for time. When a new Minister is appointed, after the war has been in progress for six weeks, surely some consideration should be extended to him.
§ Mr. Shinwell
I deprecated any personal attack on the right hon. Gentleman; I was careful to make that clear. I have, along with several other hon. Members, been in constant touch with the Board of Trade on the question of the Ministry of Shipping for many weeks, and I raised 913 the matter in the House over and over again before the war began. I know that the Mercantile Marine Department of the Board of Trade is the Ministry of Shipping. The organisation has been there, but the main considerations have been ignored. One of the considerations is that which I have just mentioned, namely, the importance of bringing into a scheme of co-ordinating shipping the officers and men, and another consideration is that of deciding how the Ministry of Shipping fits into the co-ordinating processes for which the right hon. Gentleman the Chancellor of the Exchequer is to be held responsible. I am not going to say more about it now because we shall raise the matter again at a more convenient time and in a more constructive manner.
I asked the Minister of Labour a question the other day on a most important consideration in respect of this matter. I wanted to know what the Government were doing about organising a full labour supply. What was the response? A characteristic knowing look from the right hon. Gentleman the Minister of Labour, accompanied by some rhetoric and a bag full of promises. That was all. In the meantime we are wasting our labour resources and are not pulling our full weight. The control of essential commodities is placed in the hands of men in the business, who, I am afraid, are considering their own interests first. The profit motive remains the determining factor, and we are half way between peace-time capitalism and a kind of half-baked collectivism, without the advantages of either. That is the situation. The fact is that what has happened in the past few weeks in relation to our export trade has been that the Government have imposed a system of control—I do not object to a system of control—which, instead of expanding trade, has led to a mass of pettifogging restrictions.
I now come to the proposals of the Government. The Government having promised to co-ordinate our economic activities, let us examine their scheme. There is to be a committee of departmental heads operating from the centre consisting of Lord Stamp, Mr. Clay, and Mr. Henderson, assisted by the Secretariat of the Committee of Imperial Defence. That is the machinery that is proposed. I want to ask the right hon. Gentleman this question. What are the committee 914 and the Ministers going to do? Are busy Ministers to sit round a table and talk? They will soon get tired of that. Consultation may be required, I agree, but consultations must not be regarded as a substitute for co-ordination. The coordinating machinery and methods must be worked out, not by a committee of Ministers, but by some other organisation. What are the departmental heads to do? The heads of the various Departments are all very busy men. If they are brought round a table and engage in endless tasks, sooner or later there will be disputes. Every departmental head—everybody appreciates this—will try to prevent his own Department from being subordinated by any other. In the process we shall have to see that procrastination is not substituted for co-ordination.
I beg to tell the right hon. Gentleman what we think should be done. There ought to be a small department of trained personnel, not of men who have not time to think and plan. They ought to have their own secretariat. They ought not to be the secretariat of the C.I.D. or the Cabinet itself. They ought to have around them a number of persons equally capable, certainly with a knowledge of economic subjects and problems, who could advise them and work out the various schemes which are adumbrated. The man at the head should be in the War Cabinet, and here the right hon. Gentleman the Chancellor of the Exchequer should be good enough to take note, because he is the villain of the piece. He ought to be free from departmental duties. Imagine the situation of the right hon. Gentleman the Chancellor of the Exchequer, who is preoccupied every day with grave financial matters, particularly at this time, having to take time off now and again to think out and plan the economic defence of the country and to co-ordinate the various Ministries associated with the economic war. It is physically impossible, it is mentally impossible, even for someone so able as the right hon. Gentleman. It cannot be done. He has enough to do already. Therefore, we have to consider the appointment of someone who has time to devote to matters of this kind and who is free from departmental considerations. Moreover, in my view, the very last man who should be appointed is someone who is at the head of the Treasury, for, after all, the Treasury is one of the Departments to be co- 915 ordinated. The Treasury must not dominate. It fits into the scheme. If the Treasury is put at the head, what will happen? Financial considerations are bound to be raised from time to time, and we shall have the dead hand of the Treasury on every scheme and on every proposal put up. That is the way to lose the war, not to win it.
I come now to the appointment of Lord Stamp, and again I deprecate any personal attack, but I would point out that Lord Stamp is a director of the Bank of England; he is, I believe, a director of one of the large joint stock banks as well; he is President of the London Midland and Scottish Railway Company; and he is associated actively with one of the largest of our building societies A man who is still occupied with all these tasks is to be in charge of the coordinating process, and I do not see how it can be done. We ought to have a man appointed who can devote himself exclusively to the task; it is so important. If the Government had said to Lord Stamp, "We want you to come into the War Cabinet and occupy your mind with these matters, and with nothing else, for the duration of the war," we could have understood and appreciated it, but to expect this gigantic task to be undertaken by someone who can spare only a few hours per week to it is asking too much of him and certainly too much of this country.
There is another consideration. It has been proposed to set up a Council of Industry, a very desirable proposition. The employers and the representatives of the trade unions are to come together and to consider many questions of mutual interest affecting the trade and commerce of the country. These people must be brought into the co-ordinating machinery at some point, and yet the man who is to advise on the co-ordinating machinery is himself a large employer of labour, who recently was engaged in a serious dispute with his own employes—hardly the type of man to command the confidence of one side of the personnel in industry. I think the Government ought to consider this matter afresh. As regards Mr. Clay and Mr. Henderson, they are very able men, I believe, but whether they have the drive and initiative necessary for this task is another matter. I would ask the right hon. Gentleman this: In the last war 916 several men of great experience and vast knowledge of economic subjects assisted the Government, but they have been ignored on this occasion. There is the junior Burgess for Oxford University (Sir A. Salter), there is Sir Walter Layton, there is Sir William Beveridge, and there is Mr. Keynes. Why are these not being brought in to advise and to assist in this co-ordinating process—these, or other economists and experienced men equally capable? The Government must consider this matter afresh. We must have an economic General Staff. That is essential, and their task in the economic field, I submit, is at least equal to that of the General Staff in the sphere of military operations. The prime consideration, moreover, should not be profit-making, although we cannot rule that out entirely—I am far from suggesting that—but conserving and utilising the manpower and material resources of the nation outside the sphere of the Defence Departments.
I have been asking the Government for a statement of their principles, and I beg now to offer a few suggestions myself. We must mobilise the whole of our national resources, production must be keyed up to the highest possible pitch, and labour must be fully employed. No able-bodied person outside the Forces should remain unemployed. Apart from essential war needs, we must produce for export. The expansion of exports is essential, but within the limits of available labour and shipping and, I would add, finance. We must, in addition, curtail the consumption of non-essential commodities. How is that to be done? It can be done in two ways. One is to raise the price of the non-essential commodities for inland consumption, and I do not object to that course being taken, but there is another method. We can produce, where practicable, where there is the available labour supply, and where the raw material is available, these nonessential commodities, and see to it that the production is intended exclusively for export purposes. That is a very important principle indeed.
I want to suggest that our export and trading policy must, in the nature of the case, be flexible and adapted to the situation in various countries. I will select three groups and take, for example, the South-Eastern European countries—Rumania, Bulgaria and Turkey. I hope 917 the right hon. Gentleman will not repeat the Polish mistake. For a long time we talked about advancing credits to Poland for producing arms and so on. There was a very serious failure in that regard, and we know the consequences. From a strategical point of view, apart from economic considerations, it is of the highest importance that we should enter into trade with Rumania, Bulgaria and Turkey. We have already an Anglo-Turkish trade agreement, a very satisfactory agreement. I understand that Rumania offered to buy certain commodities in this country. I do not want to divulge the sources of my information, and, therefore, I shall not mention the commodities concerned. Rumania offered to buy certain commodities in this country, which we can afford to produce, in exchange for oil. The Ministry of Supply said, "No." Why this refusal? It was because we could purchase oil in South American countries at a cheaper rate.
I believe that that policy is strategically fatal. We ought to be prepared, for strategic purposes, to pay a higher price, and that is where the hand of the Treasury comes in. Now, I understand, Rumania and Bulgaria are offering supplies of feeding stuffs, oil and seedcake, and that so far we have not availed ourselves of those offers, probably for the same reason. Therefore, I suggest that vis-a-visthe South-Eastern European countries, for diplomatic, strategic, and economic reasons, we must tempt them to trade, even if it means subsidising our exports and even subsidising our imports. I would far rather add expenditure of that kind to the war bill in order to shorten the war, as I believe it could, than spend large sums of money in the production of munitions. That is one of the principles on the basis of which this co-ordinating process must proceed.
Let us take the South American trade. The seas are very largely free, and those countries cannot easily trade with the enemy. Therefore, that trade is more or less normal, but it may be necessary—I only put the point to the right hon. Gentleman—to consider the creation of clearing agreements with those countries, because of various financial difficulties that have emerged. The problem, however, is not quite so serious as regards these countries as it is in relation to the countries I have already mentioned. Now 918 I come to, perhaps, the most important consideration of all, the countries within the sphere of German influence—the Scandinavian countries. Ordinarily, our trade with those countries proceeds normally. They are anxious to buy from us and we are anxious to trade with them, but for the moment difficulties have arisen, and we must see to it that in every possible direction we tempt them to trade with us and prevent them from trading with the enemy. Unless we take some measures along those lines then, clearly, they are going to fall into the hands of Germany before very long.
I have said something about the creation of machinery, and I want to put it to the right hon. Gentleman that for the purpose of importation and exportation it may be necessary for the Government, in addition to existing machinery, to create import and export boards. There ought to be some definite, rigid method of control when the goods come in and when they go out. I do not suggest that individual traders should be prohibited from trading, but that matters should be arranged, so to speak, through the bottleneck of some kind of Government economic machine. An import board on the one side and an export board on the other is the kind of machinery that is essential. That sort of process might be accomplished by controlled purchases and discriminating internal prices.
There is another point worthy of attention, and that is in relation to the use of our monopolistic powers of production—the production of commodities not produced elsewhere, such as rubber and tin. We must use these monopolistic powers for trading vis a visother countries, provided we have a guarantee that the goods do not pass into the hands of the enemy. I would here emphasise the importance of Anglo-Russian trade, and, apart from political prejudice would urge upon the right hon. Gentleman the essential importance of encouraging trade with Soviet Russia. We must set aside every other consideration. The more we trade with Russia the less likely it will be that Russia will play into the hands of the enemy. There are other comments to be made on that head, but I forbear.
The Government cannot approach this matter in the spirit of peace-time economy, with full play for the free market 919 and the profit motive. The Government have realised by their profiteering Bill, the Control of Prices Bill, that the free market mechanism is unsuitable to-day and, that it, and the essence of capitalism, the profit motive, must in war time if uncontrolled, lead to high prices and speculation. That would be disastrous. There must be control, or, in the end, the whole thing will break down. Therefore, if the Government appreciate the importance of creating some new mechanism it is far better to proceed in the direction of rigid control, provided there is a certain flexibility which enables private traders and manufacturers to dovetail their operations into the Government scheme.
I would submit finally, to the House, and particularly to the Government, that if this war is to continue and if it is to be won, and, what is in my view of greater importance, if it is to be shortened—even if it is to be shortened by six months, although I believe it could be shortened by a greater period—then it must be vigorously prosecuted not only by warlike measures but in every department of our economic life. We must also take care that at the end of the war we are not impoverished by the diminution of our foreign trade. That is why I suggest that it may be necessary to produce and stock goods at Government expense, keeping them ready so that at the end of the war we shall be prepared for a great trade drive. It may be that the end of the military war may mean the starting of the economic war. Germany may be even better equipped for a war of that kind than a war for military purposes. There has been created an astonishing economic mechanism in that country in recent years. Therefore, what I am proposing is that consideration should be given not only to the winning of the war itself, but what is to happen at the end of hostilities. Many traditions may have to disappear during this war and many private interests may have to be subordinated to the public good. I hope hon. Members will recognise that.
§ Mr. Shinwell
I am very glad to hear that approval. Sometimes it has seemed to me from reports in the newspapers of ships being taken over at high prices, 920 that certain trading interests are emphasising their primary consideration before the consideration of the nation as a whole. I am, therefore, glad to hear hon. Members opposite applauding what I have just said, that private interests may have to be subordinated to the public good. One thing is certain. We have no right to ask our men to make sacrifices on the field, on the sea, and in the sky, unless we are ourselves determined to root out waste and inefficiency and to promote the greatest possible measure of co-ordination of our national economic effort.
§ 4.58 p.m.
§ Sir Harold Webbe
In rising to address the House for the first time I know that I shall receive the indulgence which by a long and, to me, welcome tradition, is always accorded to an hon. Member on an occasion such as this. The House has listened, and I have listened, with great interest and attention to the very earnest and comprehensive speech of the hon. Member for Seaham (Mr. Shinvvell). We have heard his vigorous denunciation of the errors already committed by the Government, his very clear anticipation of the errors that will be committed by the Government, his destructive criticism and his constructive proposals, and we listened to his impassioned appeal for a comprehensive economic policy and a large and capable machine to give effect to that policy. After listening to matters of such high import and interest I feel even more diffident in venturing to intervene in the Debate, because the matters to which I wish to draw attention are, by comparison, very much more homely, and the plea which I have to make is a very much simpler one.
I wish to say a few words in regard to the present position of the industry of this country, and my plea is a simple plea for help. We have heard to-day the latest of a series of statements from the Prime Minister and the Service Ministers in regard to our progress in the various theatres of operation, and I am confident that the country is satisfied that every possible step is being taken to bring our war effort to the maximum of which we are capable, in order to secure the full efficiency of our fighting Services. We have been told many times, and I am sure it is generally accepted, that in the struggle in front of us it is 921 of almost equally vital importance that the trade of the country, and with it the taxable income and profits which come from that trade, should be maintained at the highest possible level of volume and effectiveness. I am afraid it is only too true to say that in regard to that field of our activity there is at the present time considerably less general satisfaction.
I shall not attempt to bring to the House all the grievances, real and very often imaginary, which have been brought to me by my constituents and by business friends in various parts of the country. To do so might, I am afraid, render me liable to the rebuke which the late Lord Birkenhead is said to have administered to a loquacious counsel who apologised for trespassing too long on the time of the court, to which Lord Birkenhead said, "It is one thing to trespass on time, but it is quite another thing to encroach upon eternity." I shall not attempt to paint a complete picture, but I would like, if I may, to point to one or two cases where at the present time I think the shoe is pinching very seriously.
May I first mention a branch of industry which is of great importance to the constituency I have the honour to represent? I refer to the great retail trade, the shopkeepers of London. These people have already been very hard hit by evacuation and by the black-out restrictions, and they will need all the help which can be given if they are to carry on without wholesale dismissals of staff or heavy unemployment among the thousands of men and women who are employed in that type of business. Some concessions have been made to them. The railway companies are restoring cheap tickets and they have promised improved bus services; but more is wanted. The railway companies, having given us cheap tickets, have taken away the trains. I live within 18 miles of London, and my last train home is at a quarter to nine at night. If that is true of the main lines around London, then any little benefit which has been given to the shopkeepers will be more than outweighed by the closing down of cafes, restaurants and places of entertainment, upon which the West End of London depend so largely and which employ so many thousands of people.
I submit that a state of affairs in which one cannot get to a place 20 miles or 922 so out of London on a main line after a quarter to nine is to the ordinary man-in-the-street utterly un-understandable, and I beg the Minister of Transport to take up this question of a reasonable provision of train services in the interests of the trading community of London. I do not like to ask for anything in connection with the black-out, because I appreciate the heavy responsibilities which rest on the Minister in this regard, but if there could be any slight alleviation of the restrictions it would be of immense value. If that is not possible, I hope that at least summer time may be extended to cover the Christmas trade, and perhaps some little adjustment made as to the time of the black-out in relation to the actual time of sunset.
Now I turn to another matter, and I ask my right hon. Friend the President of the Board of Trade if he will look again at that list of goods the import of which at the moment is completely, or almost completely, prohibited. It is true, as the hon. Member for Seaham has said, that many of the goods in that list are of the nature of luxuries for which it might well be hard to justify the employment of shipping space or foreign exchange. But there are others which, in relation to the number of people who depend upon them for their livelihood, are of comparatively small value and of very small moment. I instance one: it may be a bad instance—cosmetics. I know that to the somewhat hardened bachelors on the Treasury Bench cosmetics may appear to be not only a luxury but a positive danger, but I submit to the more human Members of the House that in these days cosmetics can hardly be regarded as a luxury. But I base my argument not upon that, but upon the fact that in relation to the amount of money and shipping space involved the cosmetic trade is a valuable trade employing a considerable number of people, and should be, if possible, preserved. I ask my right hon. Friend to consider that list and see whether some further relaxation cannot be made in the interests of carrying on business as usual.
Now I come for a moment to the most difficult problem, the problem, or series of problems, which arise from the elaborate system of control which has been instituted by the Government over almost every commodity. A fortnight 923 or so ago we were discussing somewhat vigorously the failure of the fish trade. I think that short and not very glorious experience was a fine example of how the very best-laid plans of officials and professors may well very often gang badly agley; but that is past history. The fish control has gone, and the fish have come back; but there is, I am afraid, a great deal more trouble of the same kind just round the corner. One hears on all hands of difficulties in regard to the distribution of meat. We have heard to-day—some of us heard before—that many sections of the woollen industry are in serious difficulties. We know that paper mills are closing down, and we know that the dried fruit industry is in many sections almost bankrupt.
