HC Deb 08 February 1940 vol 357 cc449-550
Mr. Alexander

I was under the impression thatthere might be questions to be asked by other hon. Members, but I understand now that I can go right on and raise the question about which the Opposition have given notice. We want to raise especially the question which was put before the House on 31st January by the Chancellor of the Exchequer, referring to the arrest, or attempt to arrest, the rise in prices of certain staple foodstuffs by the actual making of a Treasury grant, or series of grants, at a cost of about £1,000,000 a week, or £50,000,000 per annum. I am quite sure that the Chancellor of the Exchequer will in no way resent the attitude of the Opposition in raising this question at as early a stage as possible. I also hope that although this statement—

Mr. McGovern

On a point of Order. It is very difficult to follow what is happening here, and I should like to ask whether the right hon. Member for Hills-borough (Mr. Alexander) is making a second speech on the Motion for the Adjournment, after having completed his speech on the war situation. In an entirely friendly way, I should like to know how that is possible.

Mr. Speaker

Is the hon. Member asking me or the right hon. Gentleman?

Mr. McGovern

I was asking you, Sir, on a point of Order. I do not know what is happening here.

Mr. Speaker

The hon. Member is entitled to raise any question that he likes.

Mr. McGovern

That is not the point. I was wanting to know whether it is in order for the right hon. Gentleman, having just finished his speech, to begin a second speech on the Motion for the Adjournment.

Mr. Speaker

I understood that the right hon. Gentleman first referred to the Prime Minister's statement and, having finished his remarks on that, was going on to the question of food prices.

Sir Percy Harris

On the point of Order. I did intend to make a few remarks on the speech of the Prime Minister, but when the right hon. Gentleman the Leader of the Opposition did not get up, and the right hon. Member for Hills-borough (Mr. Alexander) took his place, I naturally assumed that he was going to forego that right and that the right hon. Member for Hillsborough was going straight on with the general discussion on food supplies. I think the House was a little confused, but I did not intend to exercise my right to answer the Prime Minister.

Mr. McGovern

On the point of Order. On the question of the Prime Minister's speech on the progress of the war, have we departed from that, or can an hon. Member get up and speak afterwards on it if he had intended to do so?

Mr. Speaker

Any hon. Member can refer to the Prime Minister's statement on the war at any time.

Mr. Alexander

I had no intention at all of depriving any hon. Member of his rights, and I am quite sure that Mr. Speaker can be trusted to maintain those rights. I was saying, when I was interrupted, that we regarded the statement of the Chancellor of the Exchequer on 31st January as of very great importance, and I feel sure that he would not complain of our asking for this Debate to-day and for an opportunity of asking specific questions. I feel sure also that the Chancellor of the Exchequer would not claim for himself, in spite of the great publicity given to his statement on the wireless and in the Press, that it is a new principle produced by the present war Cabinet. I remember that the first time an attempt was made to arrest the price of staple foods to the industrial worker was as a result of the great agitation led by Robert Smillie, the miners' leader, in 1917, and the subsequent making of a special subsidy to keep down the price of bread. I should also say to the Chancellor at the outset that, in so far as his announcement involves the principle of using the whole of the national resources, if necessary, to defend the consumer's position in the working classes, whether engaged in work or receiving an old age pension, we are not opposed to this in principle, provided we can be satisfied that it can be operated in such a way as to remain economically sound and not result ultimately in a worsening of the position of the country and of the workers especially.

The position, as stated by the Chancellor on 31st January, is that, in order to avoid inflation, by means of arresting a rise in prices and consequently in wages, the Government are providing about £50,000,000 per annum. At that time, the Chancellor was asked one or two Supplementary Questions as to what would be included in the £50,000,000. He was asked whether that amount would include payments already made or promised in respect of subsidies on certain commodities to agricultural producers. The answers given were rather confusing to us. From the first answer which the Chancellor gave, it seemed to us that the £50,000,000 included no such subsidies already agreed to by the House, whereas from his reply to a further Question asked by my hon. Friend the Member for Don Valley (Mr. T. Williams), it appeared that, in fact, it might well be that on further inquiry the Chancellor would find that some of these subsidies were included in the £50,000,000.

I want to ask a few direct questions. First, is the subsidy on milk, which is being operated in the first instance for the first three months of this year, and which amounts to about £3,000,000, included in the £50,000,000? It is clear that the subsidy of £3,000,000 was announced in order to prevent a rise in the retail prices of milk. Is the whole of that amount included, and if so, in assessing the annual charge on the £50,000,000, has there been included not merely the£3,000,000 in respect of the first quarter, but an estimated sum for the remainder of the year? In this connection, may I point out to the Chancellor that I heard with great interest his statement that the policy had been decided on only after most careful examination. If that be so, I hope he is certain that, whenever payments such as that to which I have just referred, are being made, those payments will be made only after the most careful examination; for, to take the case of milk, after checking up the farm costs of production of milk since the war began, I must confess that I cannot for the life of me understand how it was that the Ministry—if the Ministry were responsible for the decision—could find good cause for giving a subsidy of 3d. per gallon. In the House I am often "chipped" a little about the experience of the Co-operative movement and especially their farming experience, and as we are often charged with never making adequate surpluses on Co-operative farming, I will mention that I have looked up the costs in respect of milk and I cannot find any justification, on the basis of those costs, for getting another 3d. per gallon from the Government for at least two out of the three months, although it may be that 1d. or 1¼d. would be justified. I should like to be told on what basis the Ministry checked the costs, and what kind of costs was produced.

Secondly, I should like to know how much, if anything, of the subsidy on meat, given to prevent meat prices rising, is included inthe£50,000,000. I should like also to ask the Chancellor, in connection with the careful examination to which he referred, whether he has had reported to him, and whether he has considered, the course of events in respect of meat during the last two months. On 30th November, the Ministry of Food decided to de-control all livestock markets, and those markets remained de-controlled from 30th November to 15th January of this year. What was the result? In the course of that period, the livestock prices for beef, taking the best grade, rose from 48s. a cwt. to 64s. 6d. a cwt. We then found that that price for best-grade beef was stabilised after there had been that extraordinary rise of 16s. 6d. a cwt. or about 34 per cent. If the payment made by the Government to prevent meat prices rising depends upon allowing that kind of thing to happen, it will be of no great consolation to the consumers. I should like to know how the Government could possibly have lent themselves to such a policy.

Thirdly, in the case of wheat, does the £50,000,000 include the previous rate of subsidy on wheat or the new rate of subsidy, with the alteration in the standard price? As far as I can see, this alteration means that the standard price is raised from 10s. to 11s. a cwt., or from 45s. to 49s. 6d. a quarter. On looking at the world prices of wheat to-day, even allowing for the rise in the markets as a result of war conditions, I find that the price of 49s. 6d. compares with prices which vary from 34s. and 35s. a quarter for hard Manitoba and North American wheat down to about 29s. 6d. and 30s. for the softer wheats. Before we can say what is the exact value of this sum of £50,000,000 to the consumers, we ought to know exactly how much of that particular subsidy is included, and what justification there is for it. I am sure the Chancellor will not think I am putting these questions in any party sense, for all of us want to pool our resources from the economic point of view in order to attain our great objective of winning this struggle. If, in regard to agriculture, we are to follow the line that we can expect an increase in production and a maximum contribution to the national task of winning the war only by offering a price inducement, what answer will the Government have to any other class of workers engaged in production, whether it be shipbuilding, munitions, coal-mining or anything else? If price inducements are offered to the farmers, and to the landlords behind them, in order to persuade them to increase their output in the national interest, then the Government will have to begin to admit the same principle in the case of the organised workers of the country.

I want also to ask—and it is essential that we should have this information, and therefore, I hope these questions will be answered seriatim—how much of this amount of £50,000,000 Includes losses to the Treasury in issuing supplies, now owned by the Government, of certain commodities which I will mention. In the case of imported meat, although I have no information and cannot tell what have been the fluctuations in respect of the Government's buying prices, I know that there was a very grave shortage of imported meat during the early weeks of the year. Then, owing to the policy of the Government, there was such a run on home-killed meat that finally, when there was a grave shortage of home-killed meat, the Government had to increase the issued supplied of imported meat, whether they could be spared or not; and there was an increase in price of 1d. per pound, so that the type of meat usually bought by the poorest people went up in price. May I have the same information as to what loss, if any, is included in the £50,000,000 in respect of imported bacon, and how much is included in respect of home-produced bacon? May I also be told what losses are included in respect of imported wheat in order to keep the price of flour stable under the new arrangement by which the Wheat Commission is being put into cold storage and the levy on flour for the wheat subsidy is no longer collected from the mills? How much is lost at present, particularly in view of the recent position with regard to feeding stuffs, on imported oats, maize and fats? I ask these questions in the hope that the information can be obtained, because later in my remarks I shall ask some questions about the policy with regard to these commodities. When we begin to see how the £50,000,000 are allocated among these things, we shall be able better to form a judgment as to what is the economic value of the policy which has been announced.

At Question Time on 31st January, some of my hon. Friends also raised the question as to how much of the £50,000,000 is offset by Government profits in handling commodities other than those mentioned by the Chancellor. In the case of dried fruits, for instance, I mentioned in the House some months ago that when dried fruits purchased in June and July for shipment in August were requisitioned by the Government, this sort of thing happened. Currants which we had bought at from 30s. to 38s. were invoiced back to us at 42s.; dates, bought at from 12s. to 20s. were invoiced back to us at 35s.; dried apples bought at from 46s. to 53s. were invoiced back at 70s.; dried peaches bought at from 46s. to 50s. were invoiced back at 63s.; pears bought at from 46s. to 63s. were invoiced back at 70s.; fruit salads bought at from 45s. to 50s. were invoiced back at 70s.; sultanas bought at from 35s. to 46s. were invoiced back at 56s. Of course, it may well be that the Government, in dealing with the control of commodities of this kind, may be taking a forward view and may be trying, as much as possible, to average out over a period what will be their costs and what may be their losses, but the Chancellor will see the importance of the question. I think the hand of the Treasury has been very strong, first in the "negotiation of margins to the trade, and secondly in the formulation of the principles of the Prices of Goods Act in order that, with the passing of that Measure by the House, the inclusion of replacement costs in the traders'margins would, as far as possible, be ruled out. That is a very important point. If the Government are doing this for themselves in their own trading operations what is being done in relation to outside trade? I should be glad to have some information about that matter. There may well be other commodities dealt with on the same lines. I have mentioned butter and dried fruits. No doubt the Chancellor of the Duchy of Lancaster would be able to mention others.

Mr. Kirkwood

What about whale oil?

Mr. Alexander

I am coming to that but before I deal with the commodity which my hon. Friend has just mentioned I want to raise the question of how the Government have missed markets in certain commodities. It is all very well to get a great deal of publicity and to impress the public with the idea that the Government are going to "temper the wind to the shorn lamb,"—the consumer in this case—by means of this£50,000,000. I have been looking into the figures of taxation on certain food commodities. We did not like the proposals which the Chancellor made for sugar taxation and the figures which I have obtained go to show that the receipts from the Sugar Duty in the financial year 1938–39, were just under £13,000,000. Subsequently, in two bites, a small bite in the main Budget last April, and a special bite in the War Budget of September last, the Chancellor put another £22,500,000 intaxation on sugar alone so that in a full year he is getting in taxation on sugar £35,500,000.

At the same time he is receiving increased revenue from the Tea Duty as a result of the last adjustment which he made. He will receive in revenue from tea this year £10,500,000. Therefore, those two items of food alone will yield, on a war-time basis of taxation, a sum of £46,000,000, which is a very substantial set-off to the £50,000,000 suggested relief to the consumer. There does not seem to be a large margin between the two figures. I would ask the Chancellor to explain what relation there is between the special increases of revenue accruing to him from the taxation of food and his economic policy when saying, "I will provide from the Treasury a sum to arrest any rise in prices to the consumer. "This is rather interesting because it is clear that the increase in the duty on sugar and tea must be passed on to the consumer in order that the revenue may be maintained.

Sir Robert Tasker

Would the right hon. Gentleman kindly repeat the figures which he gave in regard to sugar taxation?

Mr. Alexander

I hope the Chancellor of the Exchequer will accept my figures as correct. I have tried to get my own picture of the situation from the financial White Papers. The yield from the Sugar Duty in the financial year 1938–39 was £12,985,000. The expected increase in the yield from the Sugar Duty as a result of the Finance (No. 1) Act of 1939 was £4,500,000, while the expected increase as a result of the increased duty put on in the Finance (No. 2) Act of 1939 is £18,000,000. The total estimated for the current year is £35,485,000 and the figure in respect of tea is £10,500,000.

The next point which I come to is this. How far has it been necessary to incur losses (by having to acquire Government stocks, at such prices as could be got on the open market), in order to prevent a rise in prices to the consumer? Was the necessity for this step due in any case to a failure to stock reserves before the war? I know that we had reserves of wheat and that reserves of one or two other food commodities were obtained later, but it seems to me that there were other reserves which might have been got at favourable prices. In the second place, was the necessity for this due at all to the failure to buy as early as opportunity offered even after the war had started; and in the third place was it due, in part, to the failure to buy or charter tonnage for the freighting of British produce, at a time when the prices either for buying the tonnage outright or for chartering it, were such that it might have been done much more favourably than was possible later?

I wish to say a word at this stage on the question of wheat, maize and oats. I think it was a very good thing that the Government decided some time ago to build up reserves of wheat, but I must say it is difficult to understand what has been going on since with regard to the acquisition of wheat supplies. I try to get my own information from the world market quotations. If I take the price of Manitoba wheat as an index I find that only a week or two before the war it was standing at little more than 50 cents. There was a steepish rise just before the outbreak of war and on the day of the outbreak of war, Manitoba was standing at 68 cents. There was a very quick rise just after the outbreak of war, as nearly always happens, but after that, prices sank until for a period of over two months this wheat never appeared at much above 72 or 73 or 74 cents. It has always seemed to me that there was a complete failure to deal with the real situation in this respect, especially when we remember what the Prime Minister said earlier to-day about what a good thing it was to have agreement and co-operation within the Empire.

Why did we not make a really good and effective deal with Canada when that wheat was at prices like 72 and 73 and 74 cents? We have seen it go up to much nearer 100 cents and we have seen sympathetic rises in the market in relation to other classes of wheat. To take as an example of other wheats Australian wheat in 480 lb. bags, we find that on 25th October it was 19s.; on 29th November, 25s., and on 28th December, 25s. 9d.—a rise of 6s. 9d. on the price since October. I must say that I was disappointed at the fact that the Government's dealings in Australian wheat seemed to come so late. If we make deals which are unfavourable to us, both as regards time and price, obviously we shall be in the difficult position of having to pay either in the form of a rise in prices to the consumer or in the form of taxation to the Exchequer in order to make up for the lost opportunity. The Chancellor of the Exchequer may have been a little vexed with me when I interrupted him during his statement last week. He suggested that I was being complacent but I was not being complacent. I merely wanted to point out that it may well turn out to be the fact that this £50,000,000, this new charge on the Treasury, is merely a financial cover for economic mistakes.

I now come to a subject which has caused some bitterness among producers in our own country, namely, the grave shortage of feeding-stuffs. I make this suggestion to those who are responsible—and I think it is important—that contrary to what seemed to be the usual state of affairs, in the early part of 1939 maize was often equal to or higher in price than foreign wheat. Having regard to the difficulty of keeping some classes of maize for any time, I can well understand that it was difficult for the Government to buy maize under those conditions. But when one sees the position of maize prices after the war broke out, with the prices obtaining not merely at distant ports in South America and South Africa but in he nearer ports, then it seems we must have been very slow. Please do not think that I am necessarily attacking the Ministry of Food, as such, or the particular department within the Ministry which might have been handing that kind of dealing. I am sure in my own mind that the Treasury would have a great deal to say about the time of the purchase and the price to be paid and as to whether it was to be bought at a near port or a distant port, and whether a nearer port required dollar exchange and a distant port did not require dollar exchange. But before we can arrive at a judgment on the Chancellor's policy which he announced on 31st January we ought to know in regard to matters like that, what the Treasury think they are saving in respect of these great food commodities by their bars and controls on foreign exchange in these transactions. We should also know how far that is set off or is it more than set off, by the charge on the taxpayer which must accrue if he has to put £50,000,000 into increased borrowing on the general Exchequer account. We shall be glad to hear from the right hon. Gentleman on that point.

Let us now take the case of fats. I see that the Ministry have just increased the price of raw materials for the manufacture of dripping. In war-time, dripping is a very important commodity and next week the price to the consumer is to be increased. I happen to know that the Government were offered considerable quantities of premier jus, an imported fat used for rendering. We were offered it at £19 or £19 10s. a ton in September but the Government did not choose to buy.

The Chancellor of the Duchy of Lancaster (Mr. W. S. Morrison)

Where from?

Mr. Alexander

New Zealand, South America and other places. In fact that was not done and in a short time the United States were raising the price of similar goods very rapidly. As a result of American pressure there were much higher prices, and then someone in the Ministry of Food seems to have got busy and it was reduced to something like—I can only deduce the figure—£30 or £32 per ton, which means that the issue to the general trade would be at round about £37 to £40 a ton. If that sort of thing has gone on in Government buying in other directions, simply through failure to seize the right opportunity, then we ought to know about it. Whether these mistakes have been due to Ministry control or to the Treasury I do not know. It is for the Minister to decide where the real responsibility lies but it is not much satisfaction to the consumer to say that you are going to seek to check the rising prices by putting another £50,000,000 on to the taxpayer. I hope the Chancellor of the Exchequer will give us a little more explanation of the results of the careful examination of the position which he made before he issued his statement.

I take next the case of the commodity mentioned earlier by my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood) namely, whale oil. Let us be fair. I think that few better purchases can have been made in the history of matters of this kind than the purchase of whale oil on behalf of the Government some months ago, but when I see that whereas the prices of both the Japanese and Norwegian crops probably did not go to more than £14 or £15 a ton, whereas the price of whale oil to the trader to-day is nearer £25 a ton, then I am just a little doubtful as to the policy which has been pursued. Of course that is the real reason why the price of margarine is going up to 9d. and 7d. instead of 8d. and 6d., and, let me point out, this is one of the foods of the poorest people, the price of which the Government is making no attempt to keep down.

I am concerned also with the question of oats. The Chancellor of the Exchequer must watch the question of Government expenditure in respect of price inducements at home. We are now fixing the oat price for feeding-stuffs at 11s. a cwt., and for human consumption at 14s. 10d. The Minister of Agriculture stated at a meeting the other day at the Farmers' Club that this' price represented an increase over the pre-war price of over 100 per cent.—I think that the figure is about 125 per cent. But this was only because the Government was so slow in controlling that particular commodity. In the meantime when feeding stuffs were short the farmers sold on the free market what they could spare and oats were put up to 50s. a cwt.; afterwards they could demand a much higher control figure, nearer the 50s. a quarter. Hon. Members on the other side of the House may not be interested in growing peas but in selling them. Last week English peas could be bought at £75 a ton which were being sold pre-war at £24. The working classes for the next two or three months will have to be without green vegetables after the experience of this hard weather. We are paying the British farmers three times, not double, the price for home-grown peas and apparently no attempt has been made on the part of the Ministry to take any control.

I come to my final point which is one of very great substance to us on this side of the House. We listened with very great interest to the speech of the Chancellor of the Exchequer on the revised Budget in September. I should like to quote two passages from it: Let us always remember, in all the efforts we have to make on the financial side of this war, that except in so far as war is financed either out of the proceeds of taxation or from the proceeds of loan which come from the genuine savings of the nation, it can only be financed by methods or out of sources which are essentially inflationary'. I do not think the Chancellor of the Exchequer will want to depart from that. The other quotation reads: It follows therefore, I think, that it is the first duty of the Chancellor of the Exchequer to use the instrument for which he is specially responsible to help curtail civilian demand and to make sure that civilian expenditure is directed as far as may be into proper channels."—[OFFICIAL REPORT, 27th September, 1939; cols. 1363–4, Vol. 351.] It seems to me that the Chancellor of the Exchequer's policy is to prevent inflation through rising prices, but he will defeat the whole purpose of it, unless there is always the corollary to a subsidised price to the consumer, of the rationing of the subsidised product. As far as I can see on the items which the Chancellor of the Exchequer has enumerated, no commodity is yet rationed. It is true meat is to be rationed, but not until 11th March. That is quite a considerable time ahead, and rationing will come then only when producers' prices have become very high and there has been an undue inroad upon our reserves, especially at home. If the price of a commodity is kept down, even if it is the very kind of commodity which we on this side of the House, from the social point of view, would desire to see most freely used, unless it is properly rationed such a demand may be made on it because its price is kept down when there is a general rise in prices that the non-inflationary effect will be defeated.