No one will possibly question the need for the regulation of trade and industry in the conditions which exist to-day. No one will question the responsibility of the Government to control and regulate the volume of imports to secure an equitable distribution of stocks, and to protect the public against unfair rises in price. Therefore, I do not think that any serious objection will ever be raised to the fixation, for example, of retail prices, having, of course, due regard to costs, and in the case of imported goods or raw materials to the institution of importers licences and perhaps dealers' licences. I submit that within those limits, within the limits imposed by a control of that kind, industries of this country might be left to function along the lines which they understand, and which have been built up on experience. If the Government could limit themselves to control and leave organisation to take care of itself, I believe that a great deal of public money would be saved, that the public would be better served, and that they would get better value for their money. I know there can be few trades in this country, or in any other country for that matter, whose internal organisation would come up to the rather exact standards of some of the professional and rather detached students of trade and commercial affairs, but those organisations at least have one merit, that they do work, even if somewhat uneasily at times.
I feel that I owe the House a double apology. First of all, an apology for raising so many matters in one speech. 924 I have not done so in any critical spirit, but by way of illustration and in support of my plea that industry should be given that opportunity to get on with its job and not be called upon to spend so much time in trying to avoid the pitfalls of new legislation and new regulations. I ask for this help for industry so that those of us whose duty lies here at home may at least be able to contribute as much as possible and our full share to the great effort which the nation is called upon to make. Finally, I apologise for taking so much of the time of the House. If in this regard I have too far offended, I can only, through you, Mr. Speaker, thank hon. Members for their patience and ask their forgiveness.
§ 5.12 p.m.
§ Sir Archibald Sinclair
It is a great privilege for me to be the vehicle of conveying to the hon. Member for the Abbey Division (Sir H. Webbe) the congratulations of the House on his informed and comprehensive, yet terse and accomplished maiden speech. The reputation which the hon. Member has won in other fields is familiar to us all, and we are grateful to him for revealing to us some of the ample foundations upon which it is based. As the Member for the Abbey Division, he will forgive me if I say that we take a kind of proprietary interest in him, and we are all proud of the success with which he has acquitted himself this afternoon.
This Debate on the economic policy of His Majesty's Government cannot be without importance, but it will fail in its object unless the Government use this opportunity for the enlightenment of those harassed traders and industrialists, to whom the hon. Member for the Abbey Division has been referring, and give us pledges of more effective action than they have hitherto announced. It is no use, even for an inveterate individualist like me, to inveigh against controls in war time. It will not be long before an important industry without a control board will be a rarity. That is not, in my view, the best way to engage the spirit of invention and enterprise in the long-term development of the economic resources of our own country and the Empire, or to promote the freest possible exchange of goods and services between all the countries of the world, for their common advantage. But those are not the objects we have to consider at the present time 925 and control is the only way of concentrating, and indeed—let us face it—not of developing, but of using up like fuel, the economic resources of our country and Empire in the vigorous prosecution of the war.
The mistake which, it seems to me, the Government are making in constituting these control boards is to man them almost entirely with men who arc engaged in the industries concerned; whereas the success of the Ministry of Munitions in the last war was largely due to this, that they brought into these controls people outside the particular trades concerned, such as those to whom the hon. Member for Seaham (Mr. Shin-well) referred in his speech—people who were uninhibited by the orthodox prejudices and conventions of their particular industry, people who were disinterested, people with a wider vision than that of a particular industry, however large it might be; but people who relied on the help, knowledge and experience of those who were themselves engaged in those industries.
This particularism or departmentalism at the lower end of the scale is matched by a lack of co-ordination among the several Departments at the other end of the scale, resulting in the bewilderment of those who are carrying on the trade and industry of the country. On the one hand, I am told of a ship sailing for New Zealand and leaving 1,000 tons of goods on the quay because the licence for export was not forthcoming—as though goods for New Zealand were likely to find their way through to Germany. On the other hand, I am told of grave gaps in the black lists of firms in neutral countries, with the result that British firms have had to make remittances to firms in neutral countries which are controlled by Germany. Everywhere there is complaint of the bewildering quantity and inconsistency and even contradictoriness of instructions received from Government Departments.
Hence the need of a new organ of study and decision which will co-ordinate the policies and demands of the Treasury, the Fighting Services, the Ministry of Supply, the Ministry of Shipping, the Department of Overseas Trade, the Ministry of Economic Warfare, the Agricultural Departments of England, Wales, and Scotland, the Ministry of Food, and 926 the Ministry of Labour; and make recommendations to the War Cabinet, through its chairman or president, who should be a Member of that Cabinet. This organ, to do its work properly, must be furnished with an efficient research staff to acquire and collate information and with a small governing body which would fix priorities, hand down decisions to the Departments, and prepare recommendations for the War Cabinet. How far have His Majesty's Government gone to meet these demands, which have been put forward on so many occasions before, which were put forward very forcibly by my noble Friend Lord Samuel in a Debate in another place some weeks ago, by Sir William Beveridge in a remarkable article, which no doubt hon. Members will have read, in the "Times," and by many other authorities? How far have the Government gone to meet these demands? Last week, the Prime Minister announced the decisions of the Cabinet, and he told us:In the case of economic and financial policy a Committee has been set up, under the chairmanship of the Chancellor of the Exchequer, composed of the Ministers concerned with the various aspects of the subject. The duty of this Committee is to keep under review and to co-ordinate the working of Departments in relation to the economic effort of the country as a whole.The right hon. Gentleman went on to say:Lord Stamp has been asked to assist this Committee by becoming Adviser on Economic Co-ordination. Assisted by Mr. Henry Clay and Mr. H. D. Henderson, Lord Stamp had for some time prior to the outbreak of war been advising upon the economic war plans of the Government, giving guidance and assistance to the Departments concerned. In association with the Ministerial Committee to which I have just referred, he will continue to review our current economic plans and activities in order to propose to the Minister or Ministers concerned ways of filling any gaps that may be found to exist or remedies for any inconsistencies that may be discovered. There has also been set up under the Ministerial Committee an inter-Departmental Committee of officials composed of the permanent heads of the Departments concerned. Lord Stamp will be President of this official Committee."—[OFFICIAL REPORT, 9th October, 1939; cols. 28 and 29, Vol. 352.]I venture to offer three criticisms of this arrangement. In the first place, here we are provided practically with three committees. There is, first, the committee of Ministers over which the Chancellor of the Exchequer is to preside. Then there 927 is the committee of officials of which Lord Stamp is to be a member. Then there is Lord Stamp and his two economic advisers, with such staff as they have. They will, I suppose, occasionally meet, apart from Ministers or Departmental chiefs. So, there are practically three new committees instead of one integrated organ of study and decision.
Secondly, while nobody has a greater respect for the abilities of the Chancellor of the Exchequer than I have, I venture to suggest that he is the wrong chairman for this particular Cabinet committee. He must have and he ought to have a strong departmental bias in favour of cheeseparing economy and the encouragement of saving, so as to facilitate his loan operations. His proper function in our economic life is that of the brakesman, but the man who leads us in war on the economic front, ought to have his hands free to reach either the brake or the accelerator. He should be much more impartial than it is the duty of the Chancellor of the Exchequer to be, and much more accessible to other influences than those which, naturally and properly, surround the Treasury.
My third criticism is that it is absurd that the Chancellor of the Exchequer should be asked to perform these vital functions with the part-time and voluntary assistance—because that is what the Prime Minister has told us—of Lord Stamp, Mr. Clay and Mr. Henderson. They are admirable men and I am sure the House would rejoice if we were told that they were able to place their whole-time services at the disposal of the Government for this purpose and that they would have adequate staffs. We are told that they are to have some staff from the Cabinet secretariat—a secretary and a typist or two, I suppose. They ought to have skilled economists to help them to acquire and collate the necessary information. The appointment of Lord Stamp in particular, is, we would all agree, an admirable one, but how can he adequately serve both the London Midland and Scottish Railway and His Majesty's Government and incidentally a number of other organisations to which the hon. Member for Seaham (Mr. Shinwell) referred. [HON. MEMBERS: "And the Bank."] He is only a director of the Bank but he is the executive chief 928 of the London Midland and Scottish Railway and that is a big enough job for a man in these difficult times.
Far from the railways requiring less supervision, far from their problems being less complex and less urgent in war-time than in peace-time, it is clear that those problems are more difficult and require the closest study and the hardest work which their executives can give them. This truth was forced upon me by my experiences during last weekend. I left London on Thursday evening. Unfortunately, there was a derailment of a goods train in front of the train in which I was travelling. I arrived at Inverness some three or four hours late. Then on the further stage of my journey another goods train was held up in front of mine; then the engine of my train could not get up steam and finally I arrived five hours late having been 27½ hours in the train. Subsequently I discovered that my hon. Friend the Member for Inverness (Sir M. MacDonald) had travelled on the following day, and his train was going so slowly that he asked the guard whether he thought they would ever get to Perth. The man said that the axle had got hot. A coach was removed at Bletchley and in the course of the removal there was a collision with another train, resulting in the accident of which we all know and which had such serious results. He was several hours late at Inverness. Coming back on the Tuesday morning I was again three hours late, because another accident had occurred between two goods trains at Warrington and the Heysham boat train had run into those goods trains. It is lucky for Lord Stamp that we do not live in Japan. If we did, I cannot help thinking that he would now after such a week-end on his railway line be preparing himself for the ceremony of hara kariinstead of settling into an arm-chair in the Treasury. As I came down in the train, I read in the newspaper an eloquent exhortation addressed to the railwaymen of the London Midland and Scottish Railway. It was headed "Carry On" and it was in these terms:We of the railways have the triple responsibility of war traffic movement, of maintaining essential food and other supplies and of enabling the civil community to carry on. The financial stress of the country means that avoidance of waste and economical working are more important than ever. Individual resourcefulness and enterprise is 929 every man's contribution to the winning of the war. We cannot just sit back and say The Government is running the railways, I have only to do as I am told, and that is that.' It is up to every one of us, in the face of great difficulties and swiftly changing conditions, to carry on that work.But the man who wrote those words is not going to do that. He is going to the Treasury to carry on far different work there. It seems to me that Lord Stamp ought to make up his mind, and that he is entitled to ask the help of the Government in making it up, whether he is rendering greater service to the country as chief executive of the London Midland and Scottish Railway, or as chief economic adviser of His Majesty's Government. Then, having made up his mind, he ought to do one job or the other and give his whole time to it.
So my first request to His Majesty's Government is to think again about this organ for the study of economic problems, for the acquisition of information, for the co-ordination of departmental policies, for fixing priorities and for taking decisions and making recommendations to the War Cabinet; to appoint a Minister in the War Cabinet to take charge of this work, a Minister not directly associated with any one of the Departments concerned; and to appoint a whole-time chief economic adviser with an adequate staff.
The only other request I have to make to the Government this afternoon is to enlighten us on the main principles of their economic policy in war-time. Do they accept the principle, which was laid down by the hon. Member for Seaham, that all available productive resources must be mobilised for the vigorous prosecution of the war? If so, it follows that unemployment must not be tolerated. The hon. Member for Seaham said that the policy of the Government seemed to be business as usual and that that was not enough to cope with present needs. The policy of the Government seems to me to be unemployment as usual, and that is worse still. Yet if these two principles—the mobilisation of our economic resources and the useful employment of men for that purpose—are accepted, we must recognise that the tendency will be for money incomes to increase at a time when the effect of concentrating production upon war needs and upon export goods will be to reduce the supply of consumable goods at home, with the re- 930 sult of an increase in the quantity of money relatively to the quantity of purchasable goods. We know that His Majesty's Government are proposing to step in here to modify the natural effects of those forces on prices by means of rationing, taxation and providing useful employment for surplus earnings in National Savings Certificates and Government loans. With such safeguards vigorously applied there is no reason why we should not, and every reason why we should, mobilise our productive resources to the fullest possible extent.
I would ask the Government to tell us what they consider the principal objects of production in war-time. It seems to me that the supreme object must be the equipment on the most generous scale of our fighting services, not forgetting that we also have to help our Allies. But in many cases it will be more economical for us to import the necessary supplies from abroad than to manufacture them here; but we shall only be able to pay for such imports, and to obtain the raw materials and foodstuffs which we require without throwing an intolerable strain upon our currency, if we are able to maintain and even expand our exports. Therefore, production for export is a hardly less important object than the production of munitions. Moreover, our exports should be used as a weapon of economic warfare in those countries adjacent to Germany which our blockade cannot reach. For countries distant from Germany our export policy must be quite different, and the terms of trade, the exchange position and the strain upon our shipping resources will be vital and often conflicting factors in deciding policy. Nevertheless, the great need will remain for the expansion of exports. Licences are a necessary evil, but surely they should be counteracted and offset by definite policies—if necessary, of subsidies and of storage of exports in foreign countries in advance of sale—which will be directed to the greatest possible expansion of our export trade. What seems altogether wrong is that British coal should be offered in Scandinavian countries at prices nearly 50 per cent. higher than those of competing countries, with the result that Germany is enabled to increase her purchases from Scandinavia, and unemployment prevails in the coalfields of Durham.
931 There is another point in connection with the export trade, the importance of which was mentioned by the hon. Member for Seaham, to which I venture to add a corollary with which I hope he will agree. His point was that the maintenance of our export trade is particularly important because it will place us in a good position to deal with the vitally important and difficult problems which we shall have to face at the termination of the war. I would add that, if we are to do that, it is all the more important to co-ordinate our economic policy with that of France, because it would never do to take the line of saying, "We are going to see that our economy at the end of this war is in a thoroughly prosperous condition, while you do the lion's share of the fighting."
§ Mr. Shinwell
I agree with the right hon. Gentleman, but I would go further and embrace the British Empire.
§ Sir A. Sinclair
I agree. I am glad the hon. Member mentioned that. I assumed of course that our arrangements would embrace the whole Empire. I am glad that the hon. Member agrees that we should include our ally France in the plans we make for the maintenance of the economic strength of our countries at the end of the war.
The third object of production must, of course, be to meet the demands of the civilian population, which must be kept down to the minimum by taxation and rationing. The reduction of purchasing power at home, however, is not an end in itself. It is only useful in so far as it enables purchasing power abroad, shipping space, capital and man-power to be diverted from the satisfaction of demand at home to meeting the needs of the fighting forces. It would be positively mischievous if this diversion were carried to the point of reducing the standard of living, and especially the food standards of the people, so low as to affect their moral. Indeed, I would suggest that there are some luxuries like amusements which ought to be encouraged because they not only make small demands upon the man-power of the nation, but they play an important part in keeping up the spirits of the people.
I do not wish to detain the House by attempting to survey the whole vast field of this question of economic policy in war- 932 time. My only objects have been, first, to insist that the vital importance and complexity of the problem requires the whole-time attention of a Minister in the War Cabinet assisted by a whole-time chief economic adviser with an adequate expert staff; and, secondly, to urge upon the Chancellor of the Exchequer the necessity for making a clear statement of the principles upon which the economic policy of His Majesty's Government in war-time is based.
§ 5.40 p.m.
§ The Chancellor of the Exchequer (Sir John Simon)
It may be convenient to the House if I say something now. I am glad to have the opportunity of giving some account of the existing system of directing economic policy in the war, and I am sure that nobody will underrate the importance of having this Debate this afternoon. The subject has so many aspects that it is difficult for anybody to compress what they want to say in a reasonably short space, but my hon. Friend the Member for the Abbey Division, Westminster (Sir H. Webbe), has set an example to us in the matter of brevity. I listened to his suggestions, but I must say that the proposal that we should import, and pay for, cosmetics from abroad was not one that I felt I could enthusiastically embrace.
§ Sir J. Simon
Sympathy I certainly offer, but it only illustrates the infinite ramifications of this terrific subject. There is one observation which I venture to make at the beginning, and I am sure that hon. Members will understand the spirit in which I make it. I think it is a mistake to regard economic policy as something which is entirely separate from and independent of war policy as a whole. It plays a very important part in it, and I do not dissent from the proposition that it might make the difference between victory and defeat. I do not think anybody can exaggerate its importance, but in practice it is necessarily and indis-solubly bound up with a series of other considerations at every point.
Decisions in the economic field are often integrally connected with political policy, diplomatic policy and military policy, and it is for that very reason that, while the topic is one of the most 933 enormous importance and of many complications, I question whether it can be treated quite so much in a compartment, however important a compartment, as some commentators suggest. Whether particular exports to a particular country should be specially pushed, or whether the purchase of something that is essential should be made in one country or another, are questions, of course, which cannot be tested, by even the most astute combination of economists, in vacuoor by economic reasoning alone. In war they are tied up with questions, it may be of strategy or diplomacy, which every competent economist would recognise as influencing the decision. This enormously important subject we are discussing is and always must be connected at a hundred points with the general conduct of the war. That is why the Prime Minister said, in his answer the other day, that the responsibility for the co-ordination of all branches of the nation's war effort, in whatever sphere, must rest with the War Cabinet as a whole. I am not a man to become hot or excited about the contrary view, but on the question whether there should be someone inside the War Cabinet who is what is called a co-ordinator of economic policy I very much doubt whether we can be guided entirely by abstract analysis or considerations of a general kind. It is very largely a question of what is the best practical machine for working this part of our policy which is so essential for our success in the war.
Nobody disputes the enormous importance of economic activities, but I should very much question whether it is easy for any except those who have had actual experience of the criss-cross considerations that arise when you come to make practical decisions to appreciate how numerous those considerations are. We are not here discussing economic policy in the abstract. We are, no doubt, agreed about our general objectives, but again and again the thing presents itself in the form of a dilemma, as a question between two Departments, one of which can produce a perfectly good argument for taking a particular step whereas another equally competent Department, equally serving the public cause, can produce an argument which would prove that it must not be done.