If we are to borrow money to induce internal consumption there will be inflation. The Chancellor's policy should go hand in hand with rationing. Mr. J. M. Keynes has pointed out in the "Times" that this is a method of preventing a rise in wages by subsidising the cost of living but in making money go further it aggravates the problem of reaching equilibrium between spending power in people's pockets and what can be released for this consumption. It seems to me that we ought to have an answer on that point.

I am quite aware that from the manner in which the Chancellor of the Exchequer prepared his statement on the 31st January he is conscious of this point in the economic policy which he has set himself in the course of his conduct of war finance. While in the main this afternoon I have tried to put my questions and comments not upon a purely party basis, but in an objective way, I think we on this side of the House, and, indeed, people in many other parts of the House, will wait with very great interest to hear how the Chancellor of the Exchequer fits this particular part of his policy into his war financial mosaic. When we have got his answers we shall consider them very carefully and maybe at a later stage will have something more to say.

4.53 p.m.

Mr. Kingsley Griffith

I should like first to express—and I think it is the general feeling of this House—our gratitude that in the midst of his tremendous responsibilities the Prime Minister gives to us from time to time a periodical statement on the war situation. We hope that these statements will continue.

I would like to mention one other instance in connection with the examples given by the hon. Member for Hillsborough (Mr. Alexander). My information comes to me from the Provision Exchange in Liverpool to the effect that hundreds of tons of ham were taken over by the Controller on 16th October at £93 a ton and were sold back to the original holders at £126 per ton for distribution. I put that forward for what it is worth from what I believe to be a reliable source. It invites some kind of explanation.

It is apparent to all of us that the arrangements for the production and distribution of food are major factors in the victory that has to be won, and in order to win the victory the Government have very rightly taken a large measure of direct control in regard to many essential commodities. The Government are the first buyers of stocks and conduct the first stages of distribution. They fix the wholesale and retail prices, limit purchases of the individual consumer, and now it is announced by the Chancellor of the Exchequer that they are to subsidise in order to maintain price levels. All these things would make Cobden turn in his grave. I would ask how far this policy has been successful. All these activities of the Government are so many aspects of rationing, and are all devoted to the object that every one should have enough as far as supplies allow. Since supplies are limited, that takes with it the corollary that no one should have more than enough.

There is a positive as well as a negative side of rationing. Rationing should ensure supplies wherever they are needed and should limit them where they are not needed. On that point I am struck by the entirely different connotation which the word "rationing" has for the civilian at the present time, compared with its meaning to me when I was a soldier in the last war. Rationing to the civilian means always restrictions. There is so much that he cannot get, and he must have coupons which allow him a limited quantity. All that side of it is purely negative. To me as a soldier in the last war rationing meant something positive. It meant that there were definite supplies of essential stuffs which were to come to me and I was assured of them whether at home or abroad. Even in such difficult places as in the front line, where the only communication was by a long duck-board track, the rations never failed to come up. I think that arrangement was the most brilliant achievement of the British Army in the last war.

Why is there this difference in the meaning? I think it is because the soldiers at the front had to receive their rations at all costs, whereas the consumer at home had his needs limited, and limited also by his purchasing power. This question of purchasing power of the people with regard to essential commodities has really made nonsense of the rationing scheme of the Government. In the case of bacon it is estimated that the price has gone up by 31 per cent., and people who used to buy the lower grades often find that they cannot get them. The result of the bacon ration has been to limit supplies to the rich who can afford to cash their coupons. There has been a surplus and consequently the ration has had to be doubled. People who cannot afford the price do not get the bacon, whereas people who can afford a price of 2s. may have eight ounces instead of four. It defeats the whole purpose of rationing.

I welcome the Chancellor of the Exchequer's statement in regard to the £50,000,000. It is a recognition of the necessity of regulating prices without being pinned entirely to the purchasing power of the individual consumer—a recognition that people have to be maintained in regard to essential commodities, even at an artificial price. I am only concerned to-day to ask whether these measures have been taken in time and whether they are adequate, and that must depend to some extent on the actual figures on the cost of living. When I come to that, I am departing from the calm waters of generalisation and coming to the stormy seas of facts, where I may be torpedoed at any moment by expert opinion. But, according to the Chancellor's statement on 1st January, the increase in the index figure of the cost of living between 1st September and 4th December was 10 per cent. I regard that figure as having no real relevance to the situation whatever. It does not really represent the increased burden on poor households.

I have here a statement from the Annual Business Review of the "Manchester Guardian," dated 30th January, which gives for just those three months comparative prices in certain groups. The rise with regard to all goods is given as 18 per cent., with regard to cereals and meat it is 28 per cent., and with regard to other foods it is 32 per cent., and in the table there are also given the corresponding rises in the first three months of the last war, with which I will not weary the House, but I will merely make the observation that the rise in those months of 1914 was much less steep than it is in the first three months of this war. I also have figures with regard to certain specific commodities. I am not at liberty, I am sorry to say, to give the source of this, because it is an official source and my authority is rather afraid of being shot at dawn under the Official Secrets Act if his name is given, but it is a source which I regard as authoritative.

The price of sugar has increased from 2¼d. before the war to the present price of 4½d. That is nominally a rise of 100 per cent., but you have to take into consideration the additional duty and, without that, I think the rise represents something like 56 per cent. The pre-war price of butter was 10½d. to 1s. and it is now up to 1s. 7d. There is a rise of 60 per cent. The cheapest cuts of imported meat have increased from 4d. to 8d., and that is complicated by the fact that a great many people who could afford only the lower grades cannot get them at present. With regard to oatmeal, I have figures of 1s. 10d. a stone pre-war, going up now to anything from 3s. 4d. to 4s, 4d. These figures suggest that, if the object of the Chancellor in his policy of trying to stabilise prices at the expense of the taxpayer is to prevent inflation, he is not actually directing that fiery steed, inflation; he is only catching on to the last hair of its tail. It does not come to more than that. Since metaphors have not yet been rationed, perhaps I may try a new one. It seems to me that one might take the essential commodities which are necessary to life and imagine them as being piled into a heap of, let us say, carrots, and the consumers are the poor donkeys, tethered by ropes of various lengths, trying to get at them.

The Chancellor says, "I have pegged this heap of carrots so that it will never get an inch further away from your noses," to which the unfortunate donkeys are bound to say they are very grateful, but unfortunately they cannot get to the carrots as it is; they are already out of reach. With regard to so many of these commodities I am afraid it is the case that some of the ropes are very short.

Some people do not get any elasticity out of the distribution of the additional money required by the war. I do not wish to belittle the concessions recently made by the Chancellor to the old age pensioners. I do not think they are illusory, though I do not think they go far enough, but I say that for them the rope is still tremendously short with regard to the most essential of commodities. For those who are dependent on payments for workmen's compensation and the Unemployment Assistance Board, for all those who are earning wages in trades which are not helped by the war but in many cases are injured, the struggle is becoming more and more bitter and difficult. I accept the answer given by the Chancellor the other day to my colleague the hon. Member for Middlesbrough, East (Mr. A. Edwards) when he said you could not apply this policy of subsidies generally, that it can necessarily only apply to a limited range of suitable commodities. I think that is so, and it is desirable that it should be so, but I ask that when the policy is applied it should be made a reality in order that the supplies of essential commodities may really be available for the people who need them.

I am almost tempted to think that, if there is discrimination in supplies to one class of the community and another, it should be on an occupational basis rather than on a basis depending purely on purchasing power. I can imagine that it might be necessary to say with regard to miners and steelworkers and those engaged in industries of that kind that they may need more in the way of meat and butter than other members of the community. When one puts against them, say, a Cabinet Minister, whom one supposes to be all brains, a different kind of diet might be appropriate. Having my memory of the war, I would feel that, just as in the front line trenches a private soldier needed just as much in the way of rations to keep him as a brigadier, so if we are really all together in this war, if we are really righting it together, it can be only by the united effort of people who are at least given a basis of subsistence and, as far as essential supplies are concerned, it should be the object of the Government to see that we are all in a position to fight the great fight and finish our course.

5.9 p.m.

The Chancellor of the Exchequer (Sir John Simon)

I am glad of the opportunity of dealing, at rather more length than is possible in answering even a Private Notice Question, with the important topics which have been raised by the right hon. Gentleman opposite. He is an expert on the details, as indeed are one or two others on that side of the House, and I am glad at this moment to have the assistance on either side of me of my colleagues who know the details very well. I do not know any subject in which it is more important to distinguish between an examination, a close examination I agree, of the principles of the economic policy which is being pursued and the myriad details which arise when one applies them than this very subject of controlling food prices. I will do my best to deal with some of the points raised by the right hon. Gentleman, and I have in mind what has just been said by the hon Member for West Middlesbrough (Mr. K. Griffith). A large number of the matters of detail will be dealt with later by the Minister for Food. First let me state my own conviction of the general significance of this policy. I agree entirely, of course, that, taken by itself, unless it is accompanied by other things, it is not really a complete policy at all. I am entirely of the view which Mr. Keynes expressed in a letter which I have read in which he said it was rather in the nature of an ingredient in a comprehensive policy. I did indeed indicate as much very clearly in the statement I made on 31st January, because I said it was a contribution, but other contributions were needed also. The right hon. Gentleman opposite made one contribution very plain when he himself said that the policy of rationing the rise of prices might be regarded as a contribution to rationing the rise of wages.

I agree also entirely that, with definite exceptions, you cannot wisely take deliberate steps, Exchequer steps, to make articles of consumption cheaper than they would otherwise be unless you are also to take steps to secure that the result will not be an increase in their consumption. I have the conviction that this is a problem in which there is no single panacea. It must be attacked not from one but from many angles. Therefore, I wish to make it quite plain that I never advanced this proposal with the idea that it is a complete policy in itself. I think it probably is the general view of the House that it is, as a matter of economic policy, a sound thing to try to get Exchequer assistance, if necessary, to keep fixed, or limited, or cheapened, the prices of certain essential things. Indeed, I appreciate that the right hon. Gentleman did not challenge that proposition, though he is naturally anxious to put a number of questions about the way it is to be done. It really is clear that there are two fundamental difficulties in applying a policy of controlling prices. One is that, unless arrangements are made which will prevent it, if you keep prices down you may diminish supplies and you may get into a situation in which you do more harm than good. So far we have been careful in our price policy to keep this first difficulty in mind.

There is a second difficulty, again the application of a very simple economic law, which is that if you take artificial steps to keep prices down you may, as I have said already, so stimulate demand that you may actually encourage unduly the consumption of what may be a commodity which you do not wish people who can afford it to buy to an excessive extent. Those are two obvious difficulties. Of course, we have had to see, as far as we could, that both are avoided. Let us see what has happened. I take in good part the challenge that in this or the other respect the Government is paying too much to British agriculture. It was quite a relief for me to hear this on Thursday. On Tuesday the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was describing the attitude of the Treasury to British agriculture as being one that could be summed up in the word "mingy." I take "mangy" to be one of those words which Lewis Carroll would have called a portmanteau word, being made up of "mean" and "stingy. "It was a relief to hear to-day the rebuke that the Treasury were pouring out money with a lavish hand. The truth is that war con- ditions do, for a variety of reasons, increase the cost of agricultural production. They do another thing. War conditions make it essential for us who live in this island to promote and encourage an adequate home production of food.

Whatever be the particular economic views of one or the other of us, we all recognise that at a time like this it is essential that the Government, and even the stringent and the hard-hearted Treasury, should be ready to do all that can properly be done in that direction. We anticipated these things before the war came, and the assistance in different forms which has been poured out in a number of directions has its justification when we consider that the home production of food is more important than it was before, and that before the war is over it may be more important still. Therefore, I am not in the least disposed to offer an apology because we have thought that was the right policy to follow. The result is that it undoubtedly tends to increase the price of British farm produce. War conditions also tend to increase the price of many things that come from overseas.

The right hon. Gentleman said something about the want of skill with which bulk purchases of various commodities have been made overseas. I think there is a gretty good answer to that. Apart from the obvious reflection that it is always easy to job backwards and pronounce your criticism when you have seen the course of prices, there were many other considerations that had to be borne in mind as well as the immediate question of price. There was the question, for instance, of whether payment would mean a loss in a currency which we particularly wished to conserve. There was the question of whether the shipping provision was one which made it on the whole better to draw supplies from one quarter than from another. The right hon. Gentleman thought we ought to have done better than we did in getting agreements with foreign countries. I would observe that it takes two to make an agreement, and I do not suppose that the right hon. Gentleman suggests for a moment that we should dictate to the Dominions the price at which we should buy their produce. I think, looking back, that the Ministry of Food and the Treasury acting in conjunction have not done so very badly.

The immediate reason why a decision was reached that we must in certain cases subsidise food prices—not as the whole of the policy, but as a contribution to it—was what I have described. It was, I admit, and as I have always admitted, an effort on our part to obviate, or at any rate to discourage and discountenance, as far as we could, the spiral movement which all of us want to do everything we can to prevent. Then comes the second difficulty—how are we to cheapen prices of commodities by Exchequer subsidy without at the same time to a certain extent defeating our own aim by enabling the cheaper price to attract a larger consumption? Manifestly—and here I agree with the right hon. Gentleman—that must be done by rationing in cases where it is necessary. It is not, however, as necessary in the case of some foods as the mere theorist might suppose. It is generally agreed by all who have considered it that it is not necessary in the case of bread. The consumption of bread in this country is extremely inelastic. It varies much less than might be supposed. If there is a cheapening in the price of the loaf you do not find the population rushing into the bakers' shops and saying "Now let us have a good blow out. "It is equally true, and a serious fact which should be always in our minds, that in the poorest home bread is the last thing people would go without. They may have to cut off something else, but it is not the case that the consumption of bread varies, as one might expect, with the price as much as that of other commodities. There is another case in which I would not expect to see rationing imposed, even though we do use public money to try and keep down the price, and that is milk. It seems to me that the social and dietetic arguments for the encouragement of an abundant supply of milk are quite strong enough and that we should not impose rationing. I agree with regard to meat and other articles of that sort that we have to control consumption and that rationing must accompany a reduction in price. That is the principle on which we are proceeding.

There is a further great difficulty in the economic issue which arises. I mention it merely because I wish to help the House to analyse the position. It is that if you keep down by Exchequer subsidy the prices of food, you leave people with more money than they otherwise would have to spend on other things. It can be argued that by thus reducing by Exchequer subsidy the amount that people have to spend on essential things you are encouraging the maintenance of the level of what I may call general consumption at perhaps a higher level than we can afford. I have never concealed my view, and I have taken many occasions since the war began to proclaim it, that we shall carry through this tremendous struggle to a successful issue only if every kind of person, other than the poorest of the poor, will recognise that there must be for the time being a certain reduction of standards. I do not believe it is possible otherwise to face the enormous burdens involved. On the other hand, I think this policy of reducing by Exchequer help the price of some of the essential articles of food has this great value, that it not merely contributes to preventing the rise of the spiral of prices and wages, but it also helps people who are not in receipt of wages but may be dependent upon small incomes and allowances. These are some of the general considerations which I have in mind, and I hope I have stated them in a way which is not controversial, because there never was a question like this question of food prices in which it is so easy to get oneself involved in a series of interesting details, figures, prices and points of this and that. I propose steadily to hold to the essential principle that ought to lie behind the whole operation.

I turn now to the application of this general principle and will start with wheat. The Ministry of Food is not only the sole importer of all cereals but it fixes by Order the prices to be paid for home produced wheat and oats. Thus, at that end of the scale the Government is the master of the wholesale supply. At the other end of the scale, which affects the ordinary citizen, we have the quartern loaf with a price of 8½d., varying a little in different parts of the country. The whole question is how are we to pass from the outlay of the State in getting these immense supplies of wheat, partly from abroad and partly in this country, at whatever price has to be paid, down to the loaf on the breakfast table. How does the matter stand as between home supplies and imported supplies? Home millable wheat is about one-fifth of our total wheat supply. We get four times as much millable wheat from abroad as we get at home.

What are the Government doing under this policy? We are acquiring wheat by buying it in various markets, in some cases under a longer contract than others, and by providing the ships to bring it here—chartering them or otherwise securing transport. We are providing this wheat for the millers for the purpose of having it ground into flour at a price which is much below what could possibly be justified if it were not for the Exchequer subsidy. The price of straight-run flour has remained virtually unchanged at 25s. 6d. per sack, including the Wheat Act levy of 3s. 6d., since August, before the war; but if the Government were selling the wheat to the millers in the ordinary way, that is, to recover the cost, then the flour would cost about 41s. per sack. If we were to raise the price of flour to 41s. per sack then instead of the quartern loaf being what it is to-day, 8½d., it would have to be raised by 1½d. to 10d. We are, in fact, selling to the millers at a much lower-price than would be the commercial charge in view of what we have had to pay for the wheat; hence this subsidy.

It is a very large subsidy. It is a subsidy of £480,000 a week. That provides cheaper wheat for the miller and cheaper flour for the baker, enabling him to sell a cheaper loaf and cheaper flour for kitchen use. That is the nature of the operation. This £480,000 includes nothing in respect of any pre-war commitments, nothing whatever, and that there should be no misunderstanding I would add that this £480,000 is required by reason of the increased cost of imported wheats. It is inevitable that the price of imported wheat should have in it some elements which are war costs—freight, of course, and the actual rise in the price of the wheat in foreign markets in many cases. There is the further complication that we have to consider not only price but where ships are available. If there are a great number of neutral ships in the Plate which we can charter, that is a reason for buying Argentine wheat. On the other hand, we have also to consider which is the market in which we shall be required to pay in dollars. It is one of the chief preoccupations of the Chancellor of the Exchequer and of the Government and of the whole House of Commons, to conserve our dollar account in every way we properly can. I may have seemed to state things with a simplicity which would be more fitting in a school than in a learned and political assembly, but I think one sees these things better, however well instructed, if some of the simple elements of our activities are stated in the way I have tried to put them.

Mr. De la Bère

There is one question I should like to put regarding wheat, to which I have given some study. When war broke out wheat was at a lower price than it had been for 300 years, and at the time when the Government were buying their reserves under the essential commodities reserves legislation it must have been at a very low price indeed. Is it not a fact that the wheat which they bought then is now really being sold at a figure which gives a substantial profit to the Government, and that might assist the Government perhaps to reduce the figure of £480,000?

Sir J. Simon

I am obliged to my hon. Friend. He has put his finger, as I think he often does, upon an interesting point. It is true that the prices were very low before the war but, of course, the wheat that was being bought in that way was constantly being turned over, because one cannot keep it indefinitely. It was constantly being replaced. If ever there was a case in which the common commercial principle as to replacement cost would appear to be justified it would be a case like this. My hon. Friend knows very well, as do all who are engaged in business, that, generally speaking if there has to be replacement of a commodity held in bulk in large quantities in the course of trade, if the price of the commodity rises it is necessary to allow for that when the commodity originally stored is disposed of. That is so for a commercial reason which is well known. Supposing that instead of a replacement cost going up it came down; then, indeed there would be very great difficulties in ordinary trade if the original stock were sold at the lower price which was ruling. I am not disputing what my hon. Friend has said, but it would not be right to infer from that that the Government is making a profit. The Government is covering itself against that which has happened, namely, that there has been a certain fluctuation in prices during the time we were turning the wheat round to replace that which was originally bought.

Mr. Harold Macmillan

In estimating £480,000 a week as the cost of the subsidy has the Chancellor made the calculation at the present price, or is he averaging the whole amount, including the stored wheat?

Sir J. Simon

I should like to give an absolutely positive answer to that, and I would if I could. My belief is that the figure is an average, but I will ascertain whether that is so, and later in the Debate, when my right hon. Friend the Minister of Food speaks, perhaps he will be able to say.

Mr. A. Edwards

On that point, would not an auditor in the ordinary course of trade insist upon taking the actual or market price?

Sir J. Simon

That is a very common method of dealing with such a matter when drawing up a balance-sheet, but I am not talking about a balance-sheet. I am talking about the ordinary conduct of trade, and I am sure that on this point the right hon. Gentleman the Member for Hillsborough (Mr. Alexander), who knows these subjects very well, will confirm me, though on other points we may differ.

If I am not keeping hon. Members too long I want to deal in the same way with two or three other commodities. Take milk. Again I should like hon. Members to have the three or four essential facts in their minds. The retail price of milk has remained virtually unchanged since the outbreak of war. The figure in January of this year was 7d. per quart. The right hon. Gentleman pointed out that the Milk Marketing Board in January increased the "pool price," as they call it, paid to the milk producers. They increased it by 3d. a gallon for the months of January and February, but it is to drop to 2½d. in the month of March. Whether that is open to criticism or not is a separate question from the one with which I am dealing, but I must say, having seen some, at least, of the calculations—though it is not a matter upon which I have had to enter into any great detail—that I came to the conclusion that that addition was justified. There is no doubt at all that the actual costs which the dairy farmer has to meet have definitely increased. There is no question at all that feeding stuffs, and other things too, are more expensive, and I know that the greatest care was taken to endeavour to equate the two. From the point of view of the consumer of milk—the ordinary person, man, woman or child, who is involved—I think it would be unfortunate if there was any crabbing of what had been done, because there is no question that it has brought the most immense advantage to great masses of the population.

What has happened? In order to keep the price of milk at what it was on the date when the war broke out, the Exchequer is paying £235,000 a week, and if we did not pay that—this is the practical point which I want the House to appreciate—the retail price of milk in every home to-day, instead of being 7d. a quart, would be 8d. It is the fact that by this means we have saved the ordinary householder 4d. per gallon. I think that must be a very great satisfaction to Members in all parts of the House. I do not claim any special credit for it, but I think our policy in this matter has been justified by this practical result. The £235,000 is, of course, connected with the increased price paid to the dairy farmer. If we could have avoided the one increase we might have avoided the other, but I am prepared for judgment to be taken upon that, and I should be very slow to believe that the right hon. Member for Hillsborough would really wish the dairy farmers in this country and all who depend upon them to understand that in his view this extra provision should not have been made for them in view of the extra costs which they had to incur.

Mr. Alexander

I want to make this point clear. In the first place, we are not saying that without the subsidy you could meet the cost without a raising of prices to the consumer, and we want milk to be consumed, but the suggestion that we have avoided a price of so much as 8d. per quart instead of 7d. cannot be maintained, for on the ordinary trade negotiations between the producer and the buyer of the milk we should not have reached that position of 8d. unless you had given to the farmer a concession of 3d. a gallon. I say that nobody in the trade accepts the view that increased costs of 3d. a gallon have been incurred, and I say that the question was never properly examined.

Sir J. Simon

I do not want to get into a controversy on what is really a different subject. The right hon. Gentleman's information may, in the quarters where he has made inquiries, be right. All I know is that there is a great body of opinion in this country which will support us in our action in allowing the additional payment to agriculturists. Yet, we have avoided an increase in the cost of milk to every household.

Mr. George Griffiths

I should not like it to go out that the price of milk to-day is 7d. per quart all over the country, because the Minister has issued an Order stating that in rural districts, and in urban areas with a population of less than 10,000, it is to be 6d. as from 1st February.

Sir J. Simon

I am much obliged to the hon. Member for mentioning that. It would have been impossible to do that but for the decision we reached that we must devote public money to keeping down the cost. I turn to meat. Here, again, I will try to present to the House the broad picture as I see it. I am excluding odds and ends and am thinking of beef, mutton and lamb. Before the war our supplies of imported meat and home grown meat were nearly equal. The percentage of imported meat was 49; the home-grown meat was 51 per cent. As nearly as possible, each was half the total quantity. In the course of the war, the position has changed. All who were considering preparations for a possible war were concerned to plan the home food supply. One of the most important changes is that very large fighting forces have to be provided—indeed, specially provided—with meat, and contrary to the impression which some people have this meat is provided from imports. There are garrisons abroad who have to have not only the day-to-day supplies, as far as can be, but stored and refrigerated supplies for the future. Another thing that happens at the beginning of a war is that you want to fill up your cold storage warehouses as fully as you can. In ordinary times they may be only 40 per cent. full, but you want to put frozen meat away, in case later on you have difficult times to face. The consequence of all that is that the supplies of imported meat for ordinary civilian purposes is a good deal reduced, and you have to put increased reliance upon home supplies. Take the quarter in which we now are. Calculating the quarter beginning on 1st February, you will find that the imported meat for ordinary civilian consumption is 43 per cent., and that home-grown meat is 57 per cent. The House will see that home supplies are, in fact, more important to us now than they were.

Mr. Benjamin Smith

Does that calculation presuppose that the same equivalent of meat is released to the community as a whole, in weight?

Sir J. Simon

I am not speaking for the moment about how it is distributed to the persons who eat it, but simply of how much comes in to the Government who have the duty of dealing with it.

Mr. Smith

The right hon. Gentleman gave the percentages as 43 and 57. Are we to assume that they equate the percentages of 49 and 51 which applied before the war?

Sir J. Simon

I should think not exactly. I see the point, of course, but percentages may be very deceptive.

Mr. Smith

That is why I asked the question.

Sir J. Simon

I know as well as anyone that that is so. I remember being told by a learned medical authority in regard to a very rare disease that it attacked the human race at the average age of 45 years. When the details were examined it was found that there were only two recorded cases. One had killed a baby at six months and the other had carried off an old man at90. I am not likely to be misled in regard to percentages. The point I am making is that when you come to conditions of war, the home-grown supply becomes more and more important.

What have we done in this case? We have again made a contribution from the Treasury. We are losing on home-grown meat something like £320,000 a week. On imported meat we are, in fact, about covered. The question is, therefore, what is the right policy to follow? Home grown meat is not the food of the very rich. There are two qualities of it in the Maximum Prices Order, and the second quality is at practically the same price as imported meat. In view of the fact that more than half the civilian consumption of meat in this country today is of home-grown meat, it is manifest that very great quantities are being consumed by people of all kinds. We therefore came to the conclusion that the right policy was not to allow prices to rise, and we devoted this £320,000 a week to this purpose, instead of making the account balance and saying: "We are not losing anything on meat."

If we did not do this, one of two things would happen. If we limited it to the home-killed meat the price of this meat would go up by 2d. a lb. all round. If we made a common average it would mean putting up the price of meat all round by 1d. per lb. I think, therefore, that our policy is justified, and is a wise policy. Just as it is wise to keep down the prices of bread and milk, it is wise to keep down the price of meat. I cannot agree for a moment that, because this additional expense is due to additional payments for home-grown meat, it is an illusory relief. I do not think that anyone who considers the matters seriously will think so. The circumstances are such as have increased the costs of production of home-grown cattle. Feeding-stuffs is a very obvious example. I should say that, in the circumstances, this policy is as justified in the case of meat as in the case of the other commodities.

I have taken those three examples because I wanted the House to see, as far as I could make it clear, how the thing works. I submit that we have here a policy which I should like the whole House to support. I do not in the least wish to claim special credit to the Government. The right hon. Gentleman seemed quite concerned because this matter had received much publicity and had even been mentioned on the wireless. I have had nothing to do with that, but I should imagine that anything which cheapens the primary articles of food in every home in the land is likely to receive a great deal of attention in this country. I am not saying that it has not been tried before. It was done in the case of bread in the last war. There is a book written by Sir William Beveridge which shows what efforts were made and how constantly the arrangements had to be changed. We are therefore devoting the £1,000,000 a week for the purpose I have described.

I was asked by the right hon. Gentleman whether I had calculated, in this £50,000,000, things which were really more in the nature of subsidies than those I have stated. I did not include any grant of public money due to any pre war decision or announcement at all. Whatever has been previously done to assist farmers before the war, in regard to milk, cattle or other branches of agriculture, none of them is included in the figure I mentioned. I might perhaps mention that there is a small additional amount on bacon. We have reduced the maximum price of bacon by 2d. a lb. I must not go into the details of this matter because I fear I may be keeping the House too long.

Mr. Boothby

The right hon. Gentleman could not give us the figure for bacon?

Sir J. Simon

Yes, I could, but I was really afraid that I was being too long. [HON. MEMBERS: "No!"] Last Monday there was, as the House knows, a reduction in the maximum price of bacon by 2d. a lb. Down to last Monday there had been no call on the Exchequer in respect of bacon, which had been paying its way. We reduced the maximum price and, of course, increased the ration. In order to enable that cheapening to take place an Exchequer subsidy is now needed. The loss from the point of view of the Exchequer in regard to bacon is estimated—it can be only an estimate—at £80,000 a week. That is all I can say about it now. I have made this statement and I hope that I have given some information of interest to the House. I want to say only one word more in conclusion.

Mr. John Wilmot

Before the right hon. Gentleman leaves this question of how the subsidy is spread, what about sugar? How much is he providing for the reduced price of sugar?

Sir J. Simon

There is no subsidy on sugar. I am glad, in a way, that this point has been mentioned, because it reminds me of a point which was made by the right hon. Gentleman. He said something to this effect: "There are taxes on tea and sugar. Therefore you are drawing, by way of taxes, to that extent, a large sum with one hand at the same time as you are spending from the Exchequer with the other." The point is well worth examination, but if you are to go right back and examine the whole of the taxes on tea and sugar it will take you back a long way. I agree that one is entitled to look at it more particularly, let us say, in relation to last year.

Mr. Wilmot

The new imposts?

Sir J. Simon

Yes. You will find that we have spread this assistance wider, on bread, meat, milk and bacon. They are very important items, and what we have done is to prevent a rise in the food index that would otherwise have been about 12 points. Our £50,000,000 is now being spent in preventing what would be a further rise in the food index to the extent of 12 points. As the food index has already risen since the war began, it is most important if we can prevent it rising by another 12 points. The reason why we started this in December was to prevent a rise following the rise at the beginning of the war. I explained that there had to be a sort of step-up from peace conditions to war conditions. The addition that is made to the food index by those additions to the taxation on tea and sugar is hardly more than two or three points. I therefore cannot agree with the right hon. Gentleman on this matter. If he looks at this thing fairly I do not think it can be disputed, from the way in which the Exchequer relief is being given, that the prevention of what would otherwise be a rise of 12 points is very much better worth having on the whole than the burden—I have always conceded that it was a burden—in respect of the additional taxes.

Mr. Alexander

We shall be very glad if we can have a new statement of how the cost-of-living index is arrived at. It is an elementary sum that, from the increase in sugar and tea duties, the right hon. Gentleman is getting about £25,000,000, which is about half of what he is going to use in this new policy. It is difficult to understand why £25,000,000 received by the Chancellor from sugar and tea means a rise of only two points while his £50,000,000 means a reduction of 12 points.

Sir J. Simon

That might easily happen. It is according to the subjects which you choose. After all, bread is a pretty important article. I agree with the right hon. Gentleman that you must not make too much of this cost-of-living calculation. The hon. and learned Gentleman below the Gangway was quite justified when he gave us that warning. At the same time it has its uses as a standard of measurement if one wishes to compare one period with another.

I want to say only one concluding sentence. I recognise that what I have been trying to deal with is only part of a very large and difficult question. I should be the very last to suggest that this particular proposal should be treated as a complete and integral whole. I do not believe that the economic problems of the warcan be dealt with singly. It requires a combination of efforts with a great deal of patience and good will between all parts of the population. But I hope that this is a helpful contribution. If the country is to make an adequate war effort, as I know it is determined to do, then, as I have said more than once from this Box, all sections will have to make sacrifices. What I am trying to do now is to secure that at any rate we do not put upon the poorest of the poor the full weight of the burden which undoubtedly otherwise would fall upon them. In doing this I cannot help thinking that we shall find there is a very wide feeling of sympathy and approval.

6.1 p.m.

Mr. Ellis Smith

I think we shall all agree that the right hon. Gentleman the Chancellor of the Exchequer has made a clear statement. He referred again and again, as he has done outside this House, to the operation of the spiral, and he went on to say that whatever may be our economic views, we desire to prevent inflation. We on this side of the House, and the movement which we represent outside, agree with that statement; we also desire to prevent inflation. Where the difference between us starts is as to how this is to be done, and it is on that that I want to make some observations in order to put on record the economic views of myself and many of my hon. Friends. In our view, this is an important Debate, and it takes place at a very opportune moment, for speeches have been made outside this House by the Prime Minister, by the Chancellor of the Exchequer, by all the chairmen of banks in this country, and by many big industrialists. Their views have been stated in leading articles, in the financial columns of the newspapers, on the wireless, and in many other ways, but the views of the common people of this country have not yet been reflected in the same way.

Therefore, I consider that this Debate is taking place at a very opportune moment, because it will give the Chancellor of the Exchequer and the Treasury an opportunity before they prepare the Budget of considering the views of my hon. Friends and the movement which we represent. I have already referred to the fact that we desire to prevent inflation. We remember the experiences of the last war, and therefore we join in the desire to prevent inflation. The difference is in our attitude to this question compared with the attitude of other people, and, therefore, I want to place some observations on record in order that they may be considered against the real background against which this question should be considered. During the past 20 years we have seen in this country the growth of financial power to an extent undreamt of before that period. We have seen the growth of the big banks and the big insurance companies, and we have seen the growth of their rake-off with relatively no responsibilities compared to the responsibility that is undertaken by industry in general.

We have seen during the past 10 years, and during the past five years in particular, millions of pounds paid out in subsidies without any means test at all. I do not want it to be considered that I am orthodox with regard to the question of subsidies. I favour subsidies provided they are granted to meet a public need, but our criticism is that subsidies are paid very often to prosperous concerns without any means test at all. During the last three years we have seen an enormous increase in production and a great increase in the exploitation of the ordinary people, and prosperity has been built up on that increased exploitation. We have seen as a result of that an enormous increase in wealth. Those of us who sat here the other day and listened to the very interesting Debate that took place on agriculture were struck with the phrases used throughout the Debate. Finance for the fanners will be forthcoming, credit for the farmers will be forthcoming, and the Lord Privy Seal came in in order to assure his critics among his right hon. and hon. Friends that the money would be forthcoming.

In the last few hours we have seen the latest settlement that has been arrived at, and we consider that against the background of the way in which our people have been treated during the past 20 years. We find that as a result of this latest settlement the average return on the £1,200,000,000 capital of the five railway undertakings will be 3 per cent. With the guarantee of £3,500,000, that will be increased to 3.6 per cent., and when the maximum revenue of £66,500,000 is reached the average interest payable will be 4.7 percent. That compares with an average return of approximately 4 per cent. in 1929, which was one of the best peace-time years. We are bound to contrast that with the pay which ordinary soldiers are receiving, with the allowances which their dependants are receiving, and with the treatment of the old-age pensioners and the injured workers. To all these people, the cream of our land, who have built up this mighty country, the means test is applied in every case. Therefore, when we are considering the economic policy which this country is going to adopt between now and the termination of the war, it is essential that this background should be considered.

When the Chancellor of the Exchequer made his statement of Government control of food prices, I for one approved of it. I think more should have been done to prepare for the situation than has been done, but it is very easy to say that now. I happen to be one of the few Members of the House who pressed for preparations to be made. Within the limits of the situation as it is now I welcome these proposals that have been made, but, having said that, I must add that this is only a policy of expediency and we are not going to carry out the successful prosecution of the war upon a policy of expediency. Therefore, I want to suggest that a constructive economic policy should be adopted in order that this country can face the situation in the way the people intend it should be faced. I want to place some facts on record and on the basis of those facts to analyse the situation as I and my hon. Friends see it, and make some constructive suggestions.

Let me, in the first place, make it quite clear that we on this side of the House and the millions of people whom we represent desire that this war shall be won. Our people approve that, and the trade union movement also has approved it. A number of the unions have agreed to the temporary suspension of hard-won rights and long-established customs. The question that arises is whether that attitude is going to be adopted in other quarters, or whether a small but powerful minority in the country will take advantage of the situation in which we find ourselves. Some of us are becoming more and more suspicious that a very small but powerful clique behind the scenes are taking advantage of the situation and are not showing the same spirit that the people's movement in this country is showing. One of the finest characters whom our people have thrown up was Bob Smillie. I remember as a boy reading about him, in 1916 or 1917 if I remember aright, saying to the Government of the day that if they stabilised prices, there would be no demand for an increase in wages.

That was agreed to, but then what happened? The wages of the miners increased by 78 per cent., but the cost of living went up by 127 per cent. That is what happened last time, and the miners cannot forget it. The coalowners—I am only giving this as an indication, and not because I want to be critical of mineowners as a special class—had profits in 1913 of £13,000,000. In 1914 they were £14,000,000; in 1915, £25,000,000; in 1916, £32,000,000; and in 1917, £26,000,000. These increased profits started unrest among the miners, which reflected itself later in the appointment of a Royal Commission, and as a result of the appointment of that Royal Commission promises were made to the miners and hopes were built in the hearts of our people. But those hopes were dashed to the ground, and the promises were never carried out. Therefore, the first question that I want to ask is whether we are to have a repetition of that kind of thing, and whether the Government and the small but powerful clique behind them are going to take advantage of the position in the same way as was done during the last war.

I have here a summary of the Prime Minister's speech at the Mansion House. He was supported by the Chancellor, by Mr. Keynes, and by other speakers. Let me give a word of warning to my hon. Friends in particular about Mr. Keynes. In 1920, when he published the book, "The Economic Consequences of the Peace Treaty,'' I was one who admired the Mr. Keynes of that day, but the Keynes of 1920 is not the Keynes of 1939 and 1940. The representatives of our people who are meeting him behind the scenes, in order that he can use his influence with our people, must remember that they are dealing with a different economist, and that, as a result of the change, his economic ideas have been quoted very widely by National Socialists and other people of that sort in many parts of the world, as an endorsement of their economic policy. We need to be on our guard against accepting advice from an economist of that description. The Prime Minister at the Mansion House made a number of statements with which we are bound to agree, but he also said: The standard of living of the wealthier classes has already been notably reduced. I have no hesitation in saying that that is not true. If there were time, one could produce statistical evidence from the Chancellor's statements, from the statements of the financial position of this country, and from the records of the big banks and the insurance companies of this country. There is not time for that. Therefore, I shall have to be satisfied with dealing with it very briefly. In the early days of the war, the Chancellor will remember, a number of us pleaded with him to take steps at once to deal with the danger of inflation. You, Mr. Speaker, may remember that I skated on very thin ice one afternoon in trying to raise this matter. We had, of course, to accept your Ruling, but that was an indication of our desire, arising out of past experience, to prevent inflation. Very little, however, has been done. We read what is taking place in many hotels and entertainment centres in this country. There has been no change there. We read about prominent members of the Cabinet dining and dancing and wining. Our people read this in the industrial centres. While our men are working 10 and 12 hours a day, turning out more per man per day than has ever been done before, they read in their newspaper the society news, and they contrast what they read there with their own circumstances.

Several times the Chancellor has referred to M. Daladier's speech, in order to show to our people what they should do. If any Member opposite doubts one of the statements that I have made, let him come on any platform in the country with me, and we will hammer the question out before the people. Unfortunately, our time here is too limited. We do not want to divide the country. I am not speaking only for myself. There are several men in this country, in responsible industrial positions, whom the Government are taking into consultation from time to time, who are becoming more and more uneasy at the way things are going. If there are to be sacrifices, let them be made all round. If undertakings are given, as they were last time, let us have them indelibly on record, so that they may be carried out. The statement that M. Daladier made was not a fair one, and it ought not to be repeated in this country. He referred to the pay of the soldiers at the Front. No one admires those men more than we, because it is not long since we were of them, and we are still with them in spirit; but there is no comparison to be drawn between their position and the position of men in industry. M. Daladier and the Prime Minister have drawn attention to what they are receiving, but there is no profit made on soldiers. Most of them have volunteered in order to defend us all, to defend our land. When our men are working in the factories and workshops there is 10, 20 or 30 per cent. super-imposed on them as the rake-off for finance capital, the banks, and these other people. If we are to consider the spiral to which the Chancellor has drawn attention on several occasions, let us consider the whole background. Take to-day's "Daily Express." There is a heading: Gamblers buy up as terms are given. Under that we read: The Government announced last night that they will guarantee Britain's railways a minimum yearly income of 40,000,000. In advance of this news the gamble in railway stocks, which has doubled some of the prices in the past few weeks, reached fever pitch. What will our people think when they read this? They are not arriving at the House of Commons at half-past two in the afternoon; they are arriving at their work at seven or eight o'clock in the morning, and working until seven or eight o'clock at night. They will say, "Here is the gambling on the Stock Exchange; here is the rake-off of finance capital. "The time has arrived when this speculation should be treated as a public nuisance. It is a big contributory factor in inflation. The Chancellor ought to take action at once to deal with commodity exchange, either by control or by some form of public ownership. This reminds me of an interesting experience I had a few years ago in this House. I was speaking very critically of the way in which prices were rising in aircraft shares. Several hon. Members opposite doubted what I was saying. That was only an indication that they did not understand the seriousness to the ordinary workers of this country of the gambling which takes place on the Stock Exchange. This cannot be afforded in war-time, and it should be dealt with by the Government as soon as possible. We have noticed in the past few weeks that most of the banking chairmen are directors of anything between six and 20 companies, in most cases receiving anything from £26 to £30 a week as chairmen and directors of the banks alone, and we have compared this with the return which our people are receiving from industry. We can stand this no longer.