Take a case in which the argument of each Department is perfectly valid, though a decision has to be reached 934 between them, reached not on abstract economic grounds but with reference to the particular circumstances of a particular case at a particular time—the case of the need for devoting supplies to the outfit and the maintenance of our forces. Everybody will subscribe to the proposition that we must devote our supplies to the outfit and maintenance of our forces and, as the right hon. Gentleman said, it may be necessary in time of war to have control to ensure that we have sufficient supplies of essential commodities. Then; of course, there is the equally important and equally accepted proposition, which was emphasised by the hon. Member who opened the Debate and also by the right hon. Gentleman, that we must maintain and encourage our export trade. This country would be defeated if its export trade disappeared, for it would not be able to pay for the things which it is essential to buy for the carrying on of the war.
The Ministry of Supply is devoting itself to supplying the needs of the Army, which has become a tremendous task in view of the actual, and the contemplated, size of our fighting forces. Inevitably that Ministry tends to concentrate upon that subject. At the same time my right hon. Friend the President of the Board of Trade is acutely aware of and has throughout emphasised the importance of increasing, if possible, our export trade. The conflict between those two interests, presented in some practical guise and with reference to some material, is not a conflict that can be resolved by profound reflections upon economic truths. It is not a problem the answer to which can be ascertained by the most concentrated thought. By all means must we have all the guidance that can be obtained, but the decision has to be a practical one, taken amid a series of claims which in the nature of things are very largely in conflict with one another. I am sure that the House will agree that that is the real nature of the problems of economic policy which are constantly arising in the war. The two points of view are backed by strong arguments and they need to be brought to a focus. They need co-ordination and decision, after every point of view has-been given its weight. That is really the nature of the problem with which we have to deal.
935 It is quite a mistake to say that this necessity was not completely realised and was not closely studied before the war broke out. There is no foundation for that view. Before the outbreak of war, steps were taken to get, as far as might be, the advice which was necessary in order to prepare for this emergency. You can, before war occurs, take advice only in comparatively general terms, because everything depends on the nature of the conflict—on who are your enemies, who are your allies, in what portion of the world the war is being waged, what is the prospect of its developing here or there, is the Mediterranean involved or not, is Russia involved or is she not involved, and to what extent may we look forward for support to other parts of the world. All these things can be studied in advance in a strategic sense, and the House will realise that they were studied most carefully by the Chiefs of Staff, who made a series of reports to the Government about them.
The economic questions involved were also studied in advance, but they must be studied in a more general way than is the case when you come to face the precise and practical problems that present themselves almost every day. I recognise that it is inevitable that there should be some reference to that position. I think that everything that has been said has been put forward with proper consideration and reason, and I am not making any reflection about that. Lord Stamp, with the help of specialist experts like Mr. Henderson and Mr. Clay, has been engaged for some time on this matter, and with those experts has been reviewing it and advising the Government on economic war plans from a great many points of view. I have had to look, to the best of my ability, at a great many documents which have been prepared and so, I suppose, have the heads of many Departments of State. This is not some improvisation which was started in a panic, but is a portion of the planning that was made, in view of the possibility of our becoming engaged in a terrible conflict. In the course of a very powerful and reasoned speech—I recognise that it was intended to be a vigorous and serious contribution—the right hon. Gentleman opposite seemed to suggest that these things ought to have been thought out before the war. I can assure him that a very great deal 936 of close economic thought was applied by the most competent people for the purpose of preparing us.
§ Mr. Shinwell
The right hon. Gentleman says that all that thought has been utilised before the war. Has it not led to the trouble that we have had in the last fortnight?
§ Sir J. Simon
I am endeavouring to state to the House the real nature of the developments that have taken place. The present duties of this body of advisers are, therefore, a natural expansion of their pre-war work; more precise. I agree, because we have the actual nature of this problem in detail before us. They have the advantage, and it is no small advantage, of being already familiar with the whole of the arrangements which have been and are being made in the economic sphere. They know precisely what the necessary contacts with each Department are like. It is not the fact, as I see somebody has been saying, that Lord Stamp is relying solely on the existing Civil Services. It is a fact that this is a development that was made before ever this war was entered upon.
I turn at once to the comment—it is a very natural comments—that Lord Stamp, acting as adviser on economic co-ordination, is not giving his whole time to that service. I would ask the House to consider one or two further matters about it. Everybody has joined in bearing testimony—I am sure with great sincerity—to the exceptional authority of this eminent man in the field in which he is trying to serve. Service to the State in times like this should, I agree, come in front of everything else, and I am sure that Lord Stamp thinks so too; but I am not at all satisfied that the criticism is well founded which complains that one of our economist advisers retains actual contact with the practical business of the country. I speak with the most profound respect for the economists, whether inside or outside this House, and I pay all possible attention to what they say, but I must be allowed to observe that it is possible for professional and academic economists to give us the help which they do without any of them necessarily himself having close contact with the actual affairs of business.
Lord Stamp gives the greater part of his time to this Government work. To 937 avoid all misunderstanding I would say that he declines entirely to be paid for it. As to his contact with the railway companies, he has been seconded from his railway company, in spite of serious constitutional difficulties in actually separating himself from the company. When the right hon. Baronet opposite was describing his experiences on the Scottish Railway I could not help thinking that he was implying that if only Lord Stamp gave the whole of his time to the London Midland and Scottish Railway those things would not happen.
§ Mr. Boothby
My right hon. Friend has said that Lord Stamp has been seconded from his railway company. This makes a very great difference. Is Lord Stamp not acting as actual managing director or president of the London Midland and Scottish Railway Company?
§ Sir J. Simon
I will tell the House the actual position. The L.M.S. board has agreed to second Lord Stamp for the proposed Government duties on the understanding that he continues as chairman, and is allowed to give enough time to maintain his hold upon matters of major L.M.S. policy. In fact, the greater part of his time is given to us; he has been chairman of the Government Economic Information Committee under the Economic Advisory Council for, I think, the last eight years. I can hardly imagine that anybody in the country, whether economist or business man, has so close a knowledge of the whole economic machine of the Government of this country. As I have said, he has been seconded by the L.M.S. for Government duties, subject to his giving enough time as president to maintain his hold on major railway business.
With the assistance of Mr. Henderson and Mr. Clay, Lord Stamp is advising the Government in this matter, and while I quite understand the criticism, I can conceive that there may actually be positive advantages in having in your body of principal economic advisers a man who, in a certain and limited portion of his time, is in absolutely first-hand contact with the course of trade and the difficulties that may develop on one side or another. I am not prepared to say that a man on that ground is not able to serve the country well, any more than I would say that a business man who has 938 made a profound study of economic subjects is not a better man in this House because he has an actual contact with business. We feel ourselves that, when you have an opportunity of learning at first-hand the judgment of an economist of world wide reputation who himself has an actual contact with the course of trade, instead of being a purely theoretical economist, it may well be that his service is not the less valuable on that account. I therefore suggest to the House that we do not reach too hasty a conclusion on this matter, and I do advance the view that the country gains from the advice of one who, in addition to his great reputation as an economist, maintains a certain contact with industry and can assess, what no academic economist can do from personal experience, the direct effects of policy on trade and industry.
Now I should like to state what is in fact the organisation and structure of the link which is co-ordinating economic policy. The right hon. Baronet the Member for Caithness (Sir A. Sinclair) gave an account of it. Let us state what it is. You may call it, if you like, a two-storey arrangement. On what I call the ground floor—a very important floor—you have an inter-departmental committee over which Lord Stamp presides. It includes the permanent heads of a large number of Departments. I listened to the list given by the right hon. Gentleman and I think I can add a few more. It is appreciated by everyone that this economic problem of the war necessarily is the vital concern of a great number of Departments. In point of fact some of these Departments on a purely departmental view might be opposed to the view of other Departments. It is not, as the hon. Gentleman who opened the Debate suggested, a meeting for conversation, or even for consultation. It is a meeting for co-ordination.
§ Sir J. Simon
Yes. It is a good word—co-ordination. It is sometimes used by people who do not precisely appreciate what is meant. It will meet constantly. It has its own agenda. Any of the parties can place on the agenda an essential and urgent matter. It is also supplied from time to time with a paper which 939 does not deal with an immediate difficulty but is directed to looking ahead and considering how in the future some branch of economic policy can best be managed and controlled. Economic plans and activities by that means are brought to a focus. It considers remedies for inconsistencies which might arise, and will arise, in departmental action. Inconsistency is a difficult thing to avoid. With Departments all working as hard as they can, there is nothing easier than to find that there is not a consistency of view, and it is a most important thing to correct that as quickly as you can. It makes sure in another case that, if there are gaps in our arrangements—and there are gaps, necessarily, sometimes—they shall be filled in the best way at once, and it is concerned not only with current economic problems but also with problems of a much wider range. My own impression having read the proceedings of this body, is that it is an exceedingly practical body. I do not know whether you ought to call it an economic general staff or not. These phrases are sometimes calculated to mislead. But I look at the practical way in which it works. We are getting all the time a series of immediate difficulties met and inconsistencies, if they arise, removed.
Why not leave it there? The answer is that in this country the responsibility of Government necessarily rests upon the shoulders of political Ministers. They have to take the responsibility. They have to accept criticism in all good temper and, if possible, profit by the correction, as I try to do. Therefore, you must have what I call a second storey, and the second storey necessarily consists of the political heads of the Departments, constituting the Ministerial Committee. There again we get this essential connection, since Lord Stamp attends those meetings, and consequently the very things which have been examined by the official committee come up to the Ministerial committee in order to ensure that the political Ministers involved, who themselves have to keep these problems under review, have their views fully expressed and considered, and in order that agreement may be reached. That is, no doubt, largely due to the fact that the preliminary work has been done on the official committee over which Lord Stamp 940 presides. That is what I mean by coordination, and it is very helpful towards developing our economic activities.
§ Sir J. Simon
I could not say that, but they will meet frequently; regular meeting times are appointed, and with regard to the committee over which I preside, special meetings are called to deal with some special difficulty. Speaking for myself—I do not claim to be an expert, but I have done my best in taking part in administration for many years—I have not the least doubt that this is an extremely practical machine, and it is the more practical because, in addition to the two meetings which I have described—the meetings of what have been called the first and second storeys—you have discussions on matters of a more general kind and on a wider basis as well as on subjects of overwhelming importance which are gone into before they are dealt with by this Committee.
§ Sir P. Hannon
As time is the essence of the country, how soon do the Government consider any decisions arrived at by the Committee?
§ Sir J. Simon
I will give the right hon. Gentleman an example. The ground floor committee met on an extremely important matter. Its report reached me, and no doubt my colleagues, within an hour. The second floor committee had a special meeting for the very purpose of discussing the matter at five o'clock last night. We considered it thoroughly and it came before the War Cabinet first thing this morning. I agree that if there is delay the whole tempo of the thing is lost. I think this House assumes a great responsibility if it criticises and condemns this arrangement without seeing how it really works. I would be the first to admit that the results of this body should be reported to the War Cabinet. When the right hon. Gentleman the Member for Caithness said that the Chancellor of the Exchequer should think of nothing but cheese-paring, I am not sure that if he did he would not be a very unhappy man. I can only say that it is not true that a Minister is simply and solely engaged in paddling his own canoe without regard to anything else. If he is contributing his best—it may be little or it may be much—he must contribute it towards the whole policy of the 941 country. It was suggested that it would be much better if we could have some other person and not an existing Member of the War Cabinet—
§ Mr. Shinwell
That was not the suggestion I made. The suggestion I made was that it ought not to be the Chancellor of the Exchequer because he is occupied with financial matters and, therefore, he is physically, and, I venture to suggest, mentally incapable of tackling this huge job.
§ Sir J. Simon
I can only say that I hope I do not look incapable. I am not conscious of being a physical or intellectual wreck. I agree that it is hard work and the Government have to do terribly hard work. I will leave it entirely as an open question whether it ought to be somebody else.
§ Sir J. Simon
In making this observation I hope no one will misunderstand me. It is not made because I am clamouring to retain a particular aspect of my duty. After some experience of the Cabinet, I think there is, perhaps, rather a fallacy lurking in the view that you should have for this purpose the chief director of economic policy at the head of a number of economists, quite divorced from any particular Government Department, and that economists thus selected—no doubt, many eminent men occur to one—better represent the point of view in the War Cabinet. I can see that my right hon. Friend on the opposite bench does not think I am quite right, but I hope he will follow me for a moment. That is what is often said, that in the War Cabinet you should have somebody who is not himself the head of a particular Department but somebody who is the chief of what is called an economic general staff, and that he should be the person to discharge all these duties. However, I do not wish to quote from memory from speeches, because the last thing I want to do is to parody any speech.
§ Sir A. Sinclair
The suggestion was not that there should necessarily be an economist who should be a member of the War Cabinet and also at the same time chief of the economic staff. The suggestion was that there should be a 942 Minister free from all Departmental duties, who should be a member of the War Cabinet and to whom the economic general staff, or however you describe it—this new organ as I describe it—could report.
§ Sir J. Simon
I apologise to my right hon. Friend if I did not quite appreciate his criticism. These matters have to be dealt with through the head of the executive department; there is no other way. The President of the Board of Trade must be the person who regulates such things as export licences, the Minister of Supply must be the person who controls supplies as far as is necessary, and the Minister for Economic Warfare has a Department to deal with matters coming under his jurisdiction. If you seek to get a sort of Minister without portfolio, or something like that, as the economic policy member of the Cabinet it means that you have somebody who is not the head of any Department who has to make contact with all these Departments, whereas what is really wanted is the means of reporting to the War Cabinet the conclusions reached by the official committee and the Ministerial committee, to see that the members of the War Cabinet as a whole approve. It may be that they would have further points to make; and then, without the unnecessary intervention of another link, the executive department could proceed to carry out what is wanted. It is my belief—I am not speaking with any certainty—that the other system would not be satisfactory.
§ Sir Arthur Salter
The right hon. Gentleman said that this would be an extra link, or an extra stage. Surely, under the present arrangement he himself, as the head of one Department, presides over meetings of Ministers from other Departments; under the other system one member of the Cabinet would preside, as the Chancellor of the Exchequer does, over all the other Ministers concerned.
§ Mr. A. Edwards
When the Government wished to rationalise the iron and steel industry they chose a man who was not a specialist in any department. They brought in Sir Andrew Duncan to do exactly what has been suggested by my hon. Friend. I understand that, as a judge, he has done a very good job.
§ Sir J. Simon
I share the hon. Member's admiration of the work done by Sir Andrew Duncan. I agree with my hon. Friend the Member for Oxford University (Sir A. Salter), but I think there is nothing very unnatural in the theory that as between a number of Ministers the Treasury representative should preside. In fact, I have seen very high authorities insisting in economic journals that it should be someone from the Treasury. The popular opinion of the Treasury is that it is either engaged in cheeseparing or in exacting the most outrageous taxes, but there is not a single branch of the executive that is not concerned with spending money in the war that has not to keep contact with the Treasury. There is not a single decision taken about purchasing or selling, whether of ships or of anything else, that does not affect the Treasury.
§ Mr. Shinwell
Surely that justifies my argument that the Treasury is one of the Departments that ought to be coordinated. The Treasury should not dominate; it should form part of the Committee, and the domination should come from the War Cabinet itself.
§ Sir J. Simon
It is not a question of domination. I do not say that my word carries more than others, and I do not think that it should. What I am saying is that there are certain practical advantages in regarding the Treasury as being the principal Department concerned. My hon. Friend the Member for Oxford University knows that the Treasury in fact is dealing in one form or another with all these things, and is the very natural centre for co-ordination.
I am sorry to have detained the House so long, but I thought it only right to explain what this system actually is. I do not think it is, in practice—in practice, I say—open to the criticism which has been expressed. It may be that it will be found open to criticism—it will be very lucky if it is not. All I am saying is that, especially in time of war, we do not want to devote ourselves too exclusively to the more theoretical sides of the matter, important as they are. The real thing is to get a machine working which does its work reasonably well. If it is shown how the machine can be improved, no one will be more anxious to accept the proposition than I shall be.
944 The essential feature of this arrangement is that it preserves Departmental and Ministerial responsibility for certain aspects of Government policy. You must hold a certain Minister responsible at Question Time—he has to defend his own corner—but, at the same time, this arrangement does provide for co-ordination of plans and policies which might otherwise conflict and brings to bear upon them that constant expert assistance in the form of persons such as these economists whom I have mentioned, who are undoubtedly the very people for the purpose.
I want to give one illustration as to what has happened. I take quite a recent one, which was published this morning, and if hon. Members will consider it they will appreciate that the illustration is apt. Undoubtedly it was true in the first weeks of the war that the number of the controls, and, I think, to some extent, the psychological effect produced by the fact that there was an elaborate machine, resulted in a very grave block of our export trade. I am giving away no secret when I say that one of the things that the President of the Board of Trade constantly insisted should be dealt with, and one of the things to which Lord Stamp directed immediate attention, was the stimulation of our export trade—perhaps I should also say the removal of discouragement to our export trade.