Here are a few examples of the success of our principles when they have been applied by the Chancellor during the past few years. The Exchange Equalisation Fund has been a huge success. The Foreign Investments Advisory Committee has been a huge success. The Export Credits Department has been a good business proposition, responsible for bringing to this country trade which would never have been brought here otherwise. We suggest that between now and the introduction of the Budget, if the Chancellor is to deal with this spiral, he has to extend these successful operations in many directions. The time has arrived when speculation should be stopped, credit controlled in the same way as he is attempting to control commodities, a national investment board set up, and a social security scheme brought in, so that the promises that are being made to our people shall be carried out. There ought to be a special levy on all incomes, from the highest to the lowest, graduated in proportion to the income, and this levy should be used to build up a social security fund, so that our people may have more economic security in future, and so that the sacrifices that they are making shall not be made in vain. In that way, we shall prove that we are real democrats—because democracy and patriotism are inseparable. You cannot be a democrat and stand for the status quo. You cannot be a democrat and agree to such treatment of one section of the community as now exists. We represent the real patriots, the real democrats, and we hope that the spirit which permeates our people will find expression in the economic policy of the Government.

6.28 p.m.

Mr. De la Bère

I shall not follow the versatile and vigorous Member for Stoke (Mr. E. Smith) in the arguments which he has been so sternly putting forward, but I wish to raise a point which has occurred in connection with the Agricultural Debate last Tuesday. The "Daily Telegraph" of to-day's date, under the heading of "London Day by Day," signed by "Peterborough," has a subheading, "Lord Privy Seal and Agriculture." If the House will permit me, I will read what follows: Mr. Lloyd George offered incidental congratulations to Sir Samuel Hoare in the House during the Debate on the Agriculture (War Provisions) Bill. He said it was very kind of the Lord Privy Seal to come. It meant that they had at any rate one member of the War Cabinet present. There was a very good reason, which Mr. Lloyd George seems to have forgotten, why Sir Samuel Hoare should have attended the Debate and made a speech. Or possibly Mr. Lloyd George did not know it. The Lord Privy Seal is chairman of the Cabinet Committee dealing with agriculture and its kindred problems, and, therefore, the appropriate person to reply to Mr. Lloyd George's criticisms. I must again, and I shall be brief, quote from the Debate which took place. This is an extract from the speech of the Lord Privy Seal: In addition to that, I think I am not betraying a confidence when I tell him that there is now a Committee, presided over by a Member of the War Cabinet, constantly sitting to deal with these questions connected with the Food Ministry on the one hand and the Ministry of Agriculture on the other. On that Committee are the various Ministers who are directly or indirectly interested in these problems. The right hon. Gentleman may think that we have not yet succeeded in our difficult task.… I will cut out the rest of it. After that the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) asked: What about the cash? The Lord Privy Seal went on, but the real point I want to get to is that at which I interrupted, a thing I very seldom do, when I asked: Can my right hon. Friend inform us who is the Chairman of the Cabinet Committee to which he referred? My right hon. Friend the Lord Privy Seal replied: It would not be usual. I think it is for my right hon. Friend the Prime Minister to give information of that kind. I suggest that my hon. Friend should put a Question on the Paper to the Prime Minister. Then, Mr. Speaker, with that agility which we so much admire, you rose, and I said: With great deference and respect, surely the Question is a very reasonable one."—[OFFICIAL REPORT, 6th February, 1940; cols. 123 and 124, Vol. 357.] I hope the House will bear with me, because I have asked for information and I have put that Question on the Order Paper, but notwithstanding the fact that I have done that, here is the "Daily Telegraph" putting into its tittle-tattle column something which we, as Members of the House of Commons, ought to have had the right of having answered. I think it would be the opinion of hon. Members of all parties in this House that, had we known that my right hon. Friend the Lord Privy Seal was the Chairman of the Committee of the War Cabinet dealing with agriculture, the whole status of the Debate might have been altered. It would undoubtedly have enabled us to put various problems to him in a different way from that in which we did put them, for he was the only Member of the War Cabinet who was good enough to be present. All my life I have been taught not to try and rub things in and not to try and score points. I do not want to do that. I do not even want to quarrel with the "Daily Telegraph." I am going to ask the "Daily Telegraph"to put this little matter right for me, and I am going to ask, as we have the Lord Privy Seal here—and we are glad to see him here—whether he will say a few words on the matter when I sit down. We shall have to have confirmation from him, of course, that he is Chairman of the Committee on Agriculture in the War Cabinet, and I hope that we shall know that he is dealing with this matter and that we have someone there who is really giving the matter his attention, and then, I think, the whole agricultural community would feel very much happier.

Although we have an admirable Minister of Agriculture, who, I am aware, has a great record and has done a great deal for agriculture, we have had no one in the War Cabinet who has been directly responsible for seeing that the maximum output from the farms was secured. I believe that the Lord Privy Seal—and he has been kind enough to have a word with me—when he replies, will tell us that he is really the Chairman of this Committee and is going to do his very utmost to ensure this maximum output, and that, as a result of his activities, and of his kindness in asking me to give him some considerable leverage on the way, we shall really, at long last, in this year 1940, get on with the job of getting this country to produce more food and of really seeing that we make a real effort, which it is absolutely desirable that agriculture should make. It is the largest and the oldest individual industry in this country. It really has not up to now had a square deal, but I believe that the powerful help of my right hon. Friend the Lord Privy Seal and the powerful support which I know all members of the agricultural community, irrespective of party, will give to him in his efforts, will secure this maximum output.

6.37 p.m.

The Lord Privy Seal (Sir Samuel Hoare)

I only rise to say in two or three sentences, first of all, that I knew nothing about the affair at all until I saw this paragraph in the "Daily Telegraph" this morning. My hon. Friend did not suggest that I had any knowledge of the paragraph in question. I can assure him and the House that I knew nothing about it at all. Secondly, I agree with him that information of this kind ought always to come first to the House of Commons, and the fact that I did not give him an answer straight away the other day was not due to any desire on my part to withhold information from him but rather because, being a Conservative in these matters, I thought the proper procedure was for my hon. Friend to put a Question to the Prime Minister on the subject. I can tell him that I do happen to be Chairman of the Committee to which he referred and to which I referred in my speech the other day, and the Prime Minister authorises me to say that. Lastly, I thank him for what he has said about myself in connection with this difficult question. I can only tell him that I am in no way responsible for the administration of the Department concerned, but, like him, I am most anxious to see the greatest possible success achieved in the programme upon which we are engaged.

6.39 p.m.

Mr. Robertson

I rise to address the House for the first time on the question of fish prices, a subject upon which I have some qualification to speak, because I have been actively engaged in the industry for 21 years. Fish prices are rising owing to scarcity, and, in my opinion, they are likely to continue on an upward scale. The fundamental cause is the conscription of wealth. I am glad to be able to say, following the hon. Member for Stoke (Mr. E. Smith), that the conscription of wealth is the sole cause, because the Admiralty have stepped in and, in the national interest, have commandeered a very large part of the catching power of steam trawlers and drifters that bring us our supplies of fish. I would also like to say at this juncture, also in reply to the hon. Member for Stoke, that when this House last discussed fish prices or the fish industry on a big scale it was about the third or fourth week in September, when the House came to the assistance and rescue of a very afflicted industry and got rid of a Government scheme which savoured of pure Socialism. That was a scheme under which every private enterprise in the country was closed down, with the exception of the retail fishmongers and the retail fish fryers, and the managers and proprietors became the servants of the State. As hon. Members know, that scheme ended in a disastrous failure. Since then the Minister of Food has left the industry to find its own level, and, in so doing, the demand for fish has been severely curtailed because of the black-out primarily, because of evacuation and because of the decline of the restaurant and banqueting trade, and the decline generally in the restaurant business.

Those conditions are rapidly disappearing. On the 25th of this month we are to have the re-introduction of Summer Time, with the lengthening day and the probability of an increased demand, because retail fishmongers, who have had to carry on their business in the limited hours of daylight, will have a much longer day in which to sell their goods, and so will the fish fryer, who has been so very largely limited because of the black-out. The position of the industry and the ultimate position of the consumer will become serious. I do not want to, bore the House with figures but I will give them very briefly so that the point I make with regard to the conscription of wealth will become apparent to hon. Members opposite. In August of last year we had 260 fast modern trawlers, all capable of fishing the distant fishing grounds. Every one of these trawlers, without a single exception, has been purchased or commandeered by the Admiralty. These vessels landed, in the year 1938, the last year for which I can get official figures, 7,755,000 cwt. of fish.

Fish prices are advancing because the catching power has been taken away for national needs. The people that I and hon. Members on this side of the House represent have no grievance at all about that. They realise that it was in the national interest that these vessels were taken, but I cannot help saying in passing, that it is a matter for regret that the Board of Admiralty did not build their own trawlers one year or two years before the war occurred, when they were so severely pressed by Smith's Dock Company of Middlesbrough and other builders to build suitable vessels. A trawler does not take a long time to build. Even one of the bigger modern vessels can be built within the brief period of three months. The trawling industry has no grievance, but it is a matter for very great regret and for consideration that the existence of 30,000 fish fryers and 21,000 retail fishmongers and workers, many of them constituents of the hon. Member for Stoke, is threatened because of the diminution in the supply of the commodity in which they trade.

I feel that, although the Government very wisely withdrew the quota restriction on all foreign fish, they will need to go a great deal further. In regard to foreign fish, as hon. Members are probably aware, supplies are coming in from Norway, from Iceland and Denmark, but they are coming in a very bad condition because of the difficulties that must arise owing to the delays in transit. Norway used to send us fish, greatly sought after, supplementing the catches of our own fishermen, and, coming by very fast vessels, it arrived in first-class condition. To-day an entirely different picture is present, and owing to these conditions fish is arriving in a very bad condition. Many tons are being condemned, and with the advent of warm weather that valuable source of supply will dry up altogether. To give an example of what I am referring to, last week the "Flora," a small vessel, came in from Denmark with a cargo of almost 4,000 boxes of fish, and all of it, with the exception of about 100 boxes of frozen fish, was condemned. That state of affairs obviously cannot go on for economic reasons. That particular vessel was captured by the Germans and taken into Bremerhaven.

These delays naturally cause fish to go bad and I feel that that condition of affairs will continue to get worse. The industry and the consumer will face a very critical period unless the situation is put right. We are going to have meat rationing in the near future; but the success of any rationed staple food depends entirely on an unlimited supply of un-rationed foods, of which fish is one of the most important. In the last year of the last war I was an official at the old Ministry of Food and I recollect the importance which the then Food Controller paid to an adequate supply of fish, controlled in regard to price but not in regard to quantity. The Food Plans Defence Department which was charged with the responsibility of making plans for war time has devoted its entire attention to producing the complex and dreadful scheme which I have already referred to in the House, and from which the House rescued the public and the industry. Instead of concentrating on an alternative supply of fish it concentrated on the distribution of something that was not there to distribute. I regret having to say so, because I am behind the Government in the splendid show they are making in this war, but I do submit that it is a matter for regret that one Department of the Government—the Admiralty—made plans to commandeer the catching power of the country and another Department—charged with the distribution of valuable foodstuff—made plans to distribute something that was not there.

I would like to make one constructive criticism which, I believe, from the years of experience I have had in this industry, is practical politics. It is that we should get fish from our Dominion of Newfoundland, which is rich in food and in fishermen but is without a market owing to the decline of the salt fish trade. I went to the Food Defence Department about five or six months before the war broke out and I told them what was going to happen because I am a director of two of the principal trawling companies. I asked them where any alternative supply of fish was coming from and they told me there was no need for alarm. If there was any shortage, they said, it would come from herring caught on the West coast of Scotland. I was born there, and do not claim to have any special knowledge of the herring trade, but I do know that the only certain thing about it is its uncertainty. The supply of herring will never make good the loss of supply owing to the commandeering of these long-distance trawlers.

Codfish, haddock and herring are the three things in the sea that matter. Cod fish is the major fish food of the people and keeps going some 30,000 fried fish shops and 20,000 fishmongers and hawkers. The quayside price at Hull is 550 per cent. up over the pre-war figure and is likely to go up further but there is no Member in this House who would say that this is too high a price considering that the cost is not only represented by the wages of British seamen, the cost of British coal, and the wear and tear of British boats, but by the lives of British fishermen. I suggested to the Food Defence Department that the Government should immediately plan to take some of the old, derelict, North Sea trawlers, which are trying to scratch a meagre living from the over fished banks of the North Sea, Irish Channel, and West Coast of Scotland, and put them out on the banks of Newfoundland where, 12 hours' sail from St. John's they can fish in perfect safety and be immune from the cowardly attacks which the Prime Minister told us about to-day. From there they could bring in their fish in big bottoms and freeze it.

Nobody to-day need apologise for freezing. The success of New Zealand, Australia - and the South American Republics is mainly due to the commercial application of refrigeration and I can assure hon. Members that if anybody wishes it to be put to the test I would be happy to give them a practical demonstration. When fish is frozen in this manner it is much better than the stale condition of fish that is packed with ice and which might be from 10 to 14 days on the way to market. Four of the leading firms in the British fishing industry, knowing that the Government turned down the scheme put before them, took it on themselves to face the difficulties of private importation, finding foreign currency, refrigerated shipments and cold storage, all controlled by Government. They placed contracts in Newfoundland, Nova Scotia and Iceland and are now negotiating with Norway with the idea of freezing fish at the source by mass production methods and bringing it here at a price which will enable it to be sold to the people and prove a valuable adjunct in time of war. But the difficulties they are facing are enormous. These firms have not the capital financial structure which is designed to meet such a tremendous departure and it is most unfair to expect them to do it. They have repeatedly asked for help and assistance, but so far all they have got is letters from the Minister such as this: Mr. Morrison has received your letter of even date and will attend to it as soon as possible. I have a file full of letters like that. These courageous firms are doing their utmost but have just about got to the end of their tether because another department of the Ministry of Food has come along and taken refrigerating space for bacon from Nova Scotia. I do sincerely hope that my right hon. Friend the Member for Cirencester (Mr. W. S. Morrison) will take this matter in hand now and do what he can to assist. I do not ask him to nationalise the job but to try and help the people who are trying to help themselves. They are not the villains of the piece, as the hon. Member for Stoke would have us believe. These firms landed their catch from Newfoundland at Liverpool and took it to the Humber. They did not keep the distribution selfishly to themselves. They said to the merchants at Hull and Grimsby, "You fellows created this trade in cheap fillet; we will give it to you to distribute.

Get on with it." The profit is not adequate but it is better than nothing at all. Within eight days 25,000 boxes of this fish were sold but the supply dried up because it was private enterprise and limited because of finance. Another shipment came, along, this time 30,000 boxes, and that was sold in the same way. They are living from hand to mouth and it is quite wrong in war-time that that state of affairs should prevail.

The House has heard a great deal, from time to time, about the herring industry and how seriously afflicted it has been. People like myself have always felt that the fishing industry has been very much the Cinderella of the Ministry of Agriculture and Fisheries. We do not grudge agriculture the big brother's share, but we feel that we get almost nothing. We are proud of our people in the herring industry. Out of the fishermen's homes in the Moray Firth come fine sons, of whom some become Ministers, others specialists in Harley Street, and so on. They contribute greatly to science and the benefit of mankind. The same applies to the fisher folk of East Anglia and elsewhere who are suffering because of the eclipse of the pickled herring Russian market.

Our great herring industry is declining, but it need not if we will give it some financial encouragement and benefit by the huge surplus of herring which occurs between May and November. We have the finest herring catch in any country in the world and we do not know what to do with it because we have not a home market for more than a portion of our catch. Ninety per cent. of it used to go to Russia and Germany. Is there any reason why it should not go to our people in the winter months? Modern refrigeration is not an exact science; it is the most simple thing in the world to take the natural heat out of a commodity and let it come back by defrosting when it is wanted for use. The whole of our surplus could be frozen by the mobile plants which are in existence to-day. These mobile freezers could go into little villages and to every part of the country to meet the seasonal demand for fish freezing and then go to Blairgowrie, Evesham and other places to provide refrigeration for strawberry and other crops. The fish that was frozen could then be distributed cheaply at a flat rate without the expense of the telephoning and telegraphing that the fresh fish trade demands. I do hope the House has been interested in what I have said. I feel confident that now is the time to put our own house in order in the fishing industry, and I hope very much that the Ministers on the Treasury Bench will do something to carry out the proposals which I have made.

7.0 p.m.

Mr. Harold Macmillan

I feel sure I shall voice the opinion of all hon. Members when I congratulate my hon. Friend the Member for Streatham (Mr. Robertson), a fellow Scot, on his remark able maiden speech. I suppose that the purpose of an hon. Member in rising to make a speech, whether it be a maiden speech or not, is partly to make as good a speech as possible, and partly to help the cause which he has at heart. I can only say to my hon. Friend that I feel sure he has done both these things for in raising a very important question he has interested us very deeply with his knowledge and skill, which are obviously based on experience. I have no doubt that in future Debates we shall have further contributions from him, and we shall look forward to them with pleasure.

This Debate has naturally roamed a little from the character which it had at the beginning, and particularly from the considerations which my right hon. Friend the Chancellor of the Exchequer put before us. I shall revert to some of the points which the Chancellor presented to the House, and pass over the more melodramatic aspects raised by the hon. Member for Stoke (Mr. E. Smith), who described to us a new feature of the Cabinet, its night life. I am bound to say that was quite new to me. I have made criticisms of the Front Bench from time to time, but I have never regarded the Cabinet as belonging to what may be called the ''smart set.'' I am afraid I shall pass from that picturesque aspect to a series of rather dull but important points.

The Chancellor of the Exchequer did not represent the policy of subsidising the prices of certain foodstuffs as more than a contribution to the general war economic policy. He said very rightly that that general policy must be considered as a whole, but at the same time, I think he had the general support of the House on the character of the contribution he has tried to make in order to prevent what everybody agrees ought to be prevented, namely, an inflationary rise in prices with all the results that would follow from it. Nevertheless, it is very difficult to consider that problem solely by itself, and I would like briefly to remind the Chancellor—who informed me that he would be unable to be present—and the House of the questions which must be considered as a whole if we are to deal successfully with the immense problem of war finance. The purpose of economic planning is just the same whether in peace or in war. It is ultimately to utilise to the full the human and material resources of the nation. In peace it is butter, and in war it is guns and butter. I do not think it can be better summed up than it was in the speech of one of the gentlemen of whom the hon. Member for Stoke is so suspicious, the chairman of the Midland Bank, Mr. McKenna. He summed it up in a few short sentences which seem to me to give exactly all the points in a successful war policy. He said: The reality behind all questions of war finance is the high demand which warfare makes on the power of the nation to produce goods for immediate consumption. The demand can be met to a large extent by the expansion of production to the uttermost through the use of additional bank credit. Not only can the recorded unemployed be absorbed, but numbers of men and women not hitherto engaged in productive work can be drafted into industry. Up to the stage of full employment there need be no inflation as the enlarged bank credit will be offset by greater output. The demand can be covered again in part by using up stocks and in part by realising investments abroad to pay for the additional imports. But before long the point must be reached at which the Government must restrict civilian consumption. I think that series of propositions admirably describes what should be our war economic policy. Let us consider the sequence. First, the recorded unemployed and under-employed are to be absorbed. We have been at war for five months, and, without considering the enormous numbers of men who have been taken out of employment for Air-Raid Precautions services, the Army, the Navy, and the Air Force, there is a serious lag in the rate at which we might have expected the unemployed and underemployed, who are not recorded in the figures, to be absorbed. Secondly, there should be a diversion of men from non- essential tasks. There is an enormous number of men who could be employed in important war production if they were made available. The other night, my right hon. Friend the Minister of Labour made what I thought to be a very timely appeal that men should try to fit themselves, through training schemes, for this new work which will be necessary with the prolongation of the war.

Thirdly, there is the recruitment of women into industry. There are colossal resources of labour which are still available and are not being used. There are the luxury trades, which may have to be cut down in order that the labour available may be brought into important war production. We are now talking of perhaps 1,000,000 or more women being brought into war work. The first thing to be done, from the labour aspect, is to make sure that not only all available labour ordinarily registered as part of the labour army shall be brought into full employment, but also that people shall be diverted from non-essential production into war production, and that people who have not hitherto been working shall be brought into work. That is the first necessity of a war economic policy. I want to be more satisfied, as I think the House wants to be, that that policy is really being sufficiently carried through, because the situation which we have reached after five or six months of war is not as satisfactory as we might have hoped.

There is then a point to which I should like the Financial Secretary to the Treasury to give particular attention, and that is the mobilisation of foreign investments and foreign currency. I should like him to give attention to the question whether returns of all British investments in the United States and elsewhere have been properly made to the Bank of England. At the beginning of the war, it was the duty of all those who owned foreign investments to make a return to the Bank of England. It is my suspicion, and a belief which I think is very widely held in many financial quarters, that those returns have been very unsatisfactory; and that belief is supported by the fact that there is a strange and very large discrepancy between the returns made and the estimates of British capital "in the United States made by the Federal Reserve Bank. I think it would be well worth making a much more serious attempt to squeeze the returns which people, either through negligence or evasion, have not made of foreign investments.

Secondly, on the same question, is the exchange restrictions system working properly? Are we getting all the foreign currency to which we are entitled by the sale of our exports, or are dollar balances being built up, through every kind of method of evading exchange restrictions, by traders in New York and in other foreign markets? It is remarkable that every time some loophole is closed up by the Treasury—and an important loophole was closed up by the Order of 8th January—the black market in sterling immediately reflects it. It is within the knowledge of the House that, although there is an official rate, there is also a black rate which is not the same; and every time there is a tightening-up of the restrictions, the free sterling market reflects it by a rise in the value of sterling. Those are a few things which I think are worthy of study by the Government, because they are very important aspects of this policy.

Combined with that, is the problem of stimulating exports. The stimulation of exports is the next method of obtaining dollars. I am sure my right hon. Friend the Secretary to the Overseas Trade Department, who is primarily responsible, from the Government point of view, for our export business, would probably agree that at the moment the chief problem in relation to exports is not the difficulty of finding markets, but the difficulty of supplying sufficient materials to enable British manufacturers to take advantage of the opportunities which are available. There may come a stage at which a different method will have to be used, but at the moment that is the main consideration. It is no use attempting to conceal from ourselves the realities of the situation and there is no use employing those percentage arguments of which the Chancellor gave us such an amusing example.

For instance, we were told by the Prime Minister that in December the value of our exports was actually greater than the average monthly value during the three months before the outbreak of the war. That sounded comforting, but it took no account of the fall in the value of sterling by 14 or 15 per cent., and the rise in world prices of 20 to 30 per cent., which of course, affect the argument. Nor did it take account of the really important question, which is not what is the total quantity of exports in terms of sterling, but what is the relation between imports and exports. That is the only, thing that matters. I would quote what was said on that subject by Lord Stamp in another place on 23rd January: Although we are congratulating ourselves upon some recovery in export trade, it is by no means adequate to the task before us. The difference between our imports and exports shows a worsening of 41 per cent. over the corresponding period. That is not a figure which can be indefinitely made good out of our resources in foreign exchange, and gold holdings and even securities. The utmost pressure has to be exercised upon this particular factor. If we called in the economic doctor to pronounce on the national health, that is the first pulse he would feel. I mention that because, I think, it follows that that is the next thing to which we must give our main attention. If I am right that the main difficulty in relation to exports is not markets, but the supply of materials, we come at once to this problem with certain aspects of which the Chancellor has been dealing, namely, the restriction of civilian consumption—because that is what it comes to, and we may as well face it. In war there is a dual problem. First, there is the physical problem of landing in our ports sufficient cargoes of raw materials to supply the Fighting Services, to be the material from which exports will be made, and to supply the civilian and domestic needs of the population. It is the problem, actually, of getting enough stuff into this country either in British or in neutral bottoms. That was the major problem in the last war. It nearly defeated us, but we overcame it.

This time, we have added to it another problem. There is not only the physical problem of getting enough stuff; there is also the problem of having enough money to pay for it. In the last war we did that in quite an impressive way, because we were able, through the then untarnished national credit, to operate in any financial market of the world. But now we have the two problems, first of getting enough stuff and, second, of using it when we have got it in such a way that, having supplied our Fighting Services, we shall be able to re-export sufficient to enable us to go on buying next year. It is the problem of using rightly the stuff which we get. So we are driven up against the restriction of civilian consumption. The hon. Member for Stoke said he was suspicious of economists when he did not agree with them, or, rather, when they did not agree with him. He seemed to think that Mr. Keynes was a very valuable guide as long as he said things which were satisfactory, according to the hon. Gentleman's idea.

Mr. E. Smith

I do not mind the hon. Gentleman criticising what I said, but I hope he will not put into my mouth words which I did not use.

Mr. Macmillan

I do not want to press the point too hardly. I was only desirous of illustrating the fact that Mr. Keynes, who 20 years ago denounced certain aspects of the Versailles Treaty, spoke with the same authority and with the same devotion to public interest now as when he gave that very solemn warning. Mr. Keynes has been fearless all through his life and has often been at variance perhaps with popular opinion. But I think we must take seriously the situation as it is, namely, that the problem of the restriction of civilian consumption is the main economic problem of this war. How can civilian consumption be restricted? The first essential is that the method must be fair and equitable to all citizens, and it must secure reasonable minimum standards for the mass of the people. I take it that the main purpose of the subsidisation policy which the Chancellor has explained to us is to keep down the prices of necessities so that these will be rationed, not by the harsh pressure of the fact that some people are unable to pay for them, but in a reasonable and fair way as they are available to the people.

The Minister of Food is confronted with a tremendous problem in having to deal with both a rationing policy and a price system. In a be leagured city, rationing is fairly simple. The rationing policy there works automatically because you simply take all the food available and divide it up as long as it lasts. You are not faced with the complication of the price system. But here you have the two things at once. You must have a policy which gives everybody as much as you can of what they need, and you must run it in conjunction with a price system. Therefore, I think this attempt to keep some control of prices and to keep down the prices of prime necessities represents a very intelligent and very wise decision on the part of the Government. I think it will have to be developed further. I think it is a foundation which will have to be extended, because the only alternative is such a rise in cost as will lead inevitably to the things that we all deplore and to an inflationary movement.

Before I pursue that subject further, it might be worth while to give a little consideration to this price problem, though I am afraid it necessarily involves the use of some figures. Retail prices included in the cost-of-living index rose by 13.8 per cent. between 1st September, 1939, and 1st January, 1940. Bacon rose by 28 per cent.; fish by 24 per cent.; sugar by 49 per cent., including taxation; butter by 23 per cent., and eggs by 44 per cent. It will be noticed that there is an immense variation in these rises. Meat rose by 5 per cent. to 14 per cent.; cheese by 18 per cent.; flour, bread, milk, and potatoes by only 3 per cent.

Mr. G. Griffiths

These are retail prices?

Mr. Macmillan

Yes. Wholesale prices have risen far less, and one of the remark able features of the situation is that, ordinarily, wholesale prices reflect the increase of retail prices. I am not sure that these cost-of-living figures which we are given are absolutely right. I see that the Chancellor, in all the Debates up to now, has taken the Bank of England figures of the index, but the American Irving-Fisher Institute figures show a very different thing. We are saying that the rise in prices in this country is 30 per cent.—that is the "Economist" figure—whereas the rise in the United States is only 8 per cent. I think it would be worth while to look into the figures published by the "Economist'' this week, which show some criticism of those which have been given to us up to date.

But the chief point to which I wish to come is: What is the main reason why these prices rise? The Chancellor of the Exchequer assumes that there must be a certain increase of prices in the change from peace to war time conditions; but what is the main reason for the rise in prices? Certain costs are, of course, inescapable, such as war costs, insurance risks, and so on, but we must not argue too readily that among the inescapable is the depreciation of the value of the sterling. I am, of course, assuming in the argument that, because sterling has just fallen by 15 per cent., therefore prices have risen by that amount. In the modem world the sterling dollar exchange is purely artificial and is based upon whatever we like to make it. The Government are a little apt to be somewhat behind the times in their studies of these matters. There was a time when we almost destroyed this country by trying to revalue the pound to four dollars 86 cents and the result was a coal strike of nearly six months and nearly a revolution. We have moved farther to-day and it is no longer absolutely necessary to argue that it is to the advantage of the nation to fix the present ratio between the pound and the dollar to an undervalue rate of exchange.

The main argument is that you give a subsidy to your exports and if you can have a depreciated pound it is better for the export trade. That, of course, is true. The rate of the exchange before the war was about four dollars 68 cents to the £, and the £ was somewhat over-valued. But it is quite possible to reverse the process, so utterly artificial is the system. I would like the Chancellor of the Exchequer to consider whether it would not be wise to reverse the process and gradually raise the £ back to four dollars and 50 cents, and then, if necessary, give a subsidy to exports in sterling. If you could raise the value of the £ in dollars, you would avoid one of the main causes of the inevitable rise in prices. I notice that the right hon. Gentleman the Secretary to the Overseas Trade Department shakes his head rather sadly, but I would say that this matter is being much discussed in business and economic circles. The technique for the maintenance of the export trade is easy to operate. It is simply a matter of whether it would be more to our convenience, if necessary, subsequently to subsidise our exports and reduce what we now argue to be an inevitable rise in prices through an artificial fall in sterling.

Mr. Boothby

Is the hon. Member for Stockton-on-Tees (Mr. Macmillan) aware that what he is suggesting now was in fact carried through with great success by the German Government for several years?

Mr. Macmillan

I am glad that my hon. Friend has reminded me of that. I meant to say that this technique was operated by Germany and that, therefore, we already have an illustration of what can be done by technical control. I think it is well worth the consideration of the Government.

Mr. R. S. Hudson (Secretary, Overseas Trade Department)

I should not like it to get out that there is a possibility of subsidising British exports on a large scale. If you subsidise exports, the bulk of commodities, you just destroy exports, and it is not an easy solution to adopt.

Mr. Macmillan

The hon. Gentleman is making too sweeping a statement, because the artificial depreciation of sterling will be just as much subsidising exports not in the sense of a technical breach of the agreement but in the spirit of it. [Interruption.] I am afraid I was rather drawn into the question of exports, but all that I wanted to do was to call attention to the possibility of raising the value of sterling to-day and by different methods to do what the Chancellor is now doing by subsidy. If it was objected that it would destroy our export market, I would say that there are other means of getting over that difficulty. I do not think it would be insuperable, because I think our commodities are much needed.

However, I go back to the point whore I began. In the discussion to-day on the Chancellor's speech I welcome the policy of subsidies of certain foodstuffs as part of a general economic policy. It marks a very important change and may have very important developments. I think the Chancellor of the Exchequer was a little bold in suggesting that it was a novel policy; for I seem to have heard in the days of my youth of panem et cirenses and of the policy rather freely employed by successive great Roman Governments. I also remember the rather pedantic Whig and Liberal historians who always presumed that a policy of subsidy on food must lead to the collapse of civilisation. But that is perhaps because those historians were rather under the influence of the economics of that time. If this policy has a potential value in time of war, then it may be of value also in time of peace. I urge upon the Government to give consideration to the broad economic policy I have outlined, for there is a feeling that the economic policy is not being pressed on with sufficient energy. I am quite sure that the Government can reply upon Members of this House to support any bold and strong measures that they may take in developing a comprehensive economic policy, because we all realise that in this way we may help to bring this struggle to a victorious conclusion.

7.29 p.m.

Mr. Boothby

I do not intend making a speech this evening, but after what my hon. Friend the Member for Stockton-on-Tees (Mr. Macmillan) has said, I should like to supplement his remarks by putting one suggestion in the mind of my right hon. Friend. I was profoundly relieved to hear the Chancellor of the Exchequer say that this was only one part, and a comparatively small part, of a comprehensive financial economic policy which he must have in mind. I agree with my hon. Friend who has just sat down that by far the largest contribution to the rise in prices was due to the sudden, precipitate, speedy and, in my mind, unnecessary depreciation of sterling at the very outset of the war. I do not think it was necessary for it to take place, and I urge a scheme at the present time for bringing about a gradual appreciation of sterling in relation to the dollar in the months that lie immediately ahead. That would do more good from the point of view of keeping down prices than any other step that we could take. In spite of what the Secretary to the Overseas Trade Department said, it is a matter that ought to be continually borne in mind by the Government, because, supposing it had an adverse effect upon our export trade, no doubt we could come to an arrangement with the United States Government whereby, to any extent to which they benefited from the fact that we allowed sterling to appreciate so far as their exports were concerned, we were allowed to write that off. No one can deny that this system is the method by which the Nazi Government have largely constructed their economy on a basis of practically nothing with incredible success, during the last five years, and I have long pleaded that we might with profit study some of the economy methods by which the Nazi Government have attained to the position which they occupy at present.

The only point that I rose to make, until my hon. Friend raised this question of the dollar-sterling exchange, was the question of the cost of living. I believe that if we are successfully to restrict consumption—I think Members on all sides agree that that has to be done—we must allow a considerable price rise in all non-essential goods to take place over the months that lie ahead. I hope it will not be very steep, but it must come, and it should not be too rigidly controlled. If we were to allow a general rise in retail prices to take place, it would obviously bear far too heavily upon the poorer classes of the community. Therefore, I think the time will inevitably come when you will have to substitute your present cost-of-living index by a much narrower cost-of-living index, what one might perhaps call an iron ration, consisting of food, fuel, rent and essential articles of clothing. Those articles should not be sham rationed, as they are at present, but really rationed. How can you say that meat is rationed when anyone who has the money can go to a restaurant and order and eat as much meat as he likes? If that system is allowed to go on very much longer, the right hon. Gentleman will get into very serious trouble. He was left a perfectly functioning ration system at the end of the last war, which worked well. If you mean business, you ought to put that system into operation now. It does not seem to me fair that anyone who can afford to do it can go into any restaurant, including the House of Commons, and buy what he likes.

If you establish an iron ration of these essentials for the life of the workers of the country, it seems to me that my hon. Friends above the Gangway should give very serious consideration to the proposition that in future wages should be moved up in accordance, not with the present cost-of-living index, which covers so wide a field, but in accordance with what I may call the iron ration, the new cost-of-living index, because only in that way shall we be able to get an effective reduction of consumption of all non-essential commodities. Every Member knows in his heart that the one essential from an economic point of view is to limit the consumption of non-essential commodities on the part of every section and class in the country to the greatest possible extent if we are to win the war on the economic front. This question of limiting consumption is a patriotic duty for everyone to go on talking about and raising all the time, because I do not think the people of the country realise yet the dangers inherent in the increased wages, not which are being paid now, but which will be paid out when all the unemployed have been absorbed, as they will be if the war goes on—I believe it works out at well over £1,000,000,000 a year—and the disastrous effect if all that is paid out in additional salaries and wages were to find its way into consumption at home, competing with the demand for more products.

I believe that one fruitful line of approach is the establishment of an iron ration along the lines that I have suggested, because no one would or should claim that the wages of the workers as a whole should not bear some relation to the cost of the necessities of living. I hope my right hon. Friend may have something to say on the subject. I am sure another thing on the more constructive side that the Government will have to consider seriously again is the whole question of family allowances. Without a system of family allowances I do not think we can possibly get through the war, because whatever criticisms anyone may make about the intentions of the capitalists on that side of the House, there is no one in the House who wants to see a reduction in the standard of living of the poorest classes of the community, and indeed I think the opportunity can and should be taken, while restricting consumption, actually to raise the standard of the poorest section of the community in the interests of the national health and strength.

7.38 p.m.

Miss Rathbone

I am very grateful to the last speaker for his concluding observations, because they give me what I have been looking for—a thread which will connect what I want to say with the main subject of debate. I do not want to deal with the more technical aspects of the Chancellor's price-control scheme. I am not qualified to do so. I want to make a few observations from the point of view of how far it is suited to carry out what he himself described as one of its main objectives, to prevent the vicious spiral—in the last war they used to call it the race between wages and prices, and I think that is a better phrase—and to ensure that the sacrifices which, he pointed out, all sections of the community must bear in this war should fall least on those who can least bear them. May I contrast two devices for carrying out this object, the Chancellor's price-control scheme and this device alluded to by the hon. Member for East Aberdeen (Mr. Boothby) of family allowances? First, as to the Chancellor's scheme, here are the objections to it. I do not say they outweigh the merits or that it may not be necessary, but certain things must be admitted about it.

First of all, there is nothing to lead out of their poverty those families that were below the poverty line before the war. We know from the figures of many sociologists that from 10 to 15 per cent. of the working-class population even before the war were living on incomes so low that, however economically spent, they did not suffice for a healthy subsistence level of maintenance, and that, of the child population, between,20 and 25 per cent. were living below the poverty line. Secondly, the proportion of those living in poverty has obviously been increased by the price increases which the Chancellor's scheme does not attempt to touch, if I understand it rightly. His scheme begins only from January. He does not do anything to lower the prices that had already risen. Between the end of September and December there was an increase in the price level of food commodities of over 10 per cent. Thirdly, it is no check on rising prices for any kind of necessaries except food. It makes no difference in the price of clothing, cleaning material, coal, or light. Fourthly, it gives no complete or permanent check even on the prices of the necessaries which it controls. The Chancellor warns us, indeed, that we must not expect him to promise that the system of subsidies will continue if the costs of production continue to rise. The scheme is to cost £50,000,000 a year, and he could not promise that that would be increased.

Fifthly—and this is my main objection—this scheme is a method of doing the trick which helps the well-to-do more than the poor, because the well-to-do spend the most on food. May I take a simple illustration? The Chancellor spoke of the subsidy that this scheme would involve on milk. Liquid fresh milk is a commodity on which the very poor spend hardly anything, because it is already too dear. Milk and meat do not bulk in the budgets of the very poor. Some food budgets were taken out recently in Cardiff by a certain scientific body which went especially into the weekly expenditure of different classes of the population on milk. They found that in the well-to-do middle class the average expenditure per week on milk was just under 1s. per head in small families and 9½d. in large families. In the poor working-class families the expenditure per head of the family was just under 9d. where the family consisted of one or two people, and fell to 3¼d. in families of seven people or more. If there were a consumption of milk according to need, the greatest expenditure would be in large families containing a considerable number of young children. The proportion, however, is exactly the other way. The greater the number of children in a family, the less does the family spend per head on milk, because it is an expensive commodity. In this scheme to keep the price of milk to its present level the family which is spending 1s. a week on it will profit, because the cost of what it buys is not going up any further. It will not do much for the family of seven or more, which can afford to spend only 3¼d.

Naturally, a system of price control helps most those who consume the most. Therefore, it is really a device for enabling everybody to keep up their pre-war level of consumption of necessary foods, irrespective of whether the amount of that consumption has been more or less than was necessary. As Mr. Maynard Keynes said the other day, it is rather like trying to meet the problems of war finance by taking the duties off tea and sugar. Surely, if the object of the Government is to prevent sacrifices falling on the backs which can bear them least, they ought to adopt the Socialist maxim, "From each according to ability, and to each according to need.'' I can hardly blame the Government for not doing it when the Labour party have fought so shy of the application of that principle.

For years many of us have put the device of family allowances before the country and occasionally before Parliament. That device avoids those disadvantages of the Chancellor's scheme on which I have been dilating. The family allowance would help to meet all the necessaries and primary needs of the poor family in addition to food, such as clothing, rent, and so forth. The benefit will accrue to the family according to its needs and not according to its spending power. With regard to the possible cost, we have recently got out a memorandum which contains figures worked out by a prominent statistician of the cost of eight alternative schemes. If we take a scheme which allows 5s. a head for every child under 15 throughout the population of Great Britain, and deduct from the gross cost that of the schemes for allowances that are already paid under contributory insurance, unemployment, and so on, the cost will be something like £132,000,000 per annum. The cost would be less than one-half if we began with the second child in the family. Some light is thrown on the population side of the picture when we consider that 52 per cent. of the children are first children. Another scheme would be to have a smaller allowance, or we could distribute the cost between the State, the employer, and the workers by the familiar device of contributory insurance.

The right hon. Gentleman the Chancellor of the Exchequer spoke of his price-control scheme as only part of his wartime economy, and I hope that the Government are facing the question whether they should not supplement their present scheme by a scheme of family allowances. I want to say a word as to what I imagine to be, in the minds of the Government, an obstacle to the scheme, and I will address myself mainly to Members of the Opposition. It is generally rumoured—I do not know with how much basis of truth—that the slowness of the Government in facing the need—which Sir William Beveridge has described as a patent necessity if we want to prevent inflation and the vicious spiral—is because organised labour is opposed to such a scheme. I do not know whether that is so, but I would like to remind the House of a few facts. So far as I know, organised labour has made only one attempt really to investigate this problem. Some 10 years ago a committee of members of the Trades Union Congress and of the Labour party sat for nearly a year and made a careful examination into the idea of family allowances, and by a majority of 8 to 4 came down in favour of a scheme of family allowances paid for by the State out of taxation and limited to those below the Income Tax level. They were largely assisted by a memorandum submitted by the hon. Member for Bishop Auckland (Mr. Dalton), now one of the leaders of the Labour party. The minority recommended that family allowances in cash should be limited to the first two years of life and that the needs of older children should be met by an extended scheme of services in kind. Subsequently the Trades Union Congress, after a very perfunctory discussion, decided in favour of the minority. They did not decide against family allowances in principle, but in favour of family allowances in cash for the first two years of life supplemented by extended social services.

Mr. Speaker

I must remind the hon. Member that family allowances would need legislation, and that renders any detailed examination of the question out of Order on the Motion for the Adjournment. There is no harm in her referring to it in passing, but she cannot do more than that.