§ Sir J. Simon
We cannot get it in a day. That was one of the most important things we had to do. It is not a question of a preference for a particular economic theory; this country cannot carry on this war to a successful conclusion unless it carries on its export trade. It is a matter which primarily falls upon the Board of Trade—nobody could do more than my right hon. Friend has done about it—but there are other points of view as well. There is the point of view of those concerned in ensuring supplies to the Army. For instance, there is wool, which is wanted for uniforms, etc., and is also wanted if we are to maintain an export trade in wool fabrics. I would point out in regard to the trade in wool that, broadly speaking, we draw the supplies from countries where we do not need to 945 make payment in dollars, whereas we sell a large part of the manufactured goods to countries that do pay us in dollars. Therefore, from the Treasury point of view, it is a form of transaction which we are extremely anxious to see carried out. On the general question of exports the House may have seen the Board of Trade announcement this morning. I am confident that the decision to make this announcement in the papers this morning is one which has been much more speedily and successfully secured, and its authority is much greater because it is the result of the machine I have been describing to the House. It starts off by saying:It is essential in the national interest that exporters should be encouraged to maintain and increase their export trade to the greatest extent consistent with vital war needs, and the Government are anxious to assist exporters in every possible way.It then points out that there must be some Government control, but, to remove a very widespread misapprehension, it goes on to say:No general system of permits or priorities in the allocation of materials is in force, and for the great bulk of manufactured goods which form the normal export trade of the United Kingdom supplies of the required materials can, so far as can be foreseen, safely be relied upon for a period of the next three months at least.The hon. Gentleman referred to three months. It is put in of course as a matter of precaution, but the Board of Trade are opening discussions with representatives of major exporting industries with a view to facilitating their operations, and, in particular, their purchases of raw materials. I trust that long before the three months are up my right hon. Friend and the Department will have seen all these particular trades, and will have been able to arrange with the trade associations the exact system which can best be followed and which will remove this block in the export trade. If this block is not removed, I am confident that our general interests in the war will be seriously interfered with. Meanwhile the Minister of Supply has issued instructions to controllers and their staffs—it is not necessarily the controller himself who is immediately concerned but possibly somebody lower down the line—to make every effort to allocate supplies where it appears to them that the controlled materials are for the manufacture of goods for export, especially where those exports are to be in the form of highly finished goods in 946 which the cost of the raw materials forms a comparatively small part of the value of the goods. I have no doubt at all, after the close attention that we have given to this matter, that it will help to remove the block, and the block is a most potent factor which could not possibly be allowed to continue.
There are a good many considerations which make it very essential to come to so clear a decision. I agreed with the right hon. Gentleman the Member for Caithness when he put first in his list the essential needs of our fighting services. It is not very easy, until you have really got control of the main materials, to know to what extent you can give the signal, "right away," in respect of very important trades. It may be that the hon. Gentleman was right when he said that it ought to have been done before, but I know it has been done now, and by the very machinery which I have described to the House.
I have kept the House for a long time and I apologise, but I hope that I have shown hon. Members, without partisanship, what is the nature of the machine for which I have a certain responsibility. I am very willing to believe that the constructive criticism of the House of Commons will improve that machine, and all that I am asking is that it ought to be given, and I believe it will be given, a fair trial, because I have no doubt at all that the main objects to be secured are objects which are common to everyone.
§ 6.35 p.m.
§ Mr. Clement Davies
The House and the country will be grateful to the Chancellor of the Exchequer for explaining, with his usual lucidity, the machinery which is at present in existence, and about which we had had no information whatever until last week, and such information as we had had since was in a reply given by the Prime Minister in answer to a question. The right hon. Gentleman explained how the machine came into existence and how it works, but I want to say at once that, having listened very carefully to the speech of the right hon. Gentleman, and especially the first part of it, I find myself very much in the same position as one of His Majesty's judges, who on one occasion sat in the Court of Appeal with his brother judge. His brother judge delivered judgment and said:" I allow this 947 appeal for the following reasons, "which he proceeded to state. The other judge, when he had finishel, said," I disagree. I think that this appeal should be disallowed for the reasons stated by my brother judge."
The Chancellor of the Exchequer has advanced the most excellent reasons why the suggestions which have been put forward by the hon. Gentleman the Member for Seaham (Mr. Shinwell) and the right hon. Gentleman the Member for Caithness (Sir A. Sinclair), and which were also put forward, as the right hon. Gentleman very rightly reminded the House, by Sir William Beveridge in that very excellent article in "The Times" should be adopted. He pointed out that economic matters are as important as military matters. We wage war to-day with moral and economic weapons just as much as we do with military weapons. In fact, if one traces the history of the wars in which this country has been engaged from the time of the Tudors to the present time, victory has depended upon two things. The first was the freedom of the seas, which was maintained by the Royal Navy, so that we could have freedom of commerce, our ships could travel the oceans of the world, and goods could come in to the country and go out of the country.
The second and equally important thing was the financial and economic strength of this country, which has worn down the enemy in the long run. It was the financial and economic strength of this country which contributed to the victories ultimately won by Marlborough, as much as the genius of that great general. In the same way, it was the economic and financial strength of this country which ultimately beat Napoleon; it was not the military strength. People do not very often realise that there were only 22,000 British soldiers at Waterloo. In the last war, which is so much in our memory, it was our economic strength, coupled with the Royal Navy to enforce it, holding the grip on Germany, that ultimately brought Germany to her knees. That is all recognised. Having recognised it, the Chancellor of the Exchequer goes on to say that all these questions relating to economics are inter-linked with war questions; they are inter-linked with decisions which the War Office, the Admiralty and the Air Ministry have to take.
948 After considering all these matters, we have to arrive at a decision. That is quite right. That is why we are asking that there should be two bodies, one rightly called by Sir William Beveridge the organ of decisions, that is, the War Cabinet, a small body of men with no other duty than considering all the points and problems brought before them and then arriving at an informed decision. One does not want to discuss personalities in this Debate, but there are too many members of the War Cabinet. With the exception of two, each member of the War Cabinet has a departmental task, which is a whole-time task, occupying his attention the whole day long. How the Chancellor gets through his work is a mystery to one who has not known about his great capacities. He acts as Chancellor of the Exchequer, he is Deputy-Leader of the House—think of the time he has been able to spare here to-day and of the fact that last night for a long time he was the only Member of the War Cabinet present—he presides over this committee of the other Ministers who are not in the War Cabinet, and then he goes to the War Cabinet, and all the time Treasury questions have to be brought before him. How has he the time to consider all these great questions of policy, of what is to be done by other Departments, of what can be spared or what cannot be spared, when his time is occupied in the way I have described, when he has to snatch a few moments to rush from one committee or Cabinet meeting to another?
That is only one objection, but there is another fundamental objection to the present position in the War Cabinet, and that is the objection, if I may say so, to the Chancellor of the Exchequer presiding over this Co-ordinating Committee. They are made judges in their own case. Every one of them is in charge of a Department and must necessarily come forward with a case which he wants to put up on behalf of his Department to the War Cabinet. Take the Secretary of State for War, the First Lord of the Admiralty, or the Secretary of State for Air. One of them comes forward and says, "I want so and so." He has already had all the particulars put before him by his own Department, and he makes the best case he can for it, and then he is one of the judges as to whether or 949 not that particular line should be adopted. He has a natural bias in favour of the case he has put forward. He has not a free mind with which to consider the pros and cons on either side; and one of these men is the Chancellor of the Exchequer. The right hon. Gentleman will not have the word "cheese-paring," but he was not wrong in stating that the general view of the House is that on the one side he is engaged in collecting such revenue as he can, and on the other side he is engaged in saying "No" to expenditure. The Chancellor of the Exchequer, as Chancellor and as responsible for the Treasury, is bound on certain occasions to take up the line that we cannot afford this or that. He cannot also therefore take the line of saying, "I now change places and advocate that this or that should be done." He cannot be judge in his own case, and that is why we object to the War Cabinet in its present form.
May I then say what we feel should happen? The War Cabinet cannot come to a decision from the blue-books. Questions must come before it from the heads of the other Ministries, but before it can discuss them it should receive the advice of a body of men such as has been suggested from the Front Opposition Bench and supported by the Leader of the Liberal party, a body of men who have already considered all these matters and had before them all the statistics on which they could lay their hands, who will then advise the War Cabinet, not only as to the line of action which they themselves may think the right one, but on another line of action which they should be able to put forward as an alternative. They are only advisory, stating their reasons, and it is for the War Cabinet to decide. I cannot understand what is to-day the position of Ministers who are not in the War Cabinet. I was very much surprised when I heard the answer of the Prime Minister this afternoon, that the Cabinet now consisted only of those members who are members of the War Cabinet. Apparently only they are summoned to the Cabinet, and all the others are Ministers who are not members of the Cabinet. That was news certainly to me, but thinking over what he was saying, it apparently comes to this—and I think it is probably right—that the War Cabinet is the body that must settle policy. It must arrive at the 950 really big decisions, and Ministers such as the Minister of Supply and the President of the Board of Trade are really in the position of factory managers of their particular branches, seeing that their Departments are producing the goods or the materials or whatever is necessary under their control.
Be it so. If that is the position, it is all the more essential that the advice of this small body of men, and all their experience, should be given direct to the War Cabinet and not to this Committee of Ministers who are meeting every now and then. They should not only be called upon to supply to the War Cabinet such matters as the War Cabinet itself can think of, but they themselves should be occupied with other problems which might occur to them. They ought to have before them a conspectus of the resources of the country, and compare it with the information that they get from day to day as to the resources of the enemy and neutral countries. It is only by thinking of that information that they are capable of giving direct advice upon which the organ of decision and action can then act in an informed manner.
The right hon. Gentleman the Chancellor of the Exchequer said that this has worked. I do not know what has been happening. That is known only by the members of the Cabinet, but let me take one thing, the black-out. I do not know who is responsible for that, but I have been told that in the main it is the Air Ministry. If it is, I can understand it. Whoever arranged all that had in mind only one thing, namely, the defence of the country and making it impossible for aircraft to get any assistance from any lights. That was all that he had in mind, and the job has been carried out excellently. But did the Minister also consider, or was it considered by anybody, what effect that would have on production? You cannot win this war by defence, by casting us all into gloom. You can win the war only by activity, and, as the Chancellor said in ending his speech, we can win it only by producing and by increasing our production, sending it overseas, and increasing our trade. You cannot do that by gloom. What is the loss that this country has suffered through this black-out? I wonder what answer the Minister of Supply could give as to the loss of production in the factories blacked out, the increased cost. 951 What is the loss also with regard to transport? It is no good, even if a factory can work, unless the materials can reach the factory and the manufactured materials can leave the factory. I do not know what the figures are, but they must be stupendous. One figure only was given to me, and that was given in the third week of the war by a very prominent railway official, who told me that the loss of efficiency on his particular railway, owing to the black-out, was as high as 60 per cent.
§ Mr. Davies
Of railway efficiency, and it is very natural. When you are blacked out in that way, how long does it take you to read the names on the parcels? If you lose a minute a parcel, it is a matter of hundreds of minutes. Then what time is lost when you are working on the sidings and trying to find out the direction of the traffic? No wonder that the loss of efficiency was 60 per cent. Think of the enormous loss that that is, and think of the loss of life, and of the men thrown out of work, at a time when all agree that everybody should be put in work who can be put in work.
Take another instance, that of air-raid warnings. We know what happened on the first day. When the air-raid warning reached us, apparently certain machines had not even crossed the coast, but about a third of England, and certainly the whole of London and the Thames district were put out of work for hours, from something like a quarter to seven until a quarter past nine. What was the loss on production then? Think of the questions that have been asked in this House as to payment of wages while men are waiting to get the signal to begin work again. In the last war these airraid warnings were so frequent that at last Lord Trenchard was sent for, and in the first week after his arrival back he cut down the number by 50 per cent. and said there was still too many. You have to limit the area. If you leave the decision in the hands of someone who is concerned only with defence, he will say: "Stop everything. Get everyone underground, Turn out the lights." Someone has to consider the other side, and I should think that that is the work of the War Cabinet.
952 We had some trouble with regard to seizures when the war broke out. The first idea of the Procurator-General the Admiralty and the Ministry of Supply was to seize everything; hold them for our courts; keep neutral ships waiting. There was another side to this question. We were angering the neutrals then, and there has been some considerable anger since. What is more, the neutrals had goods which belonged to this country which we badly needed and which they refused to release, until their goods were sent through. These matters can be decided only when you know the other side of the question. Therefore, what we want is a body working full time, with all these matters at their finger ends, and orders being given by the War Cabinet., who can arrive at decisions.
§ Mr. Benjamin Smith
Does the hon. and learned Member suggest that the War Cabinet should decide whether to hold a ship for contraband?
§ Mr. Davies
No. The hon. Member has misunderstood me. I was referring to the question of policy. Whether you release or do not release is a question for the Department concerned. I have said that I would regard the head of the Department as a factory manager. The question of policy is not for the man who is carrying out the details. May I refer to one further matter, which was mentioned by the hon. Member for Seaham, and that is the payment of neutrals. Apparently, the hon. Member thought it would be worth our while to pay an increased price to the neutrals; I suppose in order to keep them sweet, to keep them on our side. There is another side to that. I can see another point of view—it would be for the War Cabinet to decide—and that is, that you should spend as much money as you possibly can within the family. You have to reserve all your energies and, therefore, you ought to buy all you can from the Empire. All these matters ought to be brought before the War Cabinet.
I am not at all impressed with the attitude of the small neutral countries. We are fighting this war primarily for our own selves and our own liberties, but in a very large degree we are fighting it for the liberties of the small nations that surround Germany. They will not sacrifice a single man; all the sacrifice will fall upon France and upon us. Is it to be 953 suggested that the only help they can give us is to charge us extra prices for the goods we need in order to win the war? We cannot afford to pay too high a price for the materials which are necessary. That is a question of high policy, and the facts and figures should be laid before the War Cabinet before it arrives at its decision. One could multiply instances, all of which point to one end and one end only, and that is that we should have a small compact body capable of coming to decisions and giving its orders, and that that body should be well informed by having by its side experts who can advise it at once.
§ 6.54 p.m.
§ Sir P. Hannon
I will not follow the hon. and learned Member into the stimulating discussion he has raised or into the question of the duties that he would impose upon the War Cabinet. He referred to the black-out. Surely, the black-out as a primary measure for the safety of the population of this great Metropolis was a far better course to take than to risk the sacrifice of the lives of a large number of people in the event of an air raid. This Debate turns largely upon the question of the continuity and expansion of our export trade, and I congratulate the Chancellor of the Exchequer and the President of the Board of Trade on the measures that have been taken to strengthen the position of this country in maintaining its contact with foreign markets, particularly the markets of our overseas Empire.
A very valuable service has been done to this country by enlisting the services of Lord Stamp in connection with our national economic efforts. There is no public personality in this country who has made a greater contribution to economic questions for a generation than has Lord Stamp. He is not merely the abstract economist that some people regard him as being, but he has had practical contact with business. He has done constructive work in some of the largest business organisations in this country for many years past. It is an extremely wise course for His Majesty's Government to take in bringing Lord Stamp into close contact with the administration and the organisation of the economic side of the home front in the great war now being waged.
954 I should like to congratulate the President of the Board of Trade on the statement in the Press this morning. There has been a good deal of heart-searching among manufacturers since the war began about the attitude of His Majesty's Government to our export trade. It is true that the President of the Board of Trade made a statement some time ago in this House in which he made the position of the Government perfectly clear, and the Chancellor of the Exchequer and the Prime Minister in various statements have also shown their anxiety for the maintenance of the efficiency of our export trade. The statement issued this morning makes it perfectly clear that it is a first consideration of His Majesty's Government in connection with our war organisation that the export trade should be maintained so long as its limits do not impinge upon the efficiency of our defence preparations, and that it is to be kept under constant review by the Government. There was a certain amount of feeling that my right hon. Friend the Minister of Supply was concentrating his attention a great deal more on the requirements of the Defence Departments, which are very great, than on the maintenance of certain branches of the export trade, which cannot be continued in the absence of raw materials and other supplies. I am gratified to learn that my right hon. Friend will regard it as being just as important a part of his public duties to see that the necessary materials and supplies are given to these branches of our export trade which are maintaining our international commerce as to other branches with which his duties are concerned.
There are in this country three classes of industry affected by the war. In the first place there are those industries which are engaged in producing munitions of war, which are at the moment under the direct supervision of His Majesty's Government and are competent to look after themselves. Then there are the distributive trades which come, no doubt, under the control of the Chancellor of the Duchy of Lancaster. Standing by themselves all over the country there are also a large number of small industries which have suffered dislocation owing to the outbreak of the war, and whose productive efforts have not been organised. It ought to be the concern of the new economic com- 955 mittee over which the Chancellor of the Exchequer presides to consider the present condition of these industries and the utilisation of their possibilities for increased producton at the earliest possible moment.
I hope the new committee under the control of the Chancellor of the Exchequer will give some attention to the effect on the economic vitality of the country of the immense sums which are now being squandered—I use the word"squandered"—on Civil Defence. I saw in the "Times" this morning that the City of Birmingham will have to spend in the current financial year something like £4,000,000 on civil defence. A large proportion of that money will be expended on the payment of persons who in the circumstances of the time should render voluntary service to the country. I think that the Chancellor of the Exchequer and Lord Stamp, in view of the repercussions on the productive vitality of the country which these heavy burdens will impose, should give some attention to modifying the colossal burdens which are being placed upon the shoulders of the ratepayers of the country. If we are not very careful the financial policy pursued in the matter of civil defence will be regarded in the days to come as one of the greatest financial scandals of our time.
I would also like, in pleading for the smaller manufacturers, to ask the Chancellor of the Exchequer to take into account the recent expression of views obtained from a large number of the smaller manufacturers as to the contribution which they can make to our war organisation. I took the liberty of writing yesterday to the Chancellor of the Exchequer and called his attention to an appeal I had made to 1,800 of the smaller industries of the country to indicate in what way they could make some contribution, on organised methods, to our defence activities. We have received a very large number of replies and the organisation over which I for the moment preside is prepared to place the whole of this information at the disposal of the new committee.
The statement which was issued by the Board of Trade this morning shows the manufacturers of the country that their interests are receiving the careful con- 956 sideration of the Government. It would be a terrible blow to the competitive power of this country in neutral countries, and in foreign markets, and even in our own Empire, if anything should weaken our export trade during the war. The hon. Member for Seaham (Mr. Shinwell) in his somewhat caustic comments on the policy of the Government in relation to our economic work, spoke of the delay in the issue of licences. My recent experience in the organisation with which I am associated is that the President of the Board of Trade and the Secretary of the Overseas Trade Department have done yeoman service for the country in the way they have accelerated the issue of licences, and I should like to thank the Secretary for Overseas Trade for the valuable work he has done in that respect in the last few weeks in circumstances of great difficulty and embarrassment. I was very gratified to observe the care which the Board of Trade are exercising in relation to countries adjacent to Germany. It is of great importance to observe how the exports of this country may be limited, in view of the tendency to increase exports which may be used for the advantage of the Empire, and in the statement issued by the Board of Trade I am glad to see that that contingency has received careful observation.
I agree with what has been said by the hon. Member opposite as to the importance of the economic side of our life being organised to the fullest degree for the prosecution of the war. I do not disagree with most of the statements made with singular sincerity by the hon. Member for Seaham, and I cannot see very much difference in any suggestion the hon. Member made from the general outline of the activities of our economic progress as laid down by the Chancellor of the Exchequer in his speech. Not a single suggestion made by the hon. Member for Seaham or the right hon. Member for Caithness (Sir A. Sinclair), very valuable and useful as they were, can be regarded as being outside the general survey of the activities of the new committee as given to the House by the Chancellor of the Exchequer. I think we can look forward to the new committee in its economic activities, bringing more hope to the exporter and to the home producer. I only add this, that it is most important that the whole home 957 front should be organised to give satisfaction and a feeling of comfort to those who are defending the liberties of this country on the battlefield, in the air, and on the sea; and I join in the tribute paid to the Navy for the part it is playing in maintaining our sea communications, thus enabling the economic policy of the Government to be given practical effect from shore to shore throughout the whole world.
§ 7.8 p.m.
§ Sir A. Salter
I hope that the Government have been impressed by the force and almost the unanimity with which the proposals put before the House by the hon. Member for Seaham (Mr. Shinwell) have been supported. The Chancellor of the Exchequer said with great truth that that system is good which works well, and it is of course difficult for people not in the Government to advise with any confidence as to what would be precisely the best form of addition or change in the administrative mechanism. We realise that the present system, if run by people of great power and energy and skill, would work better than a theoretically ideal system run by less competent people or with less good will, or a system which fitted less well into the general administration of the country. But does the present system work? If we were generally satisfied with the results which we see and with the policy which is emerging we certainly should not come along with any new proposal to change the machine. But we are not.
What we have to consider is not only the problem of Departmental organisation—not only the co-ordination of our economic effort—but the effort as we see it co-ordinated, or unco-ordinated, in actual practice. Behind this, we have to consider also the general economic strategy of the war. I was glad to note that the Chancellor said he realised that victory may turn upon the efficacy of our economic organisation. I think all of us realise that if the war is to be a long one, it will prove to be essentially a conflict of economic resources and economic systems, and that if we are to win we must both maximise our productive capacity and see that this productive capacity is so allocated and directed as to give the best results in relation to the conduct of the war. In a word, our problem is one partly of production and 958 partly of proportion, or, in administrative terms, it is partly a matter of executive energy and competence and partly a matter of a sound economic strategy.
I think that while in this House and in the country we are approaching something very near unity in our main policy, there is profound anxiety, both in the House and throughout the country, as to whether, particularly in all that concerns the organisation of our economic effort, we are really putting enough drive or enough executive competence into our work. I am very reluctant to touch on the personal side as distinct from questions of policy, but of course, it is inherent in this subject. If we are considering how we are to co-ordinate, we must consider what is being co-ordinated and who are the people who are running whatever system we devise. What is wanted in the conduct of the war, above everything else, is executive drive, ability and energy. That is a quality which is relatively much less important under the ordinary peace-time conditions in which we lived till the last few years. It does not at all follow that because a man has that particular quality he will have good Parliamentary qualities; and conversely, it does not follow that because a man is a good Parliamentary man, he will have this particular quality of drive and executive ability.
I do not wish to make any comment upon the individual Ministers in charge of the Departments, but I would like merely to suggest a comparison to the House. There are, I think, six Ministries which are vital to the proper organisation of our economic effort. They are the Treasury, the Ministry of Supply, the Board of Trade, the Ministry of Economic Warfare, the Ministry of Food, and the Ministry of Shipping. I will give to the House a list of six people who held office at the head of those six Ministries, or in the Ministries corresponding to them, in the last war. They were the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George); the present First Lord of the Admiralty; Lord Ashfield, now chairman of the London Passenger Transport Board; Lord Cecil; Lord Rhondda; and Lord Maclay. Some of those Ministers had great Parliamentary gifts, and some had none; but every one of them was very notable indeed for executive drive and ability. Perhaps hon. Members have 959 been making a silent comparison as I went through the list. I do not propose to do more than suggest that they should perhaps again go over the list in their minds and draw the morals which I think result. Can we expect, on the economic side of the Government as a whole, enough of that quite exceptional economic drive upon which success in this sphere must depend?
I turn with some relief from that part of my subject to the other one, the problem of economic strategy which, on the administrative side, is the problem of economic co-ordination. In addition to the six Ministries to which I have referred, there are at least nine others which are concerned—the Ministry of Labour, the Ministry of Agriculture, the Department of Overseas Trade, a certain part of the Foreign Office, the purchasing departments of the three Fighting Services, the Ministry of Mines; and I think I should add, particularly in view of some of the instances that have been given to-day, the Department of Home Security, because of the importance of the reaction of the black-out, and so on, upon productive work. All these Departments are, in the course of their daily work, doing things, developing fragments of policy, which impinge upon the policy and work of all the other Departments I have mentioned. There are 15 Departments all of which are competing with other Departments, or doing something which, in order to be carried through effectively as part of a general policy, requires the co-operation of other Departments; and they are in these ways necessarily developing something which, in the absence of any broader vision, is an economic strategy made up by the addition of successive departmentalisms. It is this departmental organisation which presents this problem to us and to the Government.
May I refer now to some actual instances where co-ordination is wanted and where I think at present it is not satisfactory? Let me take, for example, such a very simple problem as that of the desire of the Minister of Economic Warfare to buy, say, oil from a particular country, with a view to seeing that that oil does not go to the enemy. It is obvious that that question at once concerns the Minister of Economic Warfare, who is concerned with it from the point 960 of view of keeping the oil from the enemy; the Minister of Supply, who would normally buy the oil and is concerned with its quality; and the Treasury, which will authorise, or not authorise, the price. It may well be that each one of those Ministers will have in his mind the considerations proper to the other Ministers as well. The Minister of Economic Warfare would not wish to buy at a quite fantastic price, the Chancellor of the Exchequer would doubtless be prepared to authorise a rather high price, and the Minister of Supply would get perhaps a quality of oil not quite what he would have chosen. But this is, obviously, a problem of general economic strategy arising out of the separate actions of three different Departments. Does the system provide for a quick decision? That is an illustration of the need for a sound economic strategy which will govern the work of separate Departments. There has perhaps been enough reference to the question of exports. There is, I believe, a general feeling that certainly over the last six weeks there has not been enough consideration of the needs of the export trade and the troubles under which it is suffering as a consequence of the actions of all the other Departments which are concerned with something else. Even the Measures now proposed, which we have seen published to-day, do not give the impression that the needs of the export trade will be adequately met.
I should like, on a rather more general question, to refer to our price policy. I feel that it is of the utmost importance that we should have a general price policy thought out in all its aspects and relations to an extent to which I see no sign of its having been done at present. If, for example, the Board of Trade or the Ministry of Supply or any other Department fixes a maximum price for an article, it is clear that if the matter stops there, disastrous consequences may result. A price may be fixed which is reasonable at the time, but which depends upon the price of an imported article remaining the same. The price of that article—a raw material, let us say—rises in a foreign country even in terms of the dollar; the pound goes down, and the sterling price rises even more. At once you are in a position in which, if you do no more, you will have removed the economic inducement to the importer to bring that article into the country. Therefore, 961 either you must at once change your maximum price, or the Ministry of Supply must step in and buy to the full extent to which the private importer would otherwise be buying. I think the Government will be forced on step by step until it is securing the importation on its own account of a great deal of what at present is coming through the ordinary channels of trade. But I fail at present to see in the announcements of policy, or in the actions taken by the Government any kind of sign or proof that a general price policy has been thought out and worked out with regard to all the secondary consequences of each particular action which is being taken.
In general, I would say that looking at the preparations of the Government which, now, and over the last few years, have been in some respects very elaborate and have been carried much further than the preparations made before the last war, or even in the first year of the last war—looking at them as a whole, I think we can, not unreasonably, criticise them from these three points of view. First, I feel that the administration has concentrated largely upon the merely desirable as against the essential. For example, I have felt for years that the Food Defence Plans Department of the Board of Trade, now absorbed into the Ministry of Food, was always concerned with preparing elaborately for the distribution of food in the country, while almost completely neglecting to secure that there was adequate food to distribute. I mention that as one instance of what I think runs through a large part of our pre-war preparations.
In the second place one finds—and this illustrates exactly our problem of to-day—one Department after another piling up its own departmental margin of safety. As an hon. Member has said, in the case of the air-raid warnings and the blackout you had a Department properly concerned with securing safety for the civilian population, but without any effective mechanism, or governmental organisation, to secure that in each of the more important measures, so far as they affected production, there was a weighing of the advantage against the disadvantages involved. I think Sir William Beveridge remarked, in the article which has already been quoted, that we may very 962 well lose the war through piling up too many margins of safety. In general, it seems to me that the Administration has been studying carefully the experience of the last war but in doing so has concentrated its attention upon the mistakes in the war effort of that time while failing to give equal attention to the equally important achievements of that effort. After all, we did produce the goods. We did win the war. I sometimes wonder whether, by very carefully and elaborately avoiding all the mistakes of the last war, we may not this time achieve a different conclusion to it.
In any case I would emphasise this. In every sphere of control, or regulation, or price-fixing it is essential to bear in mind that the first necessity is production. The first essential is to get on with the job, whether that means a Government Department shoving it on, or being sparing of its control so that somebody else can get on with it. All other matters, important as they may be, such as restraining excessive prices or excessive profits, are secondary. Even if you have excessive profit it is, in a large measure, recoverable by taxation, but if you lose even one month's production through unnecessary control or through an ill-adjusted maximum price, or any kind of regulation, the loss is irrecoverable.
I pass to a few comments upon the precise proposal which has been made with regard to co-ordination. I have spoken of the 15 Departments at the base of the organisation—what the Chancellor of the Exchequer called the ground floor. You have the officials in those Departments and the Ministers at the top, all all, day by day, necessarily preoccupied with their particular, specialised, limited jobs, necessarily finding it more difficult, by virtue of that preoccupation and specialisation, to consider their own jobs in relation to all the other 14 Departments on which their work impinges. What have you at the present to ensure that there is imposed upon that organisation, or coming out of that organisation, some consistent and sound economic plan? The Chancellor of the Exchequer has explained the organisation. At the top there is the Cabinet Committee presided over by himself. This has the double disadvantage—and I am not referring to the right hon. Gentleman personally in any way—which has been pointed out. On 963 the one hand, the Chancellor of the Exchequer is an extremely busy departmental Minister and therefore cannot give to the co-ordination of the work of these 15 Departments the time that it would be possible for another Minister, who had not a Department of his own, to devote to them. Secondly, he is, as the hon. Member for Seaham pointed out, the head of a Department which though most important, and the most general in its survey, is nevertheless one whose departmental interests sometimes need to be subordinated to a wider policy and possibly subordinated to the departmental view of some other Departments.
These are both those disadvantages. I do not say that they would necessarily be fatal if the rest of the machinery were adequate. But besides that, in the whole of this immense machine, mounting up from the base of the 15 Departments and their hundreds of officials, to the Minister at the top, there is only Lord Stamp (with his two economist colleagues) who is coordinating and who has no bias or preoccupation of departmental duty. Can Lord Stamp suffice to secure a general strategy and to get co-ordination, when there is the strong pull of so many Ministers and so many Departments? I can hardly believe it. I know what the point of view of the official of a Department is under the pressure of war conditions. I know how reluctant he is to accept the advice of somebody who is not bearing equal executive responsibility with himself. I know, as the pressure increases, how one's vision contracts and one's impatience with any interference increases. I ask myself whether, even Lord Stamp, for whose personal qualities nobody has a greater or more sincere admiration than I have, having worked with him many years, can, under the conditions I have described, infuse unity into this vast machine, and not only frame a sound economic strategy but secure its practical execution? His status is advisory; he presides over the committee of officials, but does so coming in from outside for a part only of his time; he has access to the Cabinet Committee but not on terms of equality as a Minister. Will the Departments be induced to subordinate their departmental policies by one who, under the present arrangement, has the authority neither of a Minister nor of an execu- 964 five official directly controlling a Department?
It is possible that this system can work? And was the Chancellor of the Exchequer quite fair in suggesting that it might work even better because Lord Stamp was not giving the whole of his time? The alternative is not, as the Chancellor seemed to suggest, that he would be an academic economist not conversant with practical affairs. Lord Stamp would not cease to be conversant with practical affairs because for a period in the war he came into Government work which would indeed keep him closely in touch with practical affairs. As it is, I cannot believe that in this vast system, when surveyed as a whole, that small element of unpreoccupied, disinterested, unbiased, co-ordinating authority is sufficient to develop and secure the enforcement of a real economic strategy.
The importance of this question is so great that it is impossible to exaggerate it. If we conceive of the whole war machine as a spear, with the spear head representing the combatant forces and the spear shaft representing the civilian organisation, it is true, I think, that the history of warfare, especially in this century, has shown the spear head becoming continually shorter and sharper and the spear shaft longer. What we have to see is that, while the spear shaft becomes longer, it does not also become brittle.
§ 7.33 P.m.
§ Sir Ralph Glyn
A good deal has been said about Lord Stamp's position, and as a colleague of his on the board of the London Midland and Scottish Railway, I would like the Chancellor of the Exchequer to be good enough to make it clear that by his statement he did not mean to imply that he had been seconded from the work of the railway. That is not the case. The responsibilities which Lord Stamp has to the railway, which is work of national importance, are such that he fully recognises them, and before this appointment was made he consulted his colleagues on the board. It was clearly laid down that there were certain considerations vitally affecting the interests of the shareholders and everybody concerned with the railway, and it would be a great misfortune if it got out from anything said in the House to-day that Lord Stamp was in any way escaping 965 his responsibilities and duties, which are very heavy at the present moment. Lord Stamp has, as a matter of tact, been a member of the Economic Information Committee since 1932, and all his colleagues appreciate his tremendous qualities and recognise that the work he is doing for the country, naturally without any pay, is of extreme value.
He is a man who has a greater capacity for work than anybody I have ever met. He is putting in to-day something like a 64-hour week, and he is devoting a considerable time to the work of the railway. There is no use disguising the fact that it would not be fair to Lord Stamp, and certainly not to his colleagues and the great mass of the workers and shareholders of the railway, if it went out that by accepting this appointment he was in any way betraying his duty and his trusteeship at this very difficult time. That is a point which ought to be made abundantly clear. The board of the railway made it clear, and Lord Stamp made it clear to the Prime Minister, that we would feel it very difficult to justify Lord Stamp doing this work unless the terms on which he took it up were clearly understood. They have been made very clear, and I hope the Chancellor's words will not be misrepresented by anybody outside.
§ Mr. Mander
Will the hon. Gentleman say for how many of these 64-hours a week Lord Stamp will, under the new arrangement, put in for the London Midland and Scottish Railway?
§ Sir R. Glyn
That must really be left to Lord Stamp. There are very few people who work harder. There is one fact which he himself has told me. The very nature of the work of going up and down the country, meeting traders in connection with the work of the railway, is of the greatest importance in connection with the economic work which he is doing for the Government.
This Debate has shown clearly that the House recognises that the economic side of the war is of tremendous importance. The speech of the hon. Member for Sea-ham (Mr. Shinwell) was packed with points with which I find myself in general agreement. Indeed, there has been no speech made from any part of the House which in any way minimised what was said by the hon. Gentleman and the right hon. Gentleman the Member for 966 Caithness and Sutherland (Sir A. Sinclair). There is one point to which I would like to draw the attention of the Chancellor in connection with the encouragement of the export trade. It is essential to get rid of all kinds of small pin-pricking regulations, which are being imposed not by any of the economic Departments, but by some branches of the Service Departments. The censorship is so severe that it is almost impossible to get overseas any printed matter which is essential if we are to sell our export goods. A friend of mine the other day had all his papers seided after he had with great difficulty obtained an export licence to go overseas to get some contract under the nose of very strong competition. Every document that was essential for this unfortunate exporter was taken from him. He protested and said it was useless continuing his journey without his diagrams and drawings. That is not the way to help the export trade.
In Scandinavia the people almost believe that we have lost command of the North Sea, for it takes 17 days to get a communication from London to Stockholm. Communication between Stockholm and Germany is normal, and even the telephone is working. The Germans do not stop German newspapers going to Sweden; indeed, they encourage them. Our people are supposed to be working for the justification of our cause in neutral countries, but not one English paper can get there under something like three weeks. I do not see the sense of it, it is all completely topsy-turvey. A distinguished Canadian over here who was struggling to get something done told me that we had the most perfect example of an efficient state of organised chaos he had ever met. Those of us who do not live in the remote passages of these vast new Ministries, but who come into contact with the traders trying to carry on their businesses, find it is quite impossible to excuse these stupidities. I suppose some of the things which have been done are inevitable in the beginning, but it seems to me that control is stifling common sense.