Miss Rathbone

I mentioned a scheme of family allowances that did need legislation, because they were to be paid for by the State, but it is not essential that family allowances should be paid for by the State, and I hope you will allow me to escape your Ruling by speaking of family allowances in general, whether paid for by the State or not.

Mr. Speaker

That would seem to be half in Order and half out of Order, and could not be allowed.

Miss Rathbone

May I submit that the matter is strictly in Order in this sense, that in the minds of the public just now there are alternative devices for preventing the vicious spiral? One is the system of price control and another the system of family allowances. If I am not to speak of family allowances requiring legislation, then I will devote the rest of my remarks to family allowances which would not require legislation. There is, in fact, a very large experience of family-allowance schemes. This ought to be interesting to members of the Labour party, because I have been speaking of possible objections by organised labour. In France and Belgium there are systems of family allowances which up to quite recently have involved no subventions from the State. They were introduced, at the end of the last war, in very much the same circumstances as we are now experiencing, as a means of preventing a race between wages and prices. At first organised labour was opposed to the scheme, regarding it as a device for lowering wages. The scheme was to provide the money for the children's allowances by forming what were known as equalisation funds, which were financed by contributions from employers based on the amount of the employer's wage bill. Organised labour in France then looked as suspiciously on those schemes as organised labour in this country now looks upon family allowance schemes, but experience proves that they were popular with the workers and were devoid of any injurious effect upon wages or upon the class struggle; and the system grew in favour until, in 1931, at the very height of the economic blizzard, France, and afterwards Belgium, introduced legislation, which passed into law without opposition from either the employers or employed, making the scheme universal and compulsory.

Mr. Speaker

That is a scheme that would need legislation here.

Miss Rathbone

Then I will not refer to it any more. I did not know there was anything to prevent one from alluding to legislation in a foreign country. I will end by making this appeal to the Labour party. Whatever their attitude towards family allowances has been in the past, how are they going to meet this case? For years they have been aware of a vast body of poverty, deep poverty, in this country, which falls chiefly upon the children. They are aware that organised labour has been struggling to meet poverty by securing what they call a living wage sufficient to place all above the level of poverty. They are aware that even in the most prosperous years that ideal has not been achieved. Do they deny that it is fantastic to suppose that when, in times of peace and of prosperous trade, it has been impossible to prevent nearly one-quarter of the children of the country from living in poverty by the device of securing rises in wages, they will do it in a time of war? Do they not know that the most they can hope for in a time of war is to prevent real wages falling? The system of price control is devised to secure that end.

They have no hope, under present circumstances, of securing a rise in real wages, except in the case of special and favoured groups of the community. Therefore, they should realise the necessity of a scheme of family allowances.

What is the argument against it, if there is one? The argument against it has usually been that family allowances might complicate the process of wage bargaining; in other words, that when increases of wages were under consideration the fact that allowances were being paid for the children would make it less easy for the wage-earners to put a good case before the employers. Years ago Mrs. Sidney Webb pointed out that the battle for better conditions of labour in the early years of the nineteenth century had been fought from behind the petticoats of the women and children. Men had secured healthy conditions for the women and children, and thereby secured conditions that benefited themselves too. Is the same thing going on in regard to wages? Is organised labour really fighting the battle of higher wages behind the petticoats of the women and the children, especially the children, and, if so, is that justified? I suggest that it is justified neither in common sense nor in ethics. It is not justified in common sense, because there is not a fragment of truth in the belief that to grant family allowances would injure the struggle for higher wages, a struggle which cannot go on during war-time.

I challenge anyone to produce any evidence that in any country which has had experience of this system they believe it has had that effect. In France, in Belgium, in New South Wales, in the mining industry throughout Europe—[An Hon. Member: "Wages are less."] And they always have been less, long before family allowances were introduced. The trade union representatives in those countries are practically unanimous in saying that so far from family allowances having injured trade union solidarity, they have helped it, and for this good reason, that in a trade dispute a man is encouraged to remain loyal to his trade union if his family—at least the children—have something to live upon. Anyhow, I do not want to keep the House by dilating on this subject. I am willing to provide documentary evidence for anything I have said about Continental experience for anyone who likes to ask me for it.

I come to my last point. If it were true, or if it were not—and there is not an ounce of evidence to show it—that the battle for higher wages could be fought better from behind the children, is it right that the children should be used, in that kind of way? Are you content generation after generation, in time of prosperity as well as in time of depressed trade, and in peace as well as in war, to let your own children go on, year after year, living in poverty, when you know, as you do, that the women and children together form nearly half of the entire community? Their numbers together equal the whole of the employers, the employed, and the self-employed put together. From the point of view of justice, is it right that they should have no share of their own in the wealth of the community and no share of the national income assigned to them in virtue of the fact that they are the future citizens of the world? Should they be compelled to live on what husbands and fathers can spare out of the wages earned in services to industry and production?

The mothers who produce children are also producers. Children themselves are potential producers. They are not mere hangers-on of the wage earners but are human beings in their own right. They have a right to their share in the wealth of the community. It is unworthy of the organised Labour Movement that professes to be protesting against inequalities in the distribution of wealth as between class and class and rich and poor that it should pretend that that other form of inequality does not exist in the distribution of wealth, namely, between those who have and those who have not children to support.

Mr. Marshall

The hon. Lady seems to be making charges against organised labour that it is somehow responsible for the poverty of women and children in this country. She ought to recognise that for a century the trade unions have been endeavouring to lift the status of women and children.

Miss Rathbone

I am not charging the Labour party with anything except with ignoring this aspect of the question. They continue to urge the re-distribution of wealth as between rich and poor. I agree with them. Wealth is grossly unequally distributed as between different classes; but there is another kind of mal-distribution, that between the single individual who has only himself to sup port and, on the other hand, the family as a collective unit of man, wife, and children. At the present time these have no more share in the wealth of the community than has the single individual. I am not making any accusation but merely a plea and a request that organised labour should no longer continue to ignore this question and this problem, which—[An HON. MEMBER: "Talk to those people."]—No, I talk to you as well. The other day when I alluded to the question of family allowances, I know that you—

Mr. Deputy-Speaker (Colonel Clifton Brown)

The hon. Lady appears to be talking to me too.

Miss Rathbone

I beg your pardon, Mr. Deputy-Speaker; I am speaking to both sides of the House. I alluded to this matter in a speech in a recent Debate, when the Minister of Labour was on the Front Bench. He immediately seemed to think that he had caught me out because he recommended the hon. Lady to direct her remarks about family allowances to those who sat above her, when she would soon find that their measure of agreement ceased at that point. I do not know whether the Minister of Labour was wrong or right in thinking that organised labour is rather unfriendly to family allowances. I hope he is wrong, and I have a certain amount of reason to believe that he is wrong. I pointed out before that, on the only time that organised labour had vouchsafed to discuss this subject, it had come down in its favour.

I ask them not to bury that long overdue report but to dig it out of its place in Transport House and to study it, in relation not only to the past but to the present and future, and to bring it into relation to the matter, which is now under consideration, of how the Government are to prevent, and haw organised labour want the Government to prevent, the vicious spiral of the race between wages and prices, without some such device as family allowances. Are you satisfied that price control alone will do the trick, when you know that price control is bound to advantage those who have money to spend? Prices concern only those who have money in their pockets. It does not matter what a thing costs if you are penniless. The price of steak is of no importance to the people who live in the homes of the poor because it is a commodity that they can never afford.

Mr. MacLaren

Why are they poor? That is the whole question.

Miss Rathbone

We are not discussing a panacea for all the evils of the world but a panacea for the particular evil that is under discussion to-day, which is how we are to prevent the poverty of the poor, which was bad enough before the war, from becoming even worse during the war. I challenge you to deny that the device of price control will at best only prevent that poverty getting worse. The device of family allowances would cure it.

8.8 p.m.

Sir John Mellor

I listened with very great interest to the statement of the Chancellor to-day, and I did so, I confess, with undiminished anxiety at his policy of paying out and continuing to pay out £1,000,000 a week in order to keep down the cost of food. It seemed to me that, for a Chancellor of the Exchequer, he appeared almost complacent, and his apparent cheerfulness at contemplating continuing to pay outthat vast sum week by week very much increased my anxiety. We are now in the early days of what may be a long war, perhaps a very long war; at least, we know it can be brought to a conclusion only by a decisive victory. That being so, we should husband our financial resources for all we are worth, not knowing how great will be the demands upon them in time to come or how long that war-time demand will continue. In view of our necessities, I cannot help regarding the Chancellor's policy as involving a great degree of avoidable extravagance.

We are paying out £1,000,000 a week from public funds in order to subsidise consumption and that at a time when our policy should be directed to limiting consumption, especially of commodities which have to be imported. I really admit that hardship, perhaps substantial hardship, will be caused to a number of people in this country in the event of there being a further appreciable rise in the price of food, but I do feel that hardship must be regarded as a relative term.

We must endeavour to relate our estimates of degree of hardship to the circumstances in which we unfortunately find ourselves placed. Measures of alleviation which would be certainly justified in peace time when we have not such great demands upon our resources may in wartime seriously overstrain what we have available. I want to make this point particularly. This subsidy is not exclusively aimed at relieving hardship, because the benefits that ensue from it are being broadcast to all consumers irrespective of their necessities. To take that course and to deplete our resources in order to prevent people paying what would be an economic price is a very dangerous policy, and I fear that perhaps the time may come when we shall regret not having more closely conserved our resources.

Our financial resources are not unlimited. We have only a certain amount of gold and foreign exchange. Our marketable foreign investments are also limited in amount, and certainly in this war we are not going to have the facilities for borrowing abroad that we had in the last war. In these circumstances I think it is very desirable that it should be realised throughout the country by all concerned that a rise in the cost of living cannot automatically be followed by rises inwages to make good the deficiency, and indeed that the standard of living to which people have grown accustomed in peace time cannot necessarily be maintained in time of war. If these things are realised then I think that we ought to be able to avoid what has been described as the vicious spiral of inflation. I am certain that if the people of this country clearly appreciate the difficulties they will not hesitate to respond with whatever personal sacrifices may be necessary. We have to find, in order to meet this expenditure, £1,000,000 a week. That can either be found by taxation or by borrowing or by inflation. The Chancellor of the Exchequer expressly has adopted this policy in order to avoid inflation.

Surely we can hardly contemplate borrowing money in order to spend it upon subsidising daily consumption. Therefore we fall back upon a prospect of further taxation. I feel that as far as Income Tax payers are concerned in providing 7s. 6d. in the £ they are already paying at least their fair share of what is demanded of the community. I do wish the Chancellor of the Exchequer would be bold in safeguarding our resources, that he would warn the nation of our immense liabilities, and remind people that even after victory there will be a long time in which the great expenses which we have now will continue. A long period of reconstruction is bound to follow the war and during that period much of this emergency expenditure is certain to continue. I think the rather unexpected way in which the war has developed in its early phases has lulled some people into a false sense of security. The Chancellor of the Exchequer should do nothing to soothe the people of this country, but he should do all he can to bring home to them the magnitude of the financial task that lies before us.

8.18 p.m.

Mr. A. Bevan

I have a greater sense of relief than is probably shared by those who are listening to me. We have been sitting here the whole evening listening to speeches from the opposite side of the House, which have been largely homilies directed to the working classes pointing out to them how necessary it is that they should be moderate in their demands during war time and how if they try to increase wages as the cost of living increases such action is bound to have an inflationary effect. I shall not refer to the vicious spiral, because it has become a totem pole, but there is one fact which has not been sufficiently commented on in the Debate. I have read in the "Times"and other publications essays written by some of the economists upon this matter and I agree—it would be foolish to deny it—that there are certain mathematical relations between our wartime effort and needs and our total resources which are very disquieting. It is no use anyone suggesting that we have inexhaustible resources out of which we can wage war and build a higher standard of life, but I would like hon. Members to realise that in all these calculations one factor has always been omitted and that the conclusions drawn all rest upon the assumption that there are no longer any unemployed in Great Britain.

The calculations of Mr. Maynard Keynes, the calculations in the "Economist," the calculations in a number of pamphlets which have been written, all show that the inflationary influence does not start until all the factors of production are in full employment and the total labour force of the country is at work, and that any further increase in the purchasing power of the community is bound, from that point on, to result in increasing prices because no one can be called into production to supply the additional demand. There is one qualification of that generalisation that I shall make in a minute or two, but that is the one conclusion upon which all the calculations have been based. We are a very long way from that situation. Where is the need for the Chancellor of the Exchequer and the Prime Minister to deliver homilies to the country about the necessity of restricting purchasing power at the moment, in order to prevent inflation, when there are more than 1,500,000 people out of work, when many industries are still not in full employment, and when there is behind all the male labour that can be mobilised for production a considerable reserve of female labour that can be brought in to add to the sum total of wealth before any increase in purchasing power need necessarily result in inflation?

I believe it was one of the peculiar contributions of Dr. Schacht in Germany that he pointed out, and made his principle the basis of the whole of his financial operations, that once you depart from the Gold Standard, once you leave a commodity basis for your currency and reach "fiat money," "edict money," an artificial currency, the standard upon which you base the issue of your purchasing power must be directly related to the sum total of the commodity that can be called into existence by purchasing power. It is, fortunately, one of the better results of the growth of totalitarianism that we are beginning to see the functions of money better than we were before. But—I wish to rub this in, because it has not been sufficiently considered this evening—there can be no danger of inflation in Great Britain so long as you have such a large part of your labour force out of work. Therefore, so far from homilies being directed from that side of the House to-day, so far from Labour people having to listen to dissertations from our amateur economists, who are always very learned and very ingenious, but who always run away from the central issue, so far from any charge lying against the Opposition, the charge lies against the Government that, after five months of war, after making all allowance for the dislocations that must result in the change-over from a peace economy to a war economy, there are so many unemployed and such a failure to make full use of our means of production.

The indictment goes further. People in these Debates are very chary of discussing the fundamentals of these matters, but the remedy for this unemployment lies in the hands of the friends of hon. Members opposite. The right to dismiss and to employ is not in the hands of hon. Members on this side, but is in the hands of, or is neglected by, those who at the moment own industry. Whatever we may do at the moment, it is only in order, by inducement, or bribery, or assembling favourable economic circumstances, to induce those people to give jobs. So we are at the moment discussing this matter as an abstract question. Those who at the moment, by our economic system, are charged with the responsibility of employing our labour force are not doing it, and, so far as I can see, they show no signs of doing it in future. We are told that this is the inevitable time lag and that, as the rearming of the nation undergoes increased momentum, these men will be called into work; but it is a remarkable fact that only recently the figures of un-employment have gone up. That is explained away as a "seasonable fluctuation"—another piece of mumbo-jumbo which is brought in to explain these variations all round.

I earnestly suggest that the working classes of Great Britain are not such fools as to be taken in by the lectures that they are getting over the radio and by public speeches delivered by right hon. Gentlemen opposite, because every collier and every steel worker and every agricultural labourer asks himself this plain question: Why should there be this shortage of wealth in Great Britain when there are unused factors of production in the country at the present moment? You can start your lectures when we have first maximised production in Great Britain. In the last few days we have been discussing a subject, agriculture, which has a direct bearing on this matter. We were told that there are in this country millions of acres of land lying idle, land going sour, land going back to scrubland, because it is not being drained, not being ploughed. There is no difference of opinion about that. In the second place, it is universally admitted that the landlords have not got the capital resources necessary to drain the land and to put it into cultivation. It is also universally admitted that an increase in the production of foodstuffs in this country is one of our most urgent necessities, because it economises the use of shipping.

A Bill was introduced into the House for the purpose of inducing, bribing, blackmailing the owners of land to do the job which, for various reasons, they had neglected to do. It was criticised because the amount of money made available by the Treasury was insufficient. Why was the money insufficient? For the very obvious reason, that the rest of industry, the owners of steel works, coal pits, and factories, do not like the idea of paying increased taxes in order to pour money out to landlords so as to make the landlords' properties more valuable. So you have a tug-of-war between the interests of the landlords, who want to get the money into their property, and the interests of the owners of industries, who naturally do not want to pay it. While that tug-of-war goes on, millions of acres continue to lie idle and potential sources of food production are unused. There, surely, is a very easy way out of this difficulty. If land is not being used, let the Government take it. I know that this is not the occasion to discuss that, and I am using it only as an illustration, but I would submit that there is really no justification for all this talk that we are having at the present time.

What we ought to do in circumstances of that kind is to take the land from the landowners who cannot use it, in exactly the same way as we conscript the young men and put them into the Militia, instead of trying month after month and year after year to devise some more ingenious piece of machinery to try and get this job done. If that were done we could use that idle land and could put the idle labourers in hutments where land drainage has to be done and employ them at decent wages, and eventually bring millions of acres of land into cultivation. That would economise shipping and push back the bogy of inflation a little further. We do not do that because this House will not lay sacrilegious hands upon sacred private property and will not cut through this canker of private interest. Every economic, financial and social problem is discussed on the assumption that nothing must be done which interferes with the central citadels of private property. When this gets across to the country as a whole and our people begin to understand it, as they will as the war goes on, you will find that you are putting a Trojan horse into the heart of every citizen of Britain, who will feel that he is being unnecessarily sacrificed because the capacity of the country is not being sufficiently and efficiently mobilised.

The hon. Member for East Aberdeen (Mr. Boothby) talked about the necessity of an iron ration. The hon. Member always makes very interesting and informative speeches. He suggested that, if we could restrict the index of the cost of living to a narrow range of essential commodities, we could then allow the prices of all other goods to flow freely, and then the working class of Great Britain would be satisfied that they would not need to demand an increase in wages to meet the cost of living because their demands could be directly related to the iron ration. A rotten proposition could not have been put more unattractively. It would not get rid of the major injustice to the manual workers of the country, upon whom at this moment, apart from the men in the fighting Forces, the main burden of the war is resting. The proposition that steel workers, miners and engineers shall subsist upon this restricted margin of commodities, surrounded by the spectacle of war profiteers being able to buy goods at highly inflated prices, but still able to buy them, will never be accepted by the organised industrialists of this country. We cannot admit for a moment that during war-time it should be possible for well-to-do people to buy luxuries to their hearts' content in restaurants and shops, and to restrict the working section of the population to the misery of an iron ration. I hope that the Government will not toy with that idea. If we are to do the job properly there must not be restriction by price rises. If you try to restrict commodities by allowing the prices to rise further and further, it will still leave the country with the spectacle of some people being able to buy those goods, and, by being able to buy them, cause the employment of labour in the distribution of goods, and sometimes in the making of them, which ought to be otherwise employed. That is what hon. Members opposite do not seem to realise.

Sir R. Tasker

I have an iron ration from the South African War that the hon. Member may have.

Mr. Bevan

I am not aesthetic, but we must consider these matters realistically. Every time a West End restaurant opens, it is not merely a matter of having to find the food that is sold on the table or the shipping for that food, but a whole host of people have to be employed in the service itself. Before you ask the working-class people of Great Britain to reduce their already too low standards of consumption, you must prohibit by law the importation or sale of certain goods. That is the only way in which it can be done. The position would become worse if an ever-dwindling margin of rich people were still able to consume the higher-priced goods. That would simply present the intolerable social spectacle of a smaller and smaller number of very rich people being able to consume those goods in the presence of millions of others suffering from privation. I know of no way more likely to demoralise the civilian population. If you accept this hard core of standard consumption called the iron ration and then allow the prices of luxury goods continuously to increase so that a narrower section of the community enjoy them, you will not only be demoralising the population, but the very rich would be unnecessarily exposing themselves to the indignation of the rest of the people. There is nothing which leads to social unrest more than being able to see the man who is exploiting you just where he is doing it, and how he is doing it. I suggest, therefore, that it would be unwise for the Government to pay any attention whatever to the suggestion which has been made.

I want to say a word about the speech of the hon. Lady the Member for the English Universities (Miss Rathbone). It seemed to me that in her enthusiasm for family allowances she allowed herself to make rather extravagant assertions against Members on these benches. I am as sympathetic to the principle and philosophy of allowing definite family allowances as any other Member of the Labour party, but I would advise the hon. Lady, if I may do so without presumption, not to take her analogies from France and Belgium. They have different standards of life and a very low average of wages, and family allowances have no influence on the birth rate.

Miss Rathbone

May I ask the hon. Gentleman whether he is arguing that it is because of family allowances that wages are low in France and Belgium? All the evidence is against that. In the second place it is not quite true that family allowances have no influence on the birth rate. The birth rate in France now is higher than in England, although some years ago it was much lower.

Mr. Bevan

I do know that an important investigation was made into this subject a few years ago and that a book was produced by Professor Glass in which the conclusions of the hon. Lady were rebutted. Professor Glass pointed out that all that could be said for the effect of family allowances on the birth rate was that perhaps if there had been no family allowances the birth rate might have been lower.