There is a point in connection with the trade with Denmark which I wish to mention. To-day it is quite impossible to get from Denmark the normal cargoes of foodstuffs which we consume. A Reuter telegram last week stated that in the pre- 967 vious week not one single item of agricultural produce had reached this country from Denmark. All the traders and others concerned ask, "Why is it that we cannot have some better arrangements or receive some notification?" They try to telegraph, but telegrams are censored, and fresh butter and perishable goods will not wait while the various parts of the machine are getting to work. I believe a great deal of good would be done if the Ministry responsible for the export trade would consult with the Service Departments, in particular the War Office, to ensure that those who are censoring communications understand the meaning of the messages they are attempting to censor. Some of those employed do not understand the language which is used in trade or commerce. They think there must be some deep-laid plot of a spy and hold up what is a perfectly normal trade communication.
I was at the War Office when the last war started. We had there a very efficient division, known as the Board of Trade division, M.I.5G, and the work done by Sir George Cotterill was extremely efficient. It was done with a very small staff. In addition there was a War Trade Intelligence Department, which was under Mr. Penson as he then was, now Sir Henry Penson. If some care were taken to see how those officers were able to circumvent the follies of the censor and help export trade we should be doing a good day's work. It is odious to have to criticise Ministers. Many of them have been in office a long time, and their faces are almost too familiar to us, and if we do criticise them I hope they will not take it amiss, because the stake at issue is so terrific, and we feel that however excellent are the arrangements made, and however efficient are the fighting Services, if we cannot get more common sense and quick action in the economic sphere we shall not succeed. The advantage which the totalitarian States have lies in quick action; the time factor is everything.
The Minister of Supply must recognise the importance of many of these trade problems. There are various instances which could be put forward which he would feel, I am sure, were due to ancillary circumstances not under his control, but quite clearly they must be brought under the control of some body 968 or some committee. That is why I feel that this business is of such importance that it ought to be a whole time occupation for either the Minister in charge or for the expert Lord Stamp. One or other should be a whole time official. Personally I believe that the right combination would be to have a Minister who would devote his time to that side of the work and relieve and help the Ministers in charge of the Departments, while at the same time we had the services not only of Lord Stamp but of others willing to help. I believe that things would then function better and more quickly. With a Minister who was responsible for the group of Ministries in the economic area and was also a member of the War Cabinet we could ensure quick action and give great impetus to the British export trade.
§ 7.45 p.m.
§ Mr. A. Edwards
The hon. Member for Abingdon (Sir R. Glyn) has referred to the censorship. I will take the liberty of reading a very simple postcard which came into my possession quite recently:Dear Sir,Referring to my letter of to-day, please see to it that the insurance for the goods"—there is some technical word here which I do not understand—is covered until arrival of goods at Stockholm.That left Stockholm on 3rd October and arrived here on 16th October; it did not take quite as long as the letter mentioned by the hon. Member. Fortunately, the instructions had been anticipated and carried out before the arrival of the postcard. That instance emphasises the stupidity of some Department. There is nothing on that card which could by any possible stretch of the imagination be regarded as of a dangerous nature. I naturally spoke to the postmaster and he said, "It is nothing to do with me; it is the War Office." The War Office would not believe that such a thing was possible, and an official said, "I am glad to have seen that card, it is the first I have seen." So I am glad that the hon. Member has also had a case, and I dare say there are many others.
In speaking of the necessity for speeding up licences and so forth I think it is only fair to say that we have something to learn from the experiences of the last war, when the Scandinavian countries did not quite play the game, and when a lot 969 of material which we supplied to them and which they guaranteed would not get through to the enemy's country did actually reach the enemy. They went so far as to falsify their statements, so that we could not go by their official records. For some time the records were suspended, were not published at all. But we do know that they deliberately falsified them, so that we could not trace materials which did go through from those countries to the enemy. Therefore, I do not mind our officials being very careful, but when it comes to stupidity of this kind it is about time someone who is not a Minister was dealt with. I said in debate the other night that it is not the Minister who is to blame. There are utterly stupid people who hide behind the Minister. They know that it is the tradition of this House never to attack them, but they must be got at if we are to win this war. When such people are left to themselves we get this miracle of disorganisation, what the hon. Member referred to as "the organisation of chaos. Ministers ought to take notice of that and not come here and whitewash their Departments.
I am sorry that the Chancellor of the Exchequer could not be a little more precise about the times of meeting of Lord Stamp's committee. He told us that the committee meet constantly, but when I asked whether they were meeting daily he was rather evasive, he would not say that. I have had some experience of these highbrow committees with titles and fantastic names. As the Irishman said, they sound all right on paper but we find that they meet very casually. Casually they go to the Departments and give advice, or give advice when called upon. I hope this committee is not one of that kind. With regard to the committee over which the Chancellor presides, I wish he had paid a little more attention to the analogy I attempted to draw from the iron and steel industry.
There was a time when the iron and steel industry was "organised chaos." At one time the steel industry was in such a bad way that the Government said, "You cannot hope to get any assistance from us unless you reorganise your industry and at least put it on a business footing. "They got in one or two men of their own to attempt this, but things did not get very much better. Then the 970 Government said, "We ourselves will put someone in charge." That was when they put in Sir Andrew Duncan. He was not chosen as a man who knew anything about the steel industry. He was appointed deliberately because of his ignorance of the iron and steel industry. He was an excellent business man and he went into that task with the fixed determination to rationalise the steel industry. He did it splendidly, and there is an organisation now of which the industry can be really proud. The iron and steel industry is thoroughly well organised and it owes most of that to Sir Andrew Duncan. The House has been trying to impress one point upon the Chancellor of the Exchequer to-day. Every Department tells how it is dominated by the Treasury. Is it not rather absurd that the Chancellor of the Exchequer should sit as chairman of that committee? My hon. Friend has pointed out that the right hon. Gentleman would always be in favour of not spending. There is a lot to be said for someone being chairman of that committee who is not engaged in as many other things as the Chancellor of the Exchequer must be.
I would like to ask the Government a question which Ministers must often have asked themselves. Someone not in this House has been responsible for terrific blunders. During the last two years I have begged the Government not to allow blast furnaces to be put out in this country. We have some of them in my constituency. I pointed out that the Government were deliberately allowing those blast furnaces to be put out knowing that at any time we might be thrown into war, and that the last time we were at war the first attacks from the air were on the blast furnaces. Providentially the blast furnaces were never hit, but 40 bombs were dropped within a few miles of my home. Not one of them struck a blast furnace. We do not get sufficient warning in these days because there is no time. Knowing that the blast furnaces may be thrown out of commission in a few minutes the Government have refused. I have pressed this question upon them dozens of times and on every occasion they have refused to do anything to put these blast furnaces into commission. Now the President of the Board of Trade has said that he did not think that any of the blast furnaces would need 971 to be out of commission. The consequence is that we might have raids on the blast furnaces; and we lack the stocks that might have been built up during recent years.
We have also asked the Government to store iron ore so that we need not use ships in time of emergency to bring iron ore to this country when those ships might be better used carrying food. Not a thing was done about that. Now we are told that Lord Stamp and his advisers have been brought in. Was the Economic Committee consulted on this question of storing pig iron and iron ore? It is not in the public interest that I should pursue this matter much further, but the Government must wish now that they had acted on the advice of, and that they had listened to, the people who were appealing to them not to allow our stocks to be depleted. I must not say any more about that matter, but I want to have it upon record that, in spite of the Economic Committee having been in existence for eight years, the Government were not advised to continue to store all these vital materials.
It was said by someone the other day that the trouble with the Civil Service is that it can stop but it can never start. The moment it gets into a jam it says: "What can we stop?" It never says to itself: "What can we start to provide for this emergency?" A man was here the other day who said: "I had a petrol business. It was a prosperous business, but overnight the Government have stopped it. They have just taken away my customers. We get no redress." That man's business has been stopped overnight and he has been thrown out of work without any compensation. I cannot see that such things are really necessary. Is it really economic coordination that we are discussing? I wonder where the Minister of Supply has gone? He was here a few minutes ago. I had a question down to him the other day on the subject of steel prices, and I would now like to say something to him on this subject.
Steel prices are just about to be increased. They are not increased yet, but they are to be increased within a very short time, and almost entirely because of the increased freights and insurance. Why could not the Government absorb 972 these extra costs of insurance and freight in the first instance? The Minister of Supply told me that he could not put these excessive charges on the Government; but the whole point of my question was that I wanted to save the Government money. Will the Minister consider how he can possibly escape those charges? He will pay not only the increase in the price of steel because of the freight and insurance, but he will pay that increase many times over. Every manufacturer will have to increase the price of finished goods which he sells to the Government because of this one increase, and you will not be able to stop that spiral.
In order to prevent this vicious circle from starting, would it not be better to say to the iron and steel industry: "Keep your prices where they are. We will relieve you of those extra charges"? Let me give an illustration. If a shipyard on the Tees works for the Admiralty it gets the cost of labour plus 25 per cent., and the cost of the steel plus 10 per cent. If next week the cost of steel plates goes up from say £8 to £10—I do not know the current price—a 25 per cent. increase, then there is 25 per cent. increase in that man's profits. Should not the Government say, "We cannot afford to pay this extra charge"? They pay that initial charge, plus 10 per cent. Work it out in the various stages, with all the other manufactured articles for which the Ministry of Supply is paying, and it will be seen that it would pay the Government to absorb this extra cost of freights and insurance at the first stage rather than absorb it at the ultimate stage. It would mean a colossal saving to the country. I hope this point will be put before the Economic Advisory Committee, for the purpose of seeing whether we can stop, or at least keep in check, this vicious spiral.
I have mentioned that in the iron and steel industry there is an automatic rise in prices according to the selling price of steel. Whatever the price of steel is this month it automatically rises next quarter, and that involves a rise in the price of coke and of coal. Wages will also go up. I do not mind men getting more wages but they are no better off if the cost of living rises. The Government can keen that process in check. I have told this House that if iron and steel prices begin to rise now there is nothing in this land that will 973 not have to rise with them. The Government can, if they wish, check that movement, but I am complaining that they do not appear to have taken the matter into consideration.
I come to my last point. I do not know how many Departments are guilty in this matter, but I will give one instance of the Air Ministry. One manufacturer has owing to him at this moment £500,000 by the Air Ministry, and he cannot get paid. What is the good of the Home Secretary broadcasting that everybody must pay his debts, and saying: "Do not go away from your district and leave something owing to the newspaper man or the grocer. Pay your debts." Here is a company which cannot get money from the Air Ministry to pay its sub-contractors. One of them told me, "I could not get money to pay my wages last week. I telephoned and said I must have some money. They said, You cannot have it because we cannot get a bean out of the Air Ministry.'" What possible reason can there be for that? Production is being stopped because the Departments will not pay. If the House really wants to consider economic co-ordination, let it consider the most appalling revelations that we had last night from the Parliamentary Secretary to the Secretary, who had to get up and do the meanest job that any man has ever been asked to do in this House, to defend something which is quite indefensible. We could see that he was thoroughly ashamed of his job. We have no right to be in this economic warfare trying to starve out the enemy and at the same time sending our men to the war and starving their dependants. That is not economic co-ordination: it is a crime, and I hope hon. Members will take notice of what was said last night and determine, as a first step, that we shall guarantee to the dependants of those who fight our battles that their dependants shall live in decency while they are away.
§ 8.1 p.m.
§ Mr. Harold Macmillan
It is with a certain diffidence that I rise to address the House, for two reasons. Apart from the physical black-out that threatens us every night, there has been since the beginning of the war an almost complete statistical black-out. Therefore, almost any observations on difficult economic problems must be qualified by the fact 974 that there is not the information in the possession of private Members which there was before the war began. In the second place, I think there is a certain feeling, perhaps not in the House but outside, that it is a kind of lese majesteto address any criticism to the Government, and almost unpatriotic to do so. I have now for some 15 years advanced a number of proposals on economic and other questions which have not always commended themselves to my part, or perhaps any part, of the House but, at any rate, if the supreme test of sincerity is that they have brought me neither any kind of profit, advancement nor preferment, it is in that spirit that I propose to make a few observations on this important problem to-day.
The Chancellor of the Exchequer made a very characteristic speech in which I thought he harked back to those old traditions of his skill as an advocate. He put up a series of arguments which he declared to have been put forward by those who opened the Debate and then proceeded to demolish them. Of course, they were not the arguments that they had put up at all. Someone rather cynically observed that, now that the Chancellor had resumed his seat, we could resume the Debate on economic co-ordination. I do not think I have ever listened in so long a time to so little being said. It was stone-walling only equalled by that of the Financial Secretary last night. Nevertheless, his own position brings with it its own dangers. The more he convinces us of the absolute perfectness of the machine of government, the more difficult it is to blame it on to the machine if anything goes wrong and, if there are mistakes and disasters, having proved that the machine is superb, they can only be charged to the weakness of individuals. Therefore, I think that, on reflection, the Chancellor will find that there are certain dangers inherent in the argument which he has presented. Nevertheless, like him, I am much more interested in what the machine does than exactly how it is composed, and I propose to address myself to that main problem.
It has been long recognised that if it came to war, war would be totalitarian, and we now learn in actual practice the full significance of that phrase. It means that the total energy of the nation has to be organised and directed to secure the 975 maximum results and, therefore, that every error of policy or administration, even on the remote fringes of economic activity, will be paid for by a prolongation of the struggle and the consequent sacrifice of additional lives. We approve generally the reserve with which the allied command is conducting the war on the Western front and the attempt to save unnecessary loss of life and to make no sudden movement to gain a temporary success. We must, therefore, realise the immense responsibility upon those organising the economic war which is vital and essential if we are to make useful and profitable the vast sacrifices of the Military, Naval and Air Forces. In approaching this task, the Government has not been hampered by any expression of doubt, or even of difference of opinion, on the part of economic experts. Indeed, there has been a perhaps unusual unanimity in the advice that has been given, and I think the general type of that advice might be summarised, and has been referred to already, in the article that Sir William Beveridge wrote in the "Times," which presented this case in a very powerful way, and in the many arguments which have been already developed in the House. Sir William Beveridge told us in that article:The whole British economy, if it is to work with the maximum of efficiency, must become a planned economy. It must remodel industry, employment, trade and public finance according to a single strategic plan.Has the Chancellor given us even the faintest indication to-day that he realises the importance of that problem? It is what many of us have been saying in regard to the problems of peace for many years, but it is still more vital to-day in regard to the problems of war. At the moment the public mind is confused and apprehensive. Its fears and suspicions are on two main grounds. First of all, some of us feel that the Departments have been too strong on the negative side of their work and too weak on the positive side. They have shown great vigour in stopping certain activities but nothing like the same vigour in initiating or promoting new effort. The vast number of orders and regulations which have been poured out literally in a cataract of verbiage, usually couched in the most obscure officialese and accompanied by the necessity to fill in great numbers of 976 forms, requiring a great amount of information and very little space to write it in, has baffled, exhausted, discouraged and almost maddened the ordinary trader. This bureaucratic fog has been sadly thickened by the flight from London both of some of the great businesses and some of the important control offices. Hence their orders descend upon us from a distance, and sometimes from wholly inappropriate points. In my own business, Aintree, where I understand the Grand National race is run, is the arsenal from which complicated censorship regulations reach me, calculated to put every obstacle, fence, hurdle and water-jump in the way of the British export trade. It is time that the refugee banks, insurance companies and the other great undertakings, together with these Departments of State, should return to the Metropolis. Let the women and children be evacuated, but if the worst should happen it would not be a very encouraging thought that three or four millions of people who must necessarily stay in London are to be left here without leadership of any kind.
The second weakness which has appeared has been the lack of coordination between the different Departments of State. The action taken on one sector of the economic front is completely different from that taken on another, and there is a total disregard of the importance of synchronising the action of the various authorities so that business enterprises do not close down until the need arises and until the opportunity has been created for the re-employment of the capital resources which were previously engaged in it. No one would deny that these criticisms are merited. Tens of thousands of men were thrown out of work in the early stages of the war, and to-day they are pathetically seeking something to do to enable them to get a living and to preserve their self-respect; and a feature of this new class of unemployment is that they are not insurable under the Unemployment Insurance Act. We are told by the Minister that this is a temporary period, and the Lord Privy Seal, in his rather jaunty broadcast speech, told us that before long there will be such a demand for labour that jobs will be seeking men rather than men seeking jobs—rather a pregnant observation from him. That is an optimistic estimate of how efficient our economic planning is likely to be, 977 and I would like to accept it, but it is no explanation of why these men should have been unemployed long before the mechanism was brought into operation to take them back into employment or to transfer them into other spheres of employment. The first reactions of war are deflationary. What sense was there in the restriction of bank credit in order to reduce productive work, and what justification was there in the rise of the Bank Rate to 4 per cent.? Why has it not been reduced to 2 per cent.? Why has the Chancellor of the Exchequer put a crushing burden upon the taxpayer, on the one hand, and on the other wantonly and artificially raised the cost of the national borrowing which will cost him more than the total amount of this enormous deflation?
Many Members of this House look forward daily with pleasurable anticipation to Mr. Low's cartoons in the "Evening Standard." I wish he would give us a cartoon of a very rich man and his conscientious contortions in trying to fulfill at the same time all the solemn injunctions of the Chancellor of the Exchequer and the Lord Privy Seal. First, he is punctually to pay on 1st January, 1940, his Income Tax and Surtax up to 17s. in the £secondly, he is to save enormously in order to contribute to the great new war loan; thirdly, he is to spend in the shops in order to keep trade going; and, last of all, he must not on any account do without the services of any of his dependants or employes. If any man can do all this he is indeed a very able man. He is not only a plutocrat; he is an acrobat. He is a kind of financial Blondin or Cinquevalli. These things do not make sense. There is no coherent policy. The policies cancel each other out. The Chancellor of the Exchequer gives us a few agreeable nothings about the exact relation of Lord Stamp to somebody else, and we argue in a little detail as to whether Lord Stamp has, or has not, got a new sort of income out of the revenue or whether he is content with what was delicately called contact with reality.