Miss Rathbone

I do not want to interrupt the hon. Member, but what Professor Glass pointed out was that allowances cost but a small fraction of the cost of maintaining a child. If parents are hesitating as to whether they can afford another child they are not likely to be induced to afford another child if they get an allowance of one-third of the cost of the child.

Mr. Bevan

As a matter of fact I believe it would be far better to discuss afterwards with the hon. Lady what the professor did say rather than waste the time of the House. But there was a further thing which the hon. Lady said and that was that Members on this side of the House had, according to what she had been told, been responsible for preventing the introduction of family allowances in this country at the present time. What does that infer? It infers that the other side of the House was ready. If that is so, is it ready to increase the sum total of the national income by supplementing it with family allowances, or is it that it really wants a redistribution of the same amount? Another objection, apart from minor objections, is this: if family allowances are going to be introduced they should not face the psychological impediment of reducing the wages of some workers. It is because that side of the House intends that some workers should have their wages lowered in order to give family allowances that they are ready and we are not.

Miss Rathbone

What is the evidence of the hon. Gentleman for that?

Mr. Bevan

My knowledge of that side of the House. Otherwise, what does the hon. Lady mean by that contention?

Miss Rathbone

Family allowances are not regarded as wages—

Mr. G. Griffiths

The other side regards them as such.

Miss Rathbone

Most people consider that the giving of family allowances is a possible way of preventing real wages falling by supplementing the wage with allowances.

Mr. Deputy-Speaker

This is all very interesting, but I would suggest to the House that we were discussing another subject.

Mr. Bevan

With all respect, the hon. Lady made a long speech in which she was not interrupted and most of her remarks were entirely on this subject, despite the unavailing attempts of the Speaker to prevent it. All I was trying to do was to answer one or two of the points she made, but I will not pursue the matter, although the hon. Lady assumes that that side of the House is prepared to increase the sum total of money payments made to the working class by paying a sum of money in family allowances. If that side of the House will support her in the inference nobody will be more delighted than this side of the House, but we know that that side of the House has a peculiar reverence for what is called a wages fund. They do not mind a sum of money being distributed among some of us, but what they do not want is to reduce the amount of surplus in order to increase our share. However, I apologise to the House for taking so long. Might I say, in conclusion, that I believe the Government would present a case more agreeable if they showed more energy and success in employing the unemployed in Great Britain and maximising the production of this country, as well as economising by limiting the demand for luxury goods that can be imported? After we have done a bit of reducing at the top, if the nation is still faced with such a state of affairs as will justify a reduction of the standard of the ordinary community, we shall be more ready to listen.

8.47 p.m.

Sir R. Tasker

The speech of the right hon. Gentleman who opened the Debate drew attention to Treasury grants to arrest rises in prices. It was constructive and informative, but we seem to have wandered a long way from discussion of Treasury grants. There has been a good deal of discussion about percentages. I suggest that we had better leave percentages alone. What I am concerned about is the cost of food, and that is what we are supposed to be discussing. I think noone should be dictatorial in fixing a certain number of pence or shillings per 1b. on any material. What we find in our own home would be different for someone in the next town or city. To get fair average prices, therefore, I asked a restaurant keeper to disclose to me the cost of food now as compared with the cost before the war. It would be unfair to give the name of the restaurant keeper, but the Minister can have the document if he so desires. I cannot reconcile 5, 10 or 20 per cent. with the figures my constituent has given me, and with the permission of the House I will read them. Veal; all flesh pre-war 7½d. per lb.; to-day with bones 1s. 4d. to 1s. 6d. Loin of beef, with the fillet, was 6½d. a pound before the war and to-day, without the fillet, it is 1s. 2d. and 1s. 4d. a pound. As I have said, these prices vary in costs per lb., and differ from one area to another. It is, for instance, obvious that these goods are cheaper in a street market in London than in the stores.

Mr. G. Griffiths

Is it English or foreign meat?

Sir R. Tasker

It is English meat. Before the war, liver was 6d. per lb., to-day it is 1s. 4d. Lamb carcase was 6½d. per lb., and to-day the price varies-from 1s. 2d. to 1s. 4d. My right hon. Friend mentioned dripping. The figures which I have do not quite agree with his, but they are comparable. The great increases which he cited are generally confirmed by the figures which I have. Before the war, dripping was 6s. 6d. per quarter of 28 lbs. and now an inferior quality of dripping is 12s. 6d. a quarter. The right hon. Gentleman did not say anything about the inferior quality, but we know that many of the foods that are delivered to-day are inferior in quality. Before the war, chickens were 11d. a pound; now they are from 1s. 6d. to 1s. 9d. a pound. Pork was 8d. a pound, now it is 1s. 4d. a pound; sugar was 2½d. a pound, now it is 5d. Tea was 1s. 1d.; it is now 2s. 2d. Eggs were 7s. 6d. for 120; now the price is 14s. 6d. Butter was 11d. a pound; now it is1s. 7d. Margarine was 4d. to 5d. and is now 7d., and we have been informed that it is going up. In the case of fish, cod fillet was 5d. before the war, and now it is 1s. 2d. a pound, that is, the whole cod, head and bones. Plaice was 10d.; now it is 1s. 4d.

There must be a reason for this great increase in prices. I suggest to the Minister that there should be an examination to find out what are the transport costs, because if the building industry is any criterion, transport is responsible for a good deal of the increase. The building industry is being strangled at the present time by those who control the issue of petrol. My own business is being strangled. I am denied the petrol necessary to conduct my own business. A person can get petrol for the distribution of toys, and an official can use petrol in order to go to feed the birds in the park, but I cannot get it for my business. If one cannot get building materials, due in some measure to lack of transport, it is fair to assume that one is unable to get food for the same reason. Therefore, I urge the Minister that the question of transport should be looked into. Let us find out what is this senseless system of rationing which is throttling the trade of the country. It is of no use accumulating huge stocks if it is not possible to distribute them; they cannot always be distributed by rail, speedy though rail transport may appear to be. It is a fact that very often goods can be delivered quicker by canal than by train. I do not blame the railways for that, because they have to make up a train, and a truck containing certain goods may be put into a siding for perhaps a week.

The food which is coming into the country cannot be stored for an indefinite period. Everybody knows that really there has been no shortage of bacon. People would not buy it, then the ban was lifted, and now one can buy much more bacon at a price, but that price is one which ordinary men and women cannot afford to pay. The bacon will go bad. Similarly, butter cannot be kept for an indefinite period. I do not want to labour the point, but some of us have very grave misgivings as to whether the present system of control is good for the nation. I do not want to add to the work of the Minister, for he has a very difficult task; we all sympathise with him, and can perhaps congratulate him to some extent on the success which he has obtained by his efforts. However, we cannot get away from the fact that there are two things which are necessary to life; one is food, and the other is shelter. I place food first only because one can subsist without shelter for a longer time than one can without food.

After listening to the Debate for six hours, may I say how much I deprecate the gyrostatic ability of certain hon. Members to discuss things not relating to food, as indeed they were entitled to do on the Adjournment Motion; but may I make an appeal not only to the House, but to the community at large, to stop wasting food? In the streets of London one can see bread scattered all over the place. That isa wicked waste; in time of war it is criminal. I agree with one hon. Member who said that the combatants must come first. He said that when he was a soldier he always had full rations. I think he must be the only hon. Member who had full rations every day as a soldier. I am willing to forego a portion of my ration in favour of the men on the seas, on land and in the air, who are preserving me, but I ask the Minister whether, with his great authority, he could not issue a warning to the public not to waste food which we may want in the near future.

9.0 p.m.

Mr. Garro Jones

We have had, so far, a very interesting Debate, which has, at any rate, served to show that this problem of food prices, like most problems when brought under close examination, is one o considerable complexity. But there appears to have been in the House to-day unanimity in the view that the total volume of goods for civil consumption must be reduced. That is, indeed, a self-evident proposition, not only on account of the diversion of home effort into military channels, but also on account of the drastic reduction of imports, notwithstanding all the palliative measures and stimulants which have been applied. The Chancellor of the Exchequer gave us, as usual, a very patient and clear speech, but he did not, I think, give us a very clear exposition of the operative principles by which, alone, the problem of the shortage of goods for civil consumption is to be solved.

The question is, How is the sacrifice to be equally borne and efficiently distributed? I must say I was a little dissatisfied with the only general principle which the Chancellor of the Exchequer laid down. His words were: "Every person other than the poorest of the poor must suffer a reduction." We think that without a considerable expansion and modification of that principle beyond any explanation yet given, it will operate hardly on some millions of our people whose health and vigour are as vital to the efficiency of the war effort as those of the soldier and sailor. I do not wish to introduce too controversial a note into a Debate in which there has been a singular harmony of views. But I must say that, from such indications as we have had of the Government's outlook on this matter, it would seem that a little readjustment of their perspective would help to secure a truer view of the position.

A short time ago the Chancellor of the Exchequer made a speech in Glasgow. I received a number of letters from people in my constituency commenting on what the right hon. Gentleman said. He quoted examples of working-men who had sent him 10s. a month out of their wages and one case of a poor pensioner who had sent him 5s. a week as a loan free of interest. The comments which I received were to this effect: "These must have been very strange examples of poor men and pensioners, because none of the poor men and pensioners of our acquaintance would be able to spare those sums after providing themselves with the bare necessities of life. "I thought it strange that the Chancellor of the Exchequer, upon that occasion at any rate, omitted to say how many of the 100,000 people with incomes of over £2,000 a year, and how many of the 180 people with incomes of over £100,000 a year, had sent him benefactions towards the war effort. Then there was the speech of the Prime Minister recently at the Mansion House, a building which the Lord Mayor described, without descending to particulars, as a home of great causes. The Prime Minister said: We cannot guarantee that the sacrifices of all are going to be equal, but if each one makes the sacrifice as the call comes to him, his own conscience will be clear. That was hardly a clarion call for equality of sacrifice. It seemed to me that the trumpet had a very uncertain sound in the Mansion House, particularly having regard to the fact that the Prime Minister, evidently feeling it to be indelicate to awaken conscience too roughly in that home of great causes, went on to say: The standards of living of the wealthier classes have already been notably reduced. Several Government spokesmen in the country including the Prime Minister, have drawn attention to the fact that two-thirds of the goods used for civil consumption in peace-time—and the Chancellor of the Exchequer has used the same figure—are consumed by people with incomes of less than £5 a week. When we join that general statement with the other indications of the Government outlook to which I have referred, then it would seem that the Government are looking rather too low down in the scale and are asking from those at the lower end of the scale far too great a proportion of the sacrifice which must, undoubtedly, be exacted from all our people. We have been told to-day of a few elements in the Government's policy, such as food subsidies and rationing schemes. We have not heard much about the proposed measures for persuading saving, although they undoubtedly will have to enter into the Government's action, and we have heard nothing so far about any general plan by which a reduction of goods for civil consumption is to be achieved.

I have no doubt that such a plan is being considered and I think the House is entitled to some information on the point. I ask whether it is not possible for the Government to set before the House a chart or table showing the civil consumption of goods in peace-time and to indicate in what classes of goods and in what proportions consumption is to be curtailed, as far as planning can secure that curtailment. I was looking the other day at a table which seemed to me to be absolutely vital if this problem is to be tackled in a scientific manner. It is in a book by a very well-known economist, Mr. R. W. B. Clarke. The table gives civil consumption for 1937 classified under the headings of necessities, rail, tram, and bus travel, drink and luxuries. It indicates the total expenditure under each of these heads and under sub-heads, and it suggests the percentage of each class of goods which could, efficiently, be curtailed for the advancement of the war effort. The Government must have considered the question on those lines, and before we can see whether they have a true perspective on the question of how the sacrifice is to be equally borne, the House is entitled to know on what lines they propose to distribute the burden.

I contend that the first thing in this vast problem is to provide for the absolutely essential needs of those on subsistence levels. Rationing will certainly not do it; it will accentuate it, if it is possible, for some who have the means to purchase the goods, while the less fortunate will have to fall below their ordinary diet. I entirely agree with the hon. Member for East Aberdeen (Mr. Boothby). There should be, and indeed there will have to be, some means for these people to supplement their rations, to establish the essential principle of equality of sacrifice. In the case of butter, for instance, we know that its distribution is very unfair between the different classes of the population. Anyone who happens to be able to go to a restaurant for two or three meals in the week can in fact get as much butter as he likes, because his butter ration is accumulating all the time at his home. There are plentiful supplies of margarine, so why should not the Government adopt a scheme of mixing all the butter and margarine so that nobody would have butter, but everyone would have "butterine," which is a mixture of both. That would be a simple gesture which would go far to show the earnestness of the Government's intentions that there should be equality of sacrifice.

We have heard a lot about that popular figure of speech known as a vicious spiral, although I notice that the Chancellor of the Exchequer scrupulously avoided the use of that term to-day. I would like to know to what extent the Government plan to prevent the upward coil of the vicious spiral, by holding prices down to the wages and to what extent they intend allowing prices to fly away from wages. We have not had a definite answer yet on that point, and it is vital that we should know the policy of the Government in that respect. The Chancellor's statement was of a very tentative character, and his announcement on the subject was not very clear. The right hon. Gentleman said that the Treasury could not shoulder an ever-increasing burden, but he was conscious of the disadvantages of an excessively marked or swift increase and would do all practicable to avoid that for a time at least. We are certainly not committed to the principle as yet that the Chancellor is going to prevent prices rising out of the reach of wages. It is essential for the national fitness and the morale of the nation that we should be assured that the problem will be handled with determination, because I am afraid prices will rise a good deal more quickly than wages in the future.

A great many metaphors have been used to-day, but I would use a simile to describe the right hon. Gentleman's attitude to the relation of prices and wages. He reminded me of the taxi driver who finds it very difficult to discover your change when your train is about to pull out of the station. Eventually you have to run to catch the train without having received your full change. The position of the workers may be very similar, and they may find that prices are rising out of reach of their wages. The right hon. Gentleman is handing out this £1,000,000 a week from the Treasury, and while gazing with rapt attention at his generosity, we must remember what the Treasury is gathering in special taxation on commodities, to say nothing of the Government's trading profit. If we off-set the amount which the Government are going to spend to hold food prices against the increase in taxation on food, drink, and tobacco, and add to the off-set the sum made in profit by the Government's trading, of which many examples have been given, particularly by the hon. Member for West Middlesbrough (Mr. K. Griffith), showing a profit of 60 per cent., we may well find that the subsidy of £50,000,000 is rather an illusory concession to reduce the cost of living. I would like to ask the Minister of Food whether the sum of £50,000,000 is merely to be thrown in as a debit into the foodstuffs trading account, or is it to be expended independent of any profit or loss in the Government food trading account? If the sum is going to be merely thrown in as a debit for the food account, this may be an illusory concession. I should like to see in a clear form some account giving all the debits and all the credits of the Government trading account.

The object of this Debate has been to secure a clear statement from the Government of their plan, and I would like to know by what percentage we are to aim at reductions in the consumption of civil goods over the whole period. Has it been decided how much are to be the amounts? Secondly, I should like to ask what needs of the civil population are going to be met at all costs—are going to receive priority and are going to be supplied before any other needs. Thirdly, shall we have a profit-and-loss account of the Government trading, in foodstuffs in particular? I should like to see it over the whole field. What measures of induced saving are going to be introduced, and, if they are to be applied to workers with increased wages, upon what conditions are they to be enforced; and will the Chancellor of the Exchequer give assurances to those with whom he is in negotiation that induced or persuaded savings on the part of workers with increased wages will not be secured in a way detrimental to their later interests?

I think that above everything it is necessary to get the moral factor right. There is a tremendous amount of dissatisfaction at present throughout the country with this alleged principle of equality of sacrifice, and any dissatisfaction on that ground is a stimulant of fearful potency to discontent, and discontent of a character which will loosen the very foundations of our war effort; and I think it is necessary for the Government to do something definite and drastic and immediate in order to remove that dissatisfaction which undoubtedly exists over the whole country. There is one concrete suggestion that I will put forward, I do not think that a food-rationing system will ever be fairly administered on the basis of ordinary controllers from the trades concerned. We know that that was brought about because the Government were acting in a hurry. They had lacked foresight. They had not prepared plans, and so were compelled to go to the first men they could find who had knowledge of the subject. I do not wish to lay any insinuations against the good faith of the local food controllers, but in the profession of which I am a very humble member—I say it with the greatest respect in the presence of the Chancellor—we have a maxim which has become popular even among laymen, and that is that it is not only necessary to do justice, but to enable the public to see that justice is being done, and the same principle should be applied in order to displace among these food controllers a large number who have large vested interests. It may be that for quite a long period they will have sufficient moral fibre to be willing to disoblige the firms where their money lies, but the public are not going to believe that, and I do not blame the public for not believing it, if there is found to be I will not say corruption, but bias and unfairness, and favours shown to their own friends.

I heard the Minister of Supply, in answer to a question of mine, with tremendous satisfaction say that he had insisted that they should sever all active participation in the operations of their private firms, but that does not get him out of the problem. Where their treasure lies their heart lies also, and it is no satisfaction whatever to me to know that, instead of actually managing the firm himself, he has put a salaried man in, and all the time his financial interest in the firm remains just the same. I think their appointment may have been necessary as an emergency measure, but I should like gradually to see them displaced. It is unnecessary to have a man who knows the particular trade. In the last war, as far as my recollection goes, the most efficient food administrators were my right hon. Friend the Member for Platting (Mr. Clynes) and Lord Rhondda, who was the Coal Controller, working through local authorities. Lord Rhondda came out clearly from the start for the consumer. He made public declarations. He said, "I am for the consumer.'' What food controller, from London to any provincial town, has had the courage to make that statement to the people? It is bound to be made, or else great discontent will continue. I have been a little amazed at the question of Socialism as it has arisen out of to-day's Debate, and I am almost beginning to feel ready to accept, as far as my authority goes, any recruits, however emiment, from the other side on the basis of true repentance, to Socialism, if only for the duration of the war. When that is over, I think Socialism will look after itself.

There is one other thing I should like to say. I hope we shall have rather fewer meetings throughout the country in which appeals for sacrifices are being made to whose who are perhaps least able to bear them. I recognise that sacrifices will be necessary from all classes, but we are often invited to appeal on the platform to the particular classes of workers who sent us here to join in these sacrifices. Cannot we have some meetings, for example, of munition manufacturers, bank and insurance directors, and Government stockholders? Is there any reason why we should not have meetings to make appeals to them for equality of sacrifice? I am certain that every one of my hon. Friends would be delighted to participate, and, if that were done, and the people were satisfied that a lead was being given by those able to make those sacrifices, I am convinced that the Government would not call in vain for sacrifices from every class of the community to carry this greatest effort in the history of our country to a successful conclusion.

9.28 p.m.

Mr. W. S. Morrison

As a preliminary, may I offer my respectful congratulations to the hon. Gentleman the Member for North Aberdeen (Mr. Garro Jones), this being the first time that he has addressed us from that Box. The character and the quality of his contribution this evening induce us to look forward to listening to many equally eloquent and thoughtful addresses from him. If I say that, however, it must not be presumed that I entirely agree with everything that he has said, though I agree with him profoundly when he says it is necessary to get the moral questions involved in this struggle right, and in his insistence on the desirability of the principle of equality of sacrifice. But I could not help reflecting, when he was addressing us, how difficult it is to carry out an ideal like that with mathematical precision. I could not help thinking of the seamen who this night are are on the ocean bringing us supplies, of the airmen who are guiding them and of the fishermen who have the terrors of brutality added to their labours. None of us sitting at home, whatever our station in life, can make a contribution equal to theirs. What we can do in our place is to see that, as far as possible, we do not call upon them for greater exertions than are necessary or expose them more continuously to the perils which are part of their work.

The public generally have accepted the proposal that we should do everything to ensure that the health and efficiency of the population are maintained, that all excess of importation is eliminated, and that all our resources are directed to the best advantage. I admired the hon. Member's ingenuity in hanging the argument for equality of sacrifice on to a proposal which is expressly designed to mitigate the hardship of war prices for those sections of the community which receive the least money in the ordinary nature of events for the commodities which are most generally consumed. The Government's proposal, which the House generally accepts has as its object to mitigate any hardship due to advances in the prices of staple commodities. I would ask the hon. Gentleman to reflect again on his proposal that we should mix butter and margarine and sell it under the composite title of "butterine. "I do not brush the suggestion aside thoughtlessly, but it would have the effect of raising the price of margarine, and the price of the commodity which would result from the operation would be bound to be higher than that of the nutritious and vitaminised margarine itself.

Mr. Garro Jones

The basis of the Government's rationing scheme for butter is that everyone will be able to buy butter. It leaves out of account the argument of the right hon. Gentleman that everybody has not enough money to buy butter. If they have enough money, on the Government's hypothesis they have the money to buy "butterine."