There are other matters which give rise to similar doubt. No one would deny to the Ministers in charge of the Departments all due credit for the work they have done. The Ministry of Supply started too late, but that was neither the fault of my friends nor of myself. It was 978 due to the incredible obstinacy of the Government. However, it has undoubtedly done excellent work in canalising productive effort into the channels of essential supplies, but what positive work is it doing to bring about a constructive reorganisation of industry to meet the enormous additional strains which it must bear through the two or three years' war with the minimum of waste or, what amounts to the same thing, with the minimum of bureaucratic control? The Minister may say that that is not his job, and he may be right, but whose job is it? The Ministry of Economic Warfare has also done most creditable work in seeking out information regarding enemy trade on the basis of which the Admiralty enforces the blockade, but economic warfare is not confined to stopping enemy supplies. It has its creative side as well. It has to do three vital things. It has to purchase and transport the materials which we ourselves need. It has to give such facilities and support to the export trade as will enable us to build up the foreign assets by which these supplies are to be paid; and last, but not least, it has to buy from neutrals as much as possible of what the enemy wants regardless, perhaps, of price and even regardless of what we ourselves want.
It is with no desire to belittle the importance of the Admiralty's work in the blockade that I ask for these positive signs on the part of the Ministry. If we are to do our duty in business we have to rebuild more and more of our foreign assets so that by continuing our export trade they are available for the conduct of the war. If we are to do that we want, not a bureaucratic control of import and export licences, but more encouragement instead of making it almost impossible for us to do so. Everybody welcomes the formation of the Ministry of Shipping, and everyone welcomes the return of the new Minister who has come back rather like a Rip van Winkle. He should be quite at home there, like an old boy revisiting the old school, to see the same old faces in the sixth form—they have not managed to get rid of them yet. But I am afraid he will have some difficult tasks. There are new lessons in the curriculum. They are now faced with grim realities. Every Member of this House feels that he has 979 upon his conscience not the old questions of party debates, but the lives of every one of his fellow-countrymen. The last example of lack of co-ordination to which I will refer is the question which was discussed in the House yesterday. Whereas the soldier's wife receives, in a descending scale, 5s. for her first child, 3s. for the second, 2S. for the third and 1s. for every other child, for another person's child sent to her cottage she draws 8s. 6d.
It may be said that these dangers will disappear because the Government are now setting up the machinery of coordination. I am not altogether reassured about the machinery, but I think the Chancellor was right in saying that the question is not whether the machinery is constitutionally accurate, but whether there is driving power and whether it has the men behind it to make it work. But as well as the machinery of Government, there is the machinery of industry. An hon. Member spoke of a trade that during these years of disaster has brought itself to a high level of organisation—the iron and steel trade. In some other trades that is not the case. If you are going to work this mechanisation satisfactorily, you have to work not by the bureaucratic control of all the details of production but by general control at the top, using a more or less self-governing, democratic industry to manage the details of its own affairs. In the iron and steel industry you have that; you have an integrated industry that, because of the troubles it went through, saw that it could make itself fit only by cutting out the redundancies of over-competition and over-capitalisation.
I am sure that the Minister of Supply will find that the more he can hand over the details to the masters, supported by the trade unions, in the trades themselves, the more he can build upon self-governing industry, the more will his task be simplified. But where he finds trades with great internal complications, sometimes great internal ill-feeling, he will have great difficulty in getting what he wants. It is a paradox that the greatest critics of the bureaucrats are those who believe most in centralisation. The chief attacks on bureaucracy are coming from the Socialist party. But what we mean by control is the greatest amount of control at the centre coupled with the 980 greatest amount of freedom for those concerned in an industry to carry on their industry in their own way. I think that, so far as labour is concerned, that is the most vital part of the task that confronts us.
We have to co-ordinate financial policy and taxation, so that it may serve economic objectives, as well as raise money. We have to give up this pretence that we are going to carry on a war on the conduct of which we have to spend an amount equal to half the national income without some measure of inflation. If we can carry on without the cloudy miasma which has been the curse of politics since the end of the last war, I think we can bring this war to a more rapid conclusion than some of us now hope. We "muddled through" the last war, and in doing so we needlessly sacrificed hundreds of thousands of young lives—among them those gallant, heroic leaders of men whose loss has been sadly missed from our councils these last 20 years. We engulfed ourselves in a frightful morass of economic confusion and social disorder which almost overwhelmed us with discontent at the end of the last war, from which we have since then spent all our time in trying to extricate ourselves. We cannot—we dare not—"muddle through" again.
§ 8.28 p.m.
§ Mr. Hannah
We have been talking about our export trade. I am extremely glad of that. It shows that we are conscious of the great importance of the permanent prosperity of the country. We have learned that victor}' may be illusory. We gained a great victory in the last war, but we did not know how to use it. I hope that in this war we are going to use our economic forces in such a way that when the war comes to an end—with another victory, we confidently hope—we may be able to enter on a new period of prosperity for the benefit not merely of our country and Empire, but of Europe and the entire world. We are all anxious, I think, about the large unemployment that will almost inevitably follow the end of the war, munitions no longer being wanted on the huge scale on which they are now required. We need, more than anything else economically, to preserve our own industries, and especially those industries which are well paid and offer a good career to their workers.
981 The hon. Member for Seaham (Mr. Shinwell) spoke of trying to check all non-essentials. Undoubtedly he was right in that, but are we not in danger, to some extent, of losing sight of the permanent prosperity of our industries in confining ourselves to the war. A few days ago I was visiting in my constituency a foundry that has been very prosperous during recent years casting baths, rain-water fittings, gutters and drainpipes. With the enormous amount of re-housing in the Black Country and elsewhere, an industry-like that has naturally been extremely prosperous. Most of the workers are extremely skilled. It is not a trade that can be learned at all rapidly, and a large number of the workers are relatively old men. Now there is a danger of that work being actually turned down and shut up for want of orders. We realise that housing cannot go on during the war on any very large scale, and a great many industries of that kind must find themselves deprived to a very large extent of their ordinary work. I want to impress upon the Government very strongly indeed the need for trying to turn over such factories to munition work. It is clear that castings for tanks, shells of different kinds, and all sorts of minor munitions could be turned out in such a factory as that. We need to comb the country for industries that can be used for munitions before placing orders abroad. One cannot help viewing with a certain anxiety this effort to mobilise all our foreign securities, especially those in the currency of the United States, in order to buy munitions from abroad, which in very many cases can at least be as well made in this country.
I do not want to say anything whatever against American manufacturers. I have lived in that country for a very considerable time, and I have the greatest possible respect for American industry, but there is something about American work which rather resembles Oliver Wendell Holmes '"Deacon's Cart," which was in such a condition that when it came to an end every single part of it was perfectly useless. That does not always work in munitions, and men who have served in our armies overseas have complained to me again and again that American munitions have frequently turned out to be not exactly what we wanted. Shells have gone off in guns, and various defects of that kind have been 982 revealed with extremely disastrous results. We all realise that America is a country more used to accidents of one kind and another than almost any other. I feel very strongly that to a very great extent we can make the munitions that we want, and I hope that no order for munitions will be placed abroad until we have carefully investigated all the sources of supply in this country. We need not go to Bethlehem and to Pittsburgh until we have carefully exhausted the resources of Dudley, Bilston, Coseley and Wolverhampton and numerous other industrial towns.
We cannot help feeling the very great economic weakness that it must be to this country if on any very large scale we get rid of our foreign holdings. We cannot very well imagine any worse way of entering on the difficult period of reconstruction that must come at the end of the war than then to find that we have got rid of these very important assets, and foreign investments that this country has had for a very long time in distant parts of the world. It is not merely the capitalists, but the working classes themselves are just as much interested as anybody else, and so the point that I want to emphasise is the absolute necessity of trying to produce the very utmost that we can to keep our own men employed, and our old industries in such a position that, when the blessed time of peace comes, they can go back to making things that are necessary for building houses and peace-time occupations generally when they are no longer asked to turn out munitions. I hope that we shall manage economically to enter upon the new period in a far better way than we did after the last war. I believe that all the time we have to keep our minds at least as much on the reconstruction that will come at the end of the war as on the great efforts that we are making so that the war shall have a satisfactory result.
§ 8.37 p.m.
§ Mr. Silverman
I am personally grateful to the hon. Gentleman the Member for Bilston (Mr. Hannah), and I certainly agree with everything he said, for making easier the transition from the subject of the greater part of this Debate to that aspect of the matter with which I personally would like to deal for a minute or two. I make no complaint that in dis- 983 cussing the matter of economic co-ordination the attention of nearly everybody has been directed to economic co-ordination as a war measure. For in these modern days of total war that is inevitable, and I agree with all those speakers who have said—and I think the right hon. Gentleman the Chancellor of the Exchequer will agree—that on this question may very well depend the fate of the war. I would say to the hon. Gentleman the Member for Bilston that no one, not even he, would believe that the result of the war is immaterial to these things that he has in mind.
§ Mr. Silverman
Then the hon. Member will not be ungrateful to me for giving him the opporunity of making that perfectly clear.
§ Mr. Silverman
I agree with the hon. Member that we have to contemplate a time when total war may give place to total peace. I could wish that, in considering the matter of economic co-ordination, we might take a rather wider view. I believe that it is the lack of economic co-ordination that has brought the world to its present pass. Economic chaos is not a thing that you ought to try to organise away in order that you may win a war, and then go back to the economic chaos which brought you to the war. I would remind the House that for 20 years following upon the last war we never had in this country a smaller unemployed army than 1,000,000. There were times when it was 3,000,000, and there were many periods when it ranged around 2,000,000, but in the most prosperous post-war years there were never fewer than a million able-bodied, skilled, semiskilled or unskilled workers for whom this community had no manner of use. In Germany, on the date that Hitler came to power, there were something like 7,000,000 unemployed German workers, and in all our Debates about the political chaos of the country I wonder whether we do not too much overlook these economic causes.
Hitler came to power in Germany because he had promised work for the workers, and the only way in which he 984 could provide work for the workers within the limits of the economic system he was pledged not to upset was to provide work for them on something that did not require an international, foreign market. The only thing that satisfied that condition was armaments, and he got them employed upon his armaments. He got his armaments mounting and mounting, with our tacit consent and approval and very largely with raw materials that we supplied. [An HON. MEMBER: "And finances."] And finances as well. I wonder how far the political urge that drove him to aggression after aggression was not the inevitable consequence of this piling up of the weapons of destruction year after year, until you got a position when, as the right hon. Member for Epping (Mr. Churchill) once put it, the thing could not go on and could not stop. Great play was made in the last two years, before the outbreak of war, of our own falling unemployment. Very largely the absorption of the unemployed, in so far as they were absorbed, was in war industries, and the rest of it was in the expansion of other industries made possible by the flow of money that arose from the expansion of the war industries. Many of us felt and said that that kind of economic absorption of your labour and raw materials and the piling up of competitive armaments which was its inevitable result, must end in war, and I think the true cause of the situation in which we find ourselves to-day is the economic collapse in which the economic system found itself in these last years. That was due to a lack of economic coordination.
If the Minister does not feel able to reply on this aspect of the matter, I hope it will not be overlooked and that the Government, in considering and creating effective machinery for economic coordination, will not be too limited and create that machinery for war ends, but will remember, what I hope none: of us will ever forget, that some day peace must return, and when peace does return neither this nation nor any other nation in the world will be content to go back to the bad old ways. I remember that at the end of the last war people said, "The war is over now; let us get back to normal as quickly as possible," and by that they meant getting back to the old, individual, cut-throat competition and "Every man for himself, and the 985 devil take the hindmost." They thought that that was getting back to normal conditions and that the happiness of mankind depended upon that. I hope there will be no going back to normal chaos when once this war is over. I hope it will be remembered that people will not be content to go back to that economic hell, but will expect to see that this great national effort that we are now making, and rightly making, for war purposes will not be dissipated afterwards, when war purposes give place to peace purposes.
I hope we shall be able to make the same effort in the paths of peace, social reconstruction, and economic progress, with a united community and the resources of that community organised for that purpose, as we have been able to make for victory during the period of the war. When people talk, as inevitably they must talk in these days, of economic warfare, I hope they will remember that one of the conditions of a stable peace will not be economic warfare but economic peace, and that one of the things that will have to be organised is the co-operation of nations in economic affairs, just as you will want the co-operation of classes and individuals in each community, so as to replace the war complex by the peace of co-operation, on which, after all, mankind depends. I think that when you are creating a machine designed to make the wealth, the labour, and the resources of the community most economically available for national ends, it should not be lost sight of that the same kind of organisation will be necessary, unless the world at the end of the war is to sink back into the same kind of economic strife, chaos, and waste that have led the world to the tragic place in which it now stands.
§ 8.47 p.m.
§ Mr. Denman
The basis upon which this Debate has been constructed is that we believe that in this war our economic effort is of greater importance than it has been in any previous war. On looking back to the last war, many of us remember that the "Daily Mail" was full of enthusiastic articles about one of the objects of the war being to deprive Germany of its trade. That was a sort of by-product of war in those days; it was to be a reward of a successful war that we would get some of our enemies' trade. Nowadays the conception is wholly different. We regard our economic effort 986 now as an essential portion of our total attempt to gain certain war aims. We believe we can help the work of our armed Forces by the instruments of diplomacy and economic warfare, and we do well this evening to concentrate our attention on the subject of our economic effort and of developing it to its utmost capacity. We have had to-day a good many examples of the failure of our economic effort, but, on the other hand, we have had satisfactory evidence that the Government have taken this question of economic strategy a good deal more seriously in the last few weeks than they had originally. I believe, like the hon. Member who initiated this Debate and like many others, that we have not yet attained the proper realisation of economic strategy, and that in particular we ought to pursue more actively the creation of what has been called an economic General Staff. As the Chancellor of the Exchequer said, it does not matter by what name you call it, if your machine in fact does the job, but our contention is that the machine is so constructed that it cannot possibly do the job, and the House will perhaps appreciate that the more easily if they listen to what the Prime Minister said was to be the function of the committee of permanent civil servants over whom Lord Stamp was to preside and who in fact were to perform the functions of the economic General Staff. His words were these:In association with the Ministerial Committee Lord Stamp will continue to review our current economic activities in order to propose to the Minister or Ministers concerned ways of filling in gaps that may be found to exist or remedies for any inconsistencies that may be discovered."—[OFFICIAL REPORT, 9th October, 1939; col. 28, Vol. 352.]The House will realise the inadequacy of that when they contemplate a similar organisation governing the strategy of our Fighting Forces. Conceive a committee of very able but fully occupied departmental chiefs, presided over by a part-time expert, whose functions it would be to review the current plans and activities of the Secretaries of State for War and Air and the First Lord of the Admiralty, in order to propose ways of filling in gaps that may be found or remedies for inconsistencies. Clearly, the whole conception of that sort of body is quite different from what is needed for an active general staff. What you want in your general staff are 987 the qualities of direction and drive. What you actually have in this organisation is no more than the means of smoothing out the difficulties and harmonising the diverse points of view, giving oil to your machine in its running; but not giving it direction and drive. It is in that respect that I believe we are bound to find that this organisation that the Government have set up is inadequate.
You cannot get such direction and drive from a Chancellor of the Exchequer. I do not say that in any disrespectful sense. He is a man fully occupied with his Departmental job. He can form wise decisions and come to, perhaps, the right solution of a problem put before him, but a person so occupied in Departmental work cannot possibly provide direction and drive. Perhaps I may illustrate the different conceptions by recalling the qualities of our Prime Ministers in the last war. Mr. Asquith was perhaps the greatest Prime Minister of our time for judging and deciding problems put before him, but he had nothing of the dynamic force of his more agile colleague who succeeded him. In this economic general staff we want that same quality of direction and drive that we found in our second Prime Minister in the last war. The qualities which we were said to want in the last war were the qualities of "push and go." The phrase may be different but the need is the same. That is what we need for the implementation of our strategic policy to-day.
The original question to which the answer was given by the Prime Minister was handed in over a fortnight ago, and no doubt great progress has been made since then, but we still have not got a clear economic policy in many directions. In domestic affairs, can anyone tell us what our domestic policy is in relation to prices? Are we deliberately pursuing a policy of keeping prices down to approxi ntely the pre-war levels, or are we deliberately pursuing the policy of a certain amount of inflation? Some eminent economists say that we ought to raise our price level by 20 per cent. Or are we not pursuing any deliberate policy at all, but just judging each case as it comes up, collecting the extremely divergent views which different Ministers must necessarily hold on this subject and 988 harmonising them one by one as they arise?
We have had from the Opposition benches an important example in the case of iron and steel. It has been pointed out that if we allow, as apparently we are allowing, the price of iron and steel to rise, it will mean an increase in the cost in almost every article in the country. Prices will go mounting up in the case of all the goods which the Government have to buy, percentages will be added at every stage, and the resulting loss to the Government, if the price of that raw material is advanced, will be such as to make us deplore that it was ever allowed to start. Are the Government going to try to keep down that price even at the cost of a subsidy? These are big questions of economics that an economic general staff should consider, and I think that Lord Stamp, working part-time on these problems, cannot give us that expert direction which we should have. You want a whole-time man with a special staff, in close contact with all the 15 Departments which we are told are concerned with the economic policy of the Government. If we are attempting to rely on a part-time Lord Stamp, who, we are told, spends a great deal of time going around the country looking after the affairs of the L.M.S., we shall not be able to exert that full and adequate economic power we could if we were organised properly. I hope that the Government, in the course of their experience in the next few weeks, will discover that an economic general staff is vital and will modify then-organisation in order to provide what I believe we shall need for the success of our efforts.
§ 8.58 p.m.
Mr. David Adams
I think it is becoming increasingly clear to the House and the country that success in the war will depend more upon the economic: weapon than upon the forces in the field. If that be so, it must be a source of crowning satisfaction to the whole country that subsequent wars will depend not upon life and limb but that we shall be able to base our security upon the economic strength of the country and the economic armaments we are able to bring to bear against the enemy. I am not so far advanced as to say that once the Finance Bill has passed into law and the Budget 989 for the year is in operation, the Chancellor of the Exchequer is an overworked man. If that is not the case, then, are we certain that the criticism of the Chancellor of the Exchequer in occupying the position of chairman of one of these important committees is well founded? I think all hon. Members will agree that rare competence and a determination to secure his way are characteristics of the present Chancellor. Therefore, as we know his unqualified patriotism, we cannot imagine that he would be inclined in any respect to place in the first rank the question of economy as against the paramount problem of national security and the production of all that we require for the conduct of the war. Perhaps the Minister, if he replies, will advise us whether the fears that have been so genuinely expressed that we have not in this particular chairman secured the proper man for the task, are well founded or not.
I suppose that a gradual improvement is taking place with regard to the permits that are granted to those engaged in the import and export trades. My experience has been that it is useless to send a telegram for even the most elementary permissions, and that it requires a personal visit to the appropriate Ministry before one can get attention. As an illustration of this, I can tell the House that I was an emissary in London for the city engineer of Newcastle. He required permission to obtain another quotation for a certain article required for trench security; he sent a telegram, and at the end of the week there was no reply to that simple request. I visited the Ministry in connection with the matter, and I was told that a shortage of staff had prevented the reply from being sent. That happened a little time ago, and I trust that elementary delays are not permitted to take place at the present time; otherwise, there must be a greater amount of chaos at present than prevailed before. I think that the Minister should also do something with regard to the position of firms which desire to make imports of a fixed amount of goods in separate parcels. The Ministry will not grant permission for a bulk number of these parcels, and each individual consignment must have a special permit. That seems to be a great and unnecessary waste of time, paper and authority, and it prevents 990 the merchants from purchasing the larger quantities which they would purchase if they had the necessary permit for a bulk supply rather than the lesser permit on which they have to rely now.
It has been suggested that we might subsidise both imports and exports, but I have not found any particular demand for such a course. The average firm, when it has orders in hand and can sell its goods, is satisfied with the present system. I think it would be unfortunate if it went forth that the Government are prepared to make some new ex gratiapayments in subsidising either imports or exports at the present time. Of course, the position may arise in which risks may have to be taken by the Government Departments concerned, risks under the export credits guarantee scheme, by which certain amounts of money have been lost, and may be lost in future; but in the normal way, I think it will be found to be quite unnecessary, even for war purposes, to subsidise imports and exports. The appointment of a Minister of Shipping is, in my judgment, highly satisfactory, but I am somewhat surprised that the Government have not thought fit to appoint a shipowner to undertake this very special task. Everyone will agree that this is a highly technical industry and there will be no dissent as to the way in which, during the last war, Sir Joseph Maclay, afterwards Lord Maclay, filled his responsibilities as Controller of Shipping—
He was a shipowner, but it is a delusion to suggest that he was in the pockets of the shipowners.
The general policy of the Government then in regard to shipping was defective in many respects, as I hope to show later, but where Lord Maclay was fortified with the requisite authority by the Government, his conduct of the Mercantile Marine was marked by reason and fair play and was in the general interests of the State. It makes us a little uncertain to find one who, admittedly, has not been a shipowner or engaged in-, shipping management being appointed to-undertake this task and having to call to his assistance people who are now in the: shipping industry. It seems a round- 991 about method of obtaining results, which might have been obtained equally well by the appointment of someone with experience of the industry. If necessary a retired shipowner, one who is not actively concerned in shipping management for the time being—and there are a number of such in the country—could have been appointed. On the question of the control of shipping, the House ought to know whether steps are being taken by the Government or the various Ministries to control the prices of important commodities and, in particular, to control the price of ships. There was no control during the last war until near the end of the campaign. I think it will be found that certain essential metals such as zinc, lead and copper and also steel were not controlled during the last war until it had almost terminated.
To-day the Government should set up specific control departments to handle prices. During the last war the price of tonnage rose from £9 10s. per deadweight ton to £34 10s. for an average tramp ship of, say, 7,500 tons deadweight. On behalf of the concern in which I was then interested, I purchased from a well-known shipping firm secondhand tonnage. Three of these vessels, which were of 7,500 tons deadweight, had been built when the war broke out at the low sum of £9 10s. per deadweight ton. These three vessels cost £600,000, a staggering figure, because the Government had not seen fit to control all that was required for the manufacture and equipment of ships. It was the same story of rapidly rising prices from the early days of the war. The reckless conduct of the Government had a most disastrous effect upon the values of tonnage after the war, because with the introduction of the reparation tonnage the values fell back again to normal figures, with the result that vast sums were lost by the State, by the individual and by the community due to permitting values to rise to the extent I have indicated. If prices of tonnage are permitted to rise there is automatically a rise of freight value. Then there will be an increased cost of our imports and exports. The living costs for civilians and combatants are bound to rise, and there will be with the progress of the war an inevitable rise in the cost of armaments. Therefore, I hope we shall have the requisite assurance that not only certain 992 raw materials, which the Ministry of Supply are not controlling, but all materials of an essential character requisite for the national endeavour, will be adequately controlled.
§ Sir P. Hannon
Is not the hon. Gentleman flogging a dead horse? He is relating incidents of the last war which have no relation to what is happening in this war.
I have heard no undertaking with regard to control. I have endeavoured to obtain from the Minister of Supply a statement whether the prices of everything required for the manufacture and equipment of ships could be controlled, and no such assurance could be given. The only assurance I obtained was that certain raw materials would be controlled. If control is obtained I am sure the whole nation will rejoice at such an amazing eventuality.
The question of new factory accommodation might be mentioned. The Team Valley Estate has already expended £2,000,000, and it is essential that the new factories there should be utilised for the national endeavour. Some time ago officials were appointed to survey in different districts. At the moment nothing specific has been done to utilise surplus factory accommodation. The answer which I received to a question today was that a survey was proceeding. I have made inquiry in the North of England and no area committees have been set up. In short, virtually nothing has been done with respect to this factory town, which could be utilised for the production of the lesser parts of munitions. That aspect ought to be carefully looked into without further delay. It is an unfortunate situation, because immediately upon the outbreak of hostilities large numbers of men on the Team Valley Estate were thrown out of employment. The building trades ceased and allied trades also stopped production. Here is a valuable opportunity for re-engaging many men who are technicians and employing them in the production of armaments.
I turn, lastly, to a subject which might be entitled "waste and loss." The Debate last night indicated that all could not be well on the home front. If our fighting Forces feel that those who are left at home are prejudiced in the matter of 993 Jiving conditions, there will not be the contentment and sang-froid which are necessary in the fighting Forces for successful campaigning. Here, from my own constituency, is a typical case of a soldier's wife who is now left with the allowance granted by the Army. This woman and her family of five children have the sum of 2S. 7½d. to expend upon food and one or two payments of a minor character per week, and the result is that she is driven to the public assistance committee for some relief. The Government might make it possible for the dependants of those serving in the fighting Forces to go to the Unemployment Assistance Board for the necessary relief in the case of sickness and so forth which the average unemployed man is able to get. Those sources of revenue are automatically stopped because the man has joined the Army.
Here is another case of which the House ought to know. The Newcastle Corporation were instructed to hire a number of 30-cwt. ambulances and they have a number of them as stand-bys in the event of air raids. It is understood that they pay £3 a week for these vehicles, and at that rate the cost will be £18,000 a year. The corporation have suggested to the Ministry of Health that they should purchase a fleet of 100 30-cwt. vehicles, modern cars, transform them at a cost of some £50 into ambulances, making a total cost of some £90 per vehicle. They would then be the absolute property of the corporation, and the estimated cost of them would be £9,000. So far, almost a month has elapsed. Correspondence has ensued. The corporation desire authority to purchase the vehicles and to avoid unnecessary waste of money, but apparently that authority is definitely refused by the Government. The purchase would save £9,000 in the first year, after which the vehicles would become the absolute property of the corporation. This illustrates the waste that is going on in certain directions. A Minister of waste ought to be appointed without further delay. I believe that many millions of pounds could be saved.
§ Sir P. Hannon
Who is responsible for preventing the corporation from acquiring those vehicles for £9,000?
The Ministry of Health will not give authority for the expendi- 994 ture. The corporation have £9,000 with which they do not know what to do, but they must, very properly, have the authority of the Government Department before they can expend it. It seems in many directions that we require a Minister to eliminate waste. I am satisfied that, in the progress of time, these things will rectify themselves. The Debate has served to reassure the House and the country that the conduct of the war and the preparation for its successful conduct are at least in such conpetent hands that we can look forward with abundant confidence to a successful campaign.
§ 9.22 p.m.
§ Mr. Boothby
Everybody in this House wants to go to bed, and nobody more so than I, but I feel that I must take the first, and I have no doubt that it will be the last, opportunity of my life to wind up an important Debate for the Government of the day. I will not delay the House in that connection for more than a few moments. In all the criticisms that have been made—and many have been made, some good and some bad—we have to be very careful whether we are criticising policy or whether we are criticising machinery. When it comes to machinery, we have to be particularly careful that we are criticising the right machinery.
I see the Minister of Supply sitting on the Government Front Bench. He has been criticised in the Press and elsewhere in recent weeks, but I have evidence from quarters which he probably knows not of, particularly from the northern part of the United Kingdom, that would lead me to suppose that such decisions as have been obtained quickly and effectively during the past five weeks have been obtained from the Ministry of Supply. I suggest to hon. and right hon. Gentlemen on the Opposition Front Bench and on the Liberal benches—where they are nonexistent at the present moment—that there is not such a plethora of talent on the Government Front Bench that we can afford to make any mistakes as to the men we attack. We have to be quite sure that we are on the right line and not on the wrong line, when we start attacking. All the evidence that I have, and I am sure that it will be confirmed by other hon. Members, shows that the Ministry of Supply is one of the Departments that have been functioning extremely well since the outbreak of this war. Nobody 995 can deny that there has been a great deal of overlapping and confusion in some of the other Departments, not because of the intrinsic demerits of those Departments, but because it takes such an awful time to get the necessary papers round. In some cases they have to go as far as Aintree, the Grand National course. In other cases they have to send them to Oxford and back again. They then get slung around in London from one Department to another; and I believe that this has hitherto been the cause of a great deal of unnecessary delay. It has been said by a cynic that we are now engaged in a war to make the world safe for bureaucracy. I trust that, whatever else may ensue, that will not prove to be the case.
With regard to the speech of the hon. Member who has just sat down, there is one point that I should like to take up. He complained that we have not appointed a shipping man to take control of the Ministry of Shipping. I think there is nothing more lamentable than to appoint a technical expert as head of a Department of this kind. I would no more care to see an important shipping man in control of the Ministry of Shipping than I would care to see a coal-owner in control of the Ministry of Mines. I believe that one of the chief merits of our system is that we get more or less impartial people who can take an objective view, to decide between the conflicting views of the experts. The main point and advantage of our democratic system is that we do not have experts in supreme charge of Departments. Although I have no doubt that Lord Maclay in the last war proved extremely efficient, those who know Scotland know that the shipowners certainly did not suffer under his beneficent auspices.
With regard to the question of the machinery that has been set up by the Government, I think it is probably best that the Chancellor of the Exchequer should preside over the Committee of Ministers responsible for economic affairs, and that he should represent them in the War Cabinet, for the reason which he effectively gave, namely, that he really does control every Department in the State, and that without his consent and approval it is almost impossible to get 996 anything done at all. Suppose he was a subsidiary member of the Committee, and you had another Minister without portfolio in the War Cabinet responsible for the co-ordination of economic affairs, he could be stultified at every turn, on financial grounds alone, by the Chancellor of the Exchequer. Unless he could carry the Chancellor with him, nothing would be done. We therefore have to have as Chancellor of the Exchequer a man who can do a great deal of hard work; but my belief is that, if you want effective and swift executive action, you are probably best off if you have as co-ordinator and chairman of the Economic Committee the Chancellor of the Exchequer himself. That, I believe, is the best chance of taking quick and decisive executive measures.
I should like to add a few words about the permanent Inter-Departmental Committee with Lord Stamp as President. I do not think, as time goes on, it will be found possible for the chief adviser on economic co-ordination to the Ministerial Committee, and the permanent Chairman of the Inter-Departmental Committee, to carry on his own private business interests at the same time. I do not think the House will accept it, and I do not think it will be found to be practically possible. Lord Stamp is now, in effect, the Chief Economic Adviser to the Government and, goodness knows, that is a whole-time job for any man. I do not believe that what was described as his "contact with reality" by the Chancellor of the Exchequer, in other words his presidency of the London, Midland and Scottish Railway, is at all essential, on other than financial grounds, to enable him to discharge his duties. I believe Lord Stamp will be able to maintain plenty of contact with reality in his capacity as Chief Economic Adviser, and that as time goes on it will prove to be a completely whole-time job.
Otherwise, I have not much criticism to make of the machinery. I think there are some of us who would be interested to know what is happening to the Department of Overseas Trade and the Export Credits Guarantee Department which seem to have been overlooked during the turmoil of the first weeks of the war. We must continue to build up our export trade, and it is to be hoped that those Departments will not die out.
§ Mr. Boothby
I am glad to hear that those Departments are functioning, because I believe they will have just as important a part to play during the war years as they had in the years of peace. We have the Chancellor of the Exchequer presiding over this committee and, as he himself said, the real test of the committee will be whether it works or not. I believe, on the whole, that it will work; although there may still be some minor adjustments to be made.
The question with which the House will have to interest itself is not so much the question of machinery as the question of policy. The opening phase of any war is bound to be a phase of acute deflation. There must be a terrific upheaval, and a transition period, during which many people will find it extremely difficult to fit themselves into the wartime organisation of industry. M. Reynaud, the Finance Minister in France, whom I regard as one of the greatest constructive statesmen on the Allied side, has recognised this clearly. He has maintained the French bank rate at 2 per cent.; he has also maintained the existing taxation level, and, in addition, he has taken active steps to stimulate trade in France. On the whole, I think our policy has been the reverse of that. We have raised the bank rate and greatly increased direct taxation. In doing so we have discouraged many businesses; and, in so far as a substantial section of the community have had their salary reduced by more than one-half on 1st September last, we have practically poleaxed that section of the community. The consequences of this may not be long-lived, because the necessary adjustments will be made over a period of a few months. I am concerned that the Chancellor of the Exchequer decided to take the steps he did because the inflation when it comes will be more marked than it might otherwise have been. I would rather he had said, "We are now going through a deflationary stage. I do not intend to put any increased burdens on the community at the moment; but as soon as the inflationary period sets in, and big profits begin to be made, then I will assuredly impose an Income Tax of at least 7s. 6d. in the £.
I do not think that irreparable damage has been done by any manner of means, 998 but what I want to impress on the House is that the only ultimate way to win this war is to conserve our resources, and increase our productivity. Contrary to the view held in some quarters, a high Bank Rate does not conserve resources, but only impairs productive capacity. You can put the Income Tax up to 12s. 6d. in the £,but without an expansion of the national income you cannot get any increased revenue. There must be a margin between the anticipated rate of profit and the prevailing rate of interest. The lower you can get your rate of interest, the more investment' you can get into industry. There is an immense amount of capital still lying idle in this country. All that has to be put into productive industry in the next six months; or a year at the outside.
It is well to remember how the Germans, between 1933 and the outbreak of the war, achieved the results they did. They absorbed 8,000,000 additional workers in those years, and increased Germany's national income by more than half. It was done in three ways: first, by an increase of credit; second, by long-term loans; and third, and lastly, by increased taxation—in that order. Despite the fact that the current rate of expenditure was increased by 35 per cent. and the loan expenditure by 10 per cent., as compared with 3 per cent. in this country, there was no unhealthy inflation in Germany, because specific measures were taken to prevent it. Those measures were such as it would be impossible for us to take in peace time, but they are possible in war time—-fixing the level of wages, the control of all investment, the restriction of profits beyond a certain figure—we have started on that already—absolute control of all foreign exchanges, and compulsory investment in Government stock by institutions such as banks and insurance houses, which in one form or another is now inevitable. The lesson to be learnt from Germany's experience is that, so far as expenditure is kept within the limits of saving, unhealthy inflation will not ensue. I believe that before the end of the war we shall find ourselves with a National Investment Board in this country.
In the long run we can hope to win only by increasing our productivity and expanding our national income. Whether you look at it from the point of view of 999 conserving our resources or increasing our revenue, there is no other way to win this war economically. We have also to increase our export trade. I am absolutely convinced that, in a mood of buoyant optimism, it is to that objective, rather than to control of all kinds and the damping down of enterprise, that the main energies of the Government should be directed. Our resources are almost unlimited. If only we use them in a 1000 constructive spirit, I believe they are so much greater than the German resources that quite apart from strategic questions, it will only be a question of time before our victory becomes inevitable.
§ Question, "That this House do now adjourn," put, and agreed to.
§ Adjourned accordingly at Twenty-one Minutes before Ten o 'Clock.