Mr. Morrison

I do not think it can be carried logically to such a conclusion as that. The fact is that in peace-time, without any activity on the part of the Government, there has always been a large sale for margarine, and those who are accustomed to buy it would resent having it mixed with butter at a higher price.

The right hon. Gentleman the Member for Hillsborough (Mr. Alexander) advanced the argument that, as my right hon. Friend the Chancellor of the Exchequer extracts in taxation on sugar and tea from all sections of the community a sum approximating to the subsidy, there is not much gained. My right hon. Friend dealt with that in his speech and he would like me to re-state it so that the matter can be made as clear as possible. The £50,000,000 now being spent in preventing further rises in prices represents a saving of a further 12 points in the index of food prices. The increase due to increased taxation on sugar and tea last year added two points to the cost of living, so that there are two different indices to compare. My right hon. Friend wishes me to make clear that as food is about 60 per cent, of the cost of living, our subsidy saves 7.2 points in the cost of living.

Mr. Harold Macmillan

How many millions will be raised by the increased sugar duties?

Mr. Morrison

I do not carry the exact figure in my head, but the point is that by this subsidy we are depressing the cost of living and the cost of food more than increased taxation raises them, and thus adding considerably to the food resources within the reach of the people.

Mr. Alexander

I do not want to be controversial, but I am sure the Minister and the Chancellor of the Exchequer would like to understand my position. It is not that I resist the efforts to keep down the cost of living and prevent a rise in prices by a subsidy. What I did say was that as the actual increase of taxation on tea, plus sugar, is about £25,000,000, and as the cost-of-living index includes every food into which sugar enters, you are nearer six points rise in the cost-of-living index than two. The whole point is: On what basis do you estimate your cost of living?

Mr. Morrison

For the purposes of this comparison we are taking the official cost-of-living index. If you take something else you can arrive at different results—there is no end to the process; but my right hon. Friend desires me to make it clear that if you compare what really are comparable, the cost-of-living index in the one case and in the other, the position is as I have stated.

The hon. Member also recalled to me the memory of my predecessor, Lord Rhondda. I need not state that the purpose of the Ministry of Food is to safeguard the interests of the consumer under the unnatural conditions of war-time, but that does not mean that it has regard only to low costs on a short view, but that it tries to secure supplies by offering, in the case of home-grown products, prices which can evoke them. The right hon. Member for Hillsborough asked me a number of questions of a detailed character, and I think I can answer them if I analyse the present subsidy. That analysis shows roughly: Total, some £50,000,000; flour and bread £26,000,000, meat £16,000,000, milk £12,000,000 and cheese £600,000, plus the figure which my right hon. Friend mentioned as regards bacon. Those are the articles which are mainly affected. That, I think, will answer a great number of the right hon. Gentleman's questions at once. Let me analyse these main commodities—flour and bread, meat, milk and cheese. Some of these are imported and some are home grown. By far the greater bulk of the flour and bread are provided by imported wheat. In the case of meat, about half is imported and half home grown. In the case of milk, it is all home produced, and cheese is mainly imported.

That analysis brings me on to another matter, the policy of buying when you are dealing with imported produce and the policy of buying when you are dealing with home-grown produce. The right hon. Member for Hillsborough expressed concern lest the proportion of the subsidy which passes to home producers of these articles meant that we were offering excessive prices to the home producer. I can only say that, in my opinion, the prices are fair, but I will say this, that in dealing with home produce we have not proceeded upon the basis of paying the home producer the very minimum that is payable. We have sought to give such a price as will encourage his further efforts.

Look at what we are asking the home producer to do. We are asking him at this stage to go in for a great ploughing-up campaign which will give a great impetus to the agricultural effort of this country. We have to make sure that our policy towards him and towards the country as a whole will give him confidence that if he labours it will not be labour lost. I am sure that hon. Members will see that this is a really wise policy to adopt from the point of view of the country, and I can offer one or two observations upon it. We have recently had a number of Debates upon agriculture, and many schemes have been proposed for putting that industry upon its feet in the national interest. One of the things most powerful in stimulating agricultural production is a fair price for the product. With that settled, you can deal with many other problems which it is difficult to solve by more cumbersome methods. The question of credit has been discussed, and I do not want to say anything at the moment about what we propose in that regard, but if prices are made fair and reasonably remunerative, the credit problem as a whole solves itself to some extent, because the industry becomes credit-worthy and you get many problems which appear extremely difficult of solution upon a large scale solving themselves in that way.

If you look at what may be our experience in this war, it is clear that the more that can be produced at home the less will be the drain on our exchange and our shipping. I tell the House frankly that, in my opinion, offering fair prices to the farmers now, when the campaign is in its initiation, is a wise and prudent measure for this country to adopt, looking at the future which lies before us.

Mr. Alexander

I very much appreciate the argument of the right hon. Gentleman. Might I ask him whether he is satisfied that the costs examined showed that the increase, for example, of 3d. on milk was necessary? I ask that question because I had costs before me showing the increase to be quite unnecessary. We farm our own land, and we know what we are talking about. If that is the policy, does the same argument about inducement to production apply to the production of munitions? When you come to offer piece rates in order to induce increased production of munitions, will the policy of which the right hon. Gentleman has been talking be borne in mind in regard to the munition workers who are on piece rates, and what will be their position, in view of the fact that they are producing for the needs of the country?

Mr. Morrison

I am glad to have those questions. May I deal with the second question first? I think it is the view of all in this House that everyone who is asked to produce should be paid a fair price for his work. In agriculture, for years past, men have been working at prices which did not return to them a fair remuneration, and I believe it will be the policy of this House always to insist upon fair remuneration for the work that is done. Farmers must at this time have a prospect of fair prices for the work that they are doing.

Sir Joseph Lamb

At any time.

Mr. Morrison

At any time. The right hon. Gentleman also asks me whether costs were examined to justify these additional payments, and the answer is "Yes." We did that on a number of figures which seemed to me to show that the payments were justified. The right hon. Gentleman mentioned a certain farm in which he said he was interested. I shall be very glad to see his figures, but I might point out that in agriculture costings on one farm cannot be taken as the costing of the next farm. There are all sorts of differences. Looking at the matter as a whole, however, this subsidy policy, I believe, is justified. The right hon. Gentleman also asked how this money was related to past subsidies to agriculture. The answer is that it is in addition to any subsidies given in the past. We are giving this money to enable a fair price to be paid to home producers, and it is additional to moneys paid in the past for agricultural purposes. It sometimes amuses me somewhat to hear of our lack of preparation in agriculture for war, when I reflect upon the great deal that was done between 1931 and the present time to arrest agricultural decline and the sums expended by the Treasury in subsidies not only for agricultural products but also for fertilisers for the land and other purposes. I think we can say, at any rate, that we have prepared agriculture for its part in this war far better than it was prepared in the last war.

Mr. Alexander

I want to be quite clear on this point. Am I to understand that the actual amount of the cost to the Treasury for the subsidy on meat now is £21,000,000 or £16,000,000? The livestock subsidy cost us round about £5,000,000. Is the £16,000,000 additional to the £5,000,000?

Mr. Morrison

Yes. The pre-war subsidy did amount to about £5,000,000. That subsidy is now merged in the price which is paid by the agents of my Ministry for fat cattle. If the higher cost of home production were passed straight to the consumer, there would be no necessity for this additional subsidy. The additional subsidy is on top of that, in order to prevent the consumer bearing the full cost.

Mr. Ridley

I understood it before, but I do not now.

Mr. Morrison

It seems to be that the positionwas not understandable before by the right hon. Gentleman on the Front Opposition Bench, but was by the hon. Member on the back benches. Now it is understandable by the right hon. Gentleman but not by the hon. Member behind him. I think it would be a good idea if the right hon. Gentleman would see the hon. Gentleman after the Debate so that the illumination which now radiates from him is passed on and others may understand.

Mr. Harold Macmillan

May I ask the right hon. Gentleman a question? Among other points, I raised the question of the total amount of the wheat subsidy, as to whether the example given to us of £480,000 was an average price or the present cost of the subsidy having relation to present prices?

Mr. Morrison

I will come to that. I come now to buying abroad, to the amount of food which has to be transported here in ships. The right hon. Gentleman asked how much of this expenditure is rendered necessary by mistakes in buying, by not buying early enough, and various other things of that character. Buying at the outbreak of war, fixing up contracts, was not as simple a matter as fixing up an ordinary commercial contract in time of peace. Beside the commercial consideration of the cheapest market, one had to bear in mind other considerations arising out of war, such as exchange and shipping. It was not always a question of buying in the cheapest market. Sometimes it was a question of buying in those markets which were accessible at the time, and of arranging our shipping programme as a whole so as to do the greatest good for the nation. We were faced at the outbreak of war with a speculative boom in certain foreign countries, which further complicated the task of buying. Perhaps I might give one or two examples. The right hon. Gentleman mentioned a substance, of which until recently I had very little knowledge, called premier jus, which I understand is a very superior form of suet or fat, and which is the highest quality of that article used in this country. The right hon. Gentleman said that we might have had some of that at £19 a ton.

Mr. Alexander

If the Ministry had purchased it first-hand.

Mr. Morrison

But my information is that if there was ever a lot going at £19 a ton, it was a very odd-job lot, of very inferior quality.

Mr. Alexander

Would the Minister call 50,000 or 60,000 tons a job lot?

Mr. Morrison

I will give the figures which have been given to me by those who are familiar with this trade. In August the price of this commodity in the Argentine, which is a great source of it, was £24 a ton. There was a boom in September, in the first weeks of war, which raised the price to between £70 and £74 a ton. The Ministry at that stage held off the market, and the price came down to £40 a ton. We have subsequently made purchases at that figure and at £30, and a few at £28—as a consequence of holding off a market which was rocketing up through the actions of speculators.

Mr. Alexander

I am very anxious to get this right. Hon. Members who have come in now and smile at that reference may not have heard the first reference this afternoon. I said then that the Government were offered premier jus at £19 a ton, before it rocketed under American pressure to £70 a ton, and I said that the Minister of Food did deal with the matter and did bring the price down. But I said that the Minister was very gravely lacking in not buying large consignments at £19 and £19 10s. a ton earlier than that.

Mr. Morrison

There seems to be a dispute about the facts. I said that the price was £24, and that it went to £70 at the outbreak of war.

Mr. Harold Macmillan

What was the price in June, or in March?

Mr. Morrison

I think about £24. But that is not the end of this interesting subject. I apologise for detaining the House. We have, besides buying premier jus at a price of about £40 a ton, actually built up, using selected slaughterhouses under the slaughter-house scheme, a British industry which makes premier jus of a very high quality, and I have every hope that we shall be less dependent for this substance on outside sources when we get the industry really going. Therefore, our policy has resulted, in the first place, in denying to the speculators what they considered to be their lawful gains, by holding off, in reducing the price to one that was reasonable and comparable with the necessities of the situation, and, at the same time, in establishing an industry of our own for the manufacture of this article. And these matters are all to the national advantage.

I could give the House other examples of conditions in the earlier days of the war. I will mention one or two. Sugar in New York rose from 2.8 cents per lb. in August to 3.7 cents on 6th September, three days after the war had broken out, and by January, through holding off, the price was practically down to the previous level. Lard, in Chicago, rose from 5.15 cents in August to 7.77½ in September, and again we held off and the price fell to a little over 6. It is clear that, if we had not held off from some of these speculative markets, we should be saddling ourselves and the consumers of this country with prices far in excess of those prevailing. Quite apart from the subject we are discussing to-night, there are other actions of the Ministry of Food which have resulted in cheapening the cost of food very greatly to the people.

I was asked one or two questions about the matter of replacement values, which was mixed up with the general question, by the hon. Member for Stockton-on-Tees (Mr. Macmillan) and the right hon. Member for Hillsborough. The right hon. Gentleman's argument was, as I understood it, that on the one hand it was reprehensible for a private individual to acquire a large stock of a commodity at a low price and then to charge the full replacement value in passing it on to the public when the price had risen. That may be so, but I think it is the right conduct for the people of this country, when they are dealing with their own food, to take into account in the price structure the element of replacement value. The position is quite different when you are dealing with a private individual selling to the public from that which arises when you are dealing with the whole nation's food and looking ahead at what you may have to pay six months hence.

Mr. John Wilmot

It is a very dangerous doctrine.

Mr. Morrison

It will be clear that any profit that was made would accrue to the public. If any amount is used to withstand a temporary rise, it is all to the public benefit. It is quite a different thing from private profit made in the same way, and I suggest that the wisest policy to follow—it is a vast and complicated business, and I admit the complications—is so to work prices that you avoid as far as you can the instability and the sudden jump which upset budgets and put out the calculations of the housewife. It is essential to try and retain the stability of the whole price-structure of these essential foods.

Mr. Bevan

May I ask, if another Government Department in the course of the next week or so is to discuss this matter with organisations of British industries, whether the right hon. Gentleman's argument is not a dangerous line of argument? What he is saying is in contradiction to the Prices of Goods Act.

Mr. Morrison

I think that if the hon. Gentleman asks the other Department, he is more likely to get a satisfactory answer than from me. All I am saying is that I do not think it is a dangerous doctrine to assert the principle of buying for the nation these immense stocks of food and issuing them with some regard to what the nation may have to pay for them in six months.

Mr. Harold Macmillan

Perhaps my right hon. Friend has misunderstood the purpose of my question. I asked whether he took account of one method of calculation or another. It would be useful to have this information.

Mr. Morrison

I will tell the hon. Member the exact position so far as I can, because I cannot answer him fully without giving him figures about stocks, which I cannot do. The position, roughly, is worked out as follows: The Ministry of Food has a credit from the Treasury which is spent in acquiring stocks which will be circulated through the channels of trade. If, in fact, the income received by the Ministry from the sale does not pay its outgoings, there is a loss, and, in that case, it is made good by subsidies. In answer to the hon. Member for Stockton-on-Tees, when we are considering this matter we do have this wheat in store and we turn over a certain proportion of it at the price at which it can be bought.

Mr. Macmillan

My right hon. Friend is not realising my argument. I want to know whether he takes into account the profit that is made from wheat through its being stored at a lower price?

Mr. Morrison

The answer is, "Yes."

Mr. Macmillan

It is the first time we have had an answer to this question.

Mr. Morrison

I would point out one or two other things. The right hon. Gentleman the Member for Hillsborough did mention whale oil. We made very valuable purchases of that before the war, and I do not want to quarrel with the figure he gave as to the proportion of the price at which we acquired it. We are selling to traders at well under £35 per ton, this price actually being much below the replacement value. It takes into account the stocks we have, the price at which we bought, the replacement charges that will have to be charged in the future, and the public gets the benefit. The result is that, although there are other constituents of margarine besides this fluid, the price of margarine has gone up by only 1d. a lb., and it has been possible to maintain the lowest-priced margarine at 5d. a lb., with the addition that it has vitamins which it did not have before.

It is sometimes forgotten, in discussions on these matters, that there are other buyers than ourselves of these commodities, and it may interest hon. Members if I give an example of what other countries have had to pay in the way of increased war prices. In Belgium, Canadian wheat was sold in August at 23s. 6d., and recently the price in Antwerp for the same article was over 51s. a quarter. In August, fiat maize was selling in Antwerp at 67 francs a quintal, and by 15th December it had risen to 127 francs. My general argument is that there are these rises in the markets and it would not be in the public interest for me to say the exact prices at which we have been able to buy; but I can assure the House that in these great transactions the buying has been skilfully done on behalf of this country, with the assistance of the best experts in the trade. We have made a good bargain in our purchases of these essential commodities.

Mr. Alexander

I appreciate very much the way in which the right hon. Gentleman is attempting to answer on these matters, and I accept his word. On the other hand, it is desirable to remember that, however expert and skilled our buyers may be, there are other people in the trade who are also experts. The experts to whom the right hon. Gentleman is referring cannot always be right in their judgment of the market; nor can the other experts in the trade always be right. During the last four or five months, with a period of 2½ months during which there were low world prices, there was, in my opinion, far too much hesitation in buying. I do not blame the experts who have assisted the Ministry; it may be that we have to blame the Treasury for withholding sanction dollars.

Mr. Morrison

There have been occasions when we have been urged to make long contracts at prices which appeared to be lower than they would be in future. In every case which I have examined where we have refused to buy, the prices have come down since. I can only give a general assurance that the buying has been done skilfully by the gentlemen who have assisted us, and who are probably the most experienced buyers of these commodities in the world.

Mr. Alexander

Among the most experienced in the world.

Mr. Morrison

There are always people who say that something could have been done better, but I can tell the House that these men have done a service to the country for which the whole community ought to be extremely grateful. As regards the question of the profits that are made by the Government, I will say at once that the object is not to make a profit and not to make a loss, except in cases where the loss is deemed to be a wise thing to undertake in the national interest. If one excludes all the cases covered by the replacement doctrine which I have mentioned, the only commodity on which we make a profit is sugar. In that case the profit arises from the fact that one cannot fix retail prices in units lower than¼d. It is a question of a loss if the price is fixed a ¼d. lower, and a gain if it is fixed ¼d. higher. When I tell the House that the profit which the Government are making out of sugar, owing to this arithmetical necessity is 7d. per cwt. I hope hon. Members will not think it excessive. I would also beg the House to remember that anything which is made in the way of profit redounds to the benefit of the nation as a whole which is making the purchases.

I would like to say how much I regret that I did not hear the maiden speech of my hon. Friend the Member for Streatham (Mr. Robertson). I am aware of his acquaintance with the subject with which he dealt, and I shall make a point of considering his views very carefully when I read them in the Official Report tomorrow. My hon. Friend the Member for Stockton-on-Tees asked what causes the rise in prices. I do not intend to go into the question of exchanges and so forth, raised by him, though I was very interested in his views. In the case of one commodity, flour, the rise which has taken place since the war is due to several elements of which I will give a very rough estimate, as follows: the rise is due, as to one-third to freights, one-third to higher prices in the export market and one-third to the fact that we have followed the policy of buying the more expensive Canadian wheats rather than some of the cheaper ones.

Mr. Harold Macmillan

Are these gold prices?

Mr. Morrison

In the case of a sterling area, of course they are sterling prices. In the case of other countries on a different gold parity they are gold prices. The hon. Member for East Aberdeen (Mr. Boothby) mentioned the rationing arrangements, and, if I may say so, he appears to be living in a fool's paradise if he imagines that under the meat rationing scheme which we propose to introduce anyone will be able to go into a restaurant and get as much meat as he likes. That is not the case. There will be an allocation, and it will be made for the purpose, among other things, of securing that industrial workers who, in increasing numbers, get their midday meals in canteens, and who have in many cases agreed to abridge their lunch hour in order to get more production in the daytime, should not have their meals further abridged by the trouble of producing coupons. I believe it to be in the general interest that that arrangement should be made. It will not lead to excess of consumption of meat, because the amount of meat will be controlled. It will also apply to meals for school children. The children will be given the meals without putting the mothers to the trouble of having to send coupons.

Mr. Alexander

I hope in that case the arrangements will include arrangements to deal with shortages of supply to the ordinary trader for the ordinary working-class household. Otherwise, I hope the right hon. Gentleman will withdraw the arrangement.

Mr. Morrison

I always investigate very closely complaints of shortages of supply, and we do what we can to ameliorate such cases where a shortage is shown to exist. The House, I know, appreciates the fact that a machine of this character will have to be operated through agents up and down the country. There will be cases, no doubt, in which it will be found that things might have been done better, and I am looking forward to that without any self-delusion whatever. But I would ask for the assistance of hon. Members who possess local knowledge which I cannot possibly have, working as I do in London. I hope they will tell me of any case where they think things can be improved, and that they will co-operate with me in that way.

I think the House has to-day given its general approval to the policy which is under discussion. I should like to point out that it would not be possible to carry out this policy were it not for the existence of my Department and unless there was control over these commodities. Without that it would be impossible to assist the budgets of the poor by this means. When some are affected by the control and consider it a little vexatious, I hope they will put to the credit side the fact that control enables this policy to be pursued in the national interests. Where there may have been occasional grievances a broad view should be taken, because we are doing our best to diminish the irritations and vexations. It is clear that in the public interest control should exist. I agree with what the hon. Member for North Aberdeen (Mr. Garro Jones) said when he spoke of our duty to see that the health and efficiency of our people should be maintained throughout this struggle at the highest possible pitch. There is a side of my Department coming into operation which I hope will assist in the better feeding of the people. I do not consider my responsibility at an end when I have controlled this or that supply. It is true that this Ministry must play its part in the national and war effort having regard to questions of exchange, shipping, and the general policy of the war. But I hope that people, when they think of it, will not regard it as entirely restrictive but as a great social service in time of war, which I hope will be a benefit to the people of this country after the war is over and its work is ended.

Question, "That this House do now adjourn," put, and agreed to.

Adjourned accordingly at Seventeen Minutes after Ten o'Clock, until Tuesday next, pursuant to the Resolution of the House this day